Monday night Payless ShoeSource filed for bankruptcy protection as the retailer arranges to shut down nearly 2,500 U.S. locations.
Payless first filed for bankruptcy protection back in April of 2017, when it eliminated 700 of its retail branches. Shutting down these branches eliminated roughly $435 million in collective debt for the shoe retailer, but according to the filing, Payless still retains $470 million in financial obligations.
Much of the retailer’s debt stems from the $2 billion sale of its previous parent company Collective Brands. Collective Brands was purchased by private equity firms Golden Gate and Blum, as well as Wolverine World Wide. Wolverine World Wide took ownership of Collective’s other brands, like Keds, Sperry Top-Sider, and Stride Rite, while the equity firms maintained control of Payless.
Payless had a financial loss of $4 million in 2017 and $63 million in 2018. This growing financial loss was initially blamed on port strikes in the West Coast that delayed shipments before Easter and resulted in the inventory being off-season. This forced the retailer to sell products at deep-discount prices.
The retail industry as a whole continues to be in a state of turmoil as consumers flock to online retailers like Amazon more and more. This change in consumer trends benefits large organizations that can afford to scale, whereas smaller companies like Payless struggle.
Payless, especially, has faced opposition from much loftier competitors like T.J. Max, which has a market capitalization of $62 billion.
The shoe retailer which opened in 1956 plans for all of its locations to remain operational until at least the end of March and possibly into May.
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