Four months after the largest family-footwear retailer in the U.S. sought Chapter 11 protection, the company is emerging from the process with a new lease on life.
“We have accomplished our goals of strengthening our balance sheet and restructuring our debt load, positioning Payless to create substantial value for our stakeholders and achieve long-term success,” said CEO Paul Jones. “In a year where so many major retail companies have filed for Chapter 11 restructurings, Payless is the first to successfully emerge as a stronger and healthier enterprise for the benefit of its customers, employees, suppliers, business partners and lenders. That is a testament to the hard work and dedication of everyone at Payless.”
Jones, who spent five years at Payless’ helm, will retire following the completion of the company’s restructuring. The post-emergence board of directors will begin a search to identify a new CEO, according to the company. In the interim, Payless will be led by a newly appointed executive committee comprising CFO Michael Schwindle and COO Mike Vitelli, and headed by Martin R. Wade III, chairman of Payless’ post-emergence board and interim CEO.
Payless, which had 4,400 stores in 30 countries and set out to close about 400 at the start of its Chapter 11 proceedings, said it now has 3,500 brick-and-mortar outposts. The previously debt-saddled firm said it was able to shed about $435 million in funded debt via the bankruptcy process.
Payless’ emergence could set the company in a rare class at a time when the outcome for many struggling retailers that have taken the Chapter 11 route has been far different. Over the past 18 months, Sports Authority, Eastern Outfitters, City Sports, Wet Seal and several other companies launched futile attempts to restructure. Conversely, Pacific Sunwear of California Inc. — doing business as PacSun — and teen mall staple Aeropostalé Inc. were among those to successfully restructure via Chapter 11.
“Payless remains poised to execute on the company’s go-forward strategy and is excited to continue to serve our loyal customers in North America and around the globe,” said Michael Schwindle, who will be a member of the newly appointed executive committee. “On behalf of everyone at the company, I want to extend our collective thanks to Paul. We are grateful for his exemplary leadership and his contributions to the company’s strategic direction, which have helped build a strong foundation for future growth.”
Added Jones, “Our new owners believe wholeheartedly in the future of Payless, and I am confident that they will identify a new leader who will complement our outstanding and deeply committed management team, while sparking new ideas and approaches.”
Pressured by consumer shifts to digital and a growing preference for experiential spending among millennials and young adults, a host of retailers have filed for bankruptcy since the start of 2017, including BCBG Max Azria Group, The Limited and Rue 21.
Payless was founded in 1956 in Topeka, Kan.
Check out the links below for more on FN’s yearlong coverage of Payless’ financial challenges: