Specialty footwear giant to shutter hundreds of stores amid Chapter 11 filing

Payless ShoeSource filed for Chapter 11 bankruptcy protection amid growing competition from off-price retailers and online.

The retailer, which has some 4,400 locations in more than 30 countries, plans to immediately close nearly 400 stores in the United States and Puerto Rico as it attempts to boost its balance sheet and restructure its debt load.RCS Real Estate Advisors has been retained as Payless’ real estate consultant to market the leases of the stores that are closing and renegotiate the leases of the locations that will remain open.

“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” stated Payless CEO Paul Jones.



Payless listed liabilities between $1 billion and $10 billion, according to the filing. It had roughly $500 million to $1 billion in assets. The company plans to continue to operate its business as usual during the filing.



“We intend to use the Chapter 11 process to implement a comprehensive path forward to meaningfully enhance our growth profile and profitability, positioning us to continue to thrive as a sustainable business in the face of the retail industry’s radical, unprecedented transformation,” Payless said in a statement.



Payless is the tenth retailer to file Chapter 11 this year, reported CNBC, which cited a recent study by AlixPartners.



Payless has entered into an agreement with certain parties to reduce its debt load by nearly 50%. That agreement is also designed to "materially lower annual cash interest costs access significant additional capital, and provide a clear path to emergence on an expedited basis,” the company said. The chain has also negotiated agreements with certain of its existing lenders to provide it with access of up to $385 million of debtor-in-possession financing.



Payless’ two Hong Kong-based companies involved in logistics and supply chain were also included in the filing.