Two months after filing for Chapter 11 protection, Payless ShoeSource Inc. is looking to double the number of store closures it had originally planned.
The bankrupt retailer last week asked federal bankruptcy court in St. Louis for permission to close 112 stores and perhaps up to another 296 in the U.S. and Puerto Rico as it struggles with high rents and brick-and-mortar lease obligations.
“As part of Payless’ Chapter 11 restructuring, we are taking steps to further rationalize our store fleet in the U.S. and Puerto Rico,” a spokesperson for Payless told Footwear News in an email statement today. “We do not anticipate store closures in other markets as a result of this action, including Latin America and Canada.”
If the largest family-footwear retailer in the Western hemisphere makes good on these plans, it will have shuttered 800 stores, or nearly 20 percent of its fleet.
Payless is one of many traditional retailers that have had to resort to massive store closures and/or file bankruptcy as they struggle with the rapid growth of e-commerce and consumer shifts toward experiential spending.
Michael Kors Holdings Ltd. today also announced its plans to shutter up to 125 stores over the next two years as it shoulders weak product trends and sluggish sales.
After months of speculation, Topeka, Kansas-based Payless filed Chapter 11 in early April, listing the value of its assets at between $500 million and $1 billion and its liabilities at between $1 billion and $10 billion.
The debt-saddled firm said it would immediately close nearly 400 of its 4,400 stores as it attempts to restructure.
Payless included its North American entities, as well as two Hong Kong-based entities involved in logistics and supply chain in its restructuring plan. Factories in Taiwan, Hong Kong and parts of China make up the majority of the list of Payless creditors with the largest unsecured claims.
Payless has suggested that it fully intends to emerge from Chapter 11 and continue its brick-and-click operations — albeit with a leaner store fleet. Several other retailers — the most notable of which is now-defunct Sports Authority — had similar intentions but were unsuccessful. Conversely, Pacific Sunwear of California Inc. — doing business as PacSun — and teen mall staple Aeropostalé Inc. were able successfully restructure via Chapter 11.
The growing list of store closures can be found at www.paylessrestructure.com under the store closure tab.