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Payless ShoeSource announced authorities of its bankruptcy state on April 5, 2017. The company decided for 400 store closures as a strategy to ease on the impact of adhering to Chapter 11. These measures were programmed for the period of 2016-2017. However, the company intends to close another large wave of 480 locations.
Payless ShoeSource Is Looking at a Total of 808 Store Closures
According to court documents, Payless ShoeSource pleaded before the St. Louis federal bankruptcy court for approval on 112 store closures. However, there are chances for the company to fail its negotiations with landlords. In case they can’t reach a consensus on rent, the company asks the court for another 296 locations to be closed. If this strategy takes off, then the company would have more than 800 stores behind it.
On the other hand, the company is still fighting for the protection of the 296 batch of stores. A spokeswoman stated that officials are seeking the attention of landlords. They intend to reach some rent concessions which would allow a large portion of the 296 locations to continue their activity.
Payless has already resolved 40% of the total of $838 million in funded debt. This percentage will reach lenders in the form of equities in the company. At the same time, other creditors are in line for significant recoveries.
CEO Paul Jones Believes that Brand Portfolio Has Still a Lot of Potential
Shoe retailer’s CEO, W. Paul Jones, sees these restructurings as a necessary evil. To his view, the company wasn’t ready to face a growing competitive environment that the retail industry became. As these conditions are going to intensify their challenges, the organization needed a fresh start. Therefore, the massive waves of store closures will make way for free cash flow.
Nonetheless, these moves will leave the company with a total of 3600 stores across America. The CEO bets on a strong collection of brands and its partnerships line with reputed businesses to earn customers’ trust once more. Other core points for the company are competitive discounts and a potent niche in the Latin American business.
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