Payless files Chapter 11, will close 2,500 sites
Payless ShoeSource, a once-popular seller of inexpensive women’s footwear and a staple in many suburban shopping malls, has filed for Chapter 11 bankruptcy protection and is shuttering its remaining stores in North America.
The filing on Monday came a day after the shoe chain began holding going-out-of-business sales at its North American stores.
The company operates 260 stores in California, of which 32 are in the Bay Area. It also plans to wind down its online offerings. The company said in a tweet Saturday that it is no longer selling items on its website and that some of its merchandise would be available on Amazon.com “for the time being.”
The company, based in Topeka, Kan., updated the number of stores it is closing to 2,500, up from the 2,100 it cited on Friday when it confirmed that it is planning to liquidate its business. It reiterated that stores will remain open until at least the end of March and the majority will remain open until May.
The liquidation doesn’t affect its franchise operations or its Latin American stores, which remain open for business as usual, it said.
The retailer, which filed for Chapter 11 bankruptcy protection two years ago, had already closed hundreds of stores as its brand lost
luster among women searching for deals on shoes. It is the latest mass-market retailer to vanish from the retail landscape.
“The challenges facing retailers today are well documented, and unfortunately, Payless emerged from its prior reorganization illequipped to survive in today’s retail environment,” said Stephen Marotta, Payless ShoeSource’s chief restructuring officer.
He noted that the prior Chapter 11 proceedings left the company with too much debt and with too many stores.
Toys R Us and BonTon, a department store chain, liquidated last summer, after failing to come up viable reorganization plans. Sears narrowly escaped liquidation this month after a judge allowed its chairman and largest lender, hedge fund manager Edward Lampert, to buy the company and keep its stores open.
The Payless liquidation comes as more people are opting to shop online rather than in stores, which were at the core of the shoe company’s strategy. But e-commerce explains only part of Payless’ challenges. While Payless struggled to stay relevant with shoppers, other retailers catering to bargain-conscious shoppers, like TJ Maxx and Nordstrom Rack, are thriving.
Keeping up with emerging fashion trends and creating attractive stores requires constant investment, which was a challenge for Payless. Some of the company’s stores have also been hurt by their location in struggling suburban malls that are anchored by Sears and J.C. Penney, another listing retailer. As hundreds of those anchor stores have closed, traffic to nearby retailers in the malls has slowed. Chronicle staff writer
Shwanika Narayan contributed to this report.