International shoe giant, Payless Shoes, is going into creditor protection in North American where its chances of closing all stores are high.
Payless Shoes is a discount shoe retailer, with over 3,400 locations in more than 40 countries. The company is looking for protection from all of its creditors under Chapter 11 of not just the U.S. Bankruptcy code, but its Canadian equivalent.
The company made a public statement that said Payless plans to utilize the proceeds to start a wind-down of approximately 2,500 North American stores, as well as its e-commerce operations.
Currently, the company has massive undisclosed losses that reach the millions, and nearly 500 of Payless’ locations struggled to come up with rent for its current month.
Payless Shoes was founded in Kansas in 1956, and it quickly grew to become one of the world’s largest discount shoe sellers. In its prime, Payless was selling more than 110 million pairs of shoes annually. However, the company has currently fallen on rough times—and it’s not the first time. In 2017, Payless went through a creditor protection process in its Canadian locations, but all American stores were spared.
Stephen Marotta, a spokesperson for Payless, claimed that there are many challenges that retailers face, and unfortunately, Payless is unable to survive in today’s retail environment. Marotta also said that prior proceedings left the North American side of the company with too much debt and too large of a footprint.
The chain is looking to liquidate all North American stores as soon as possible.
Many retailers have been hit with a smaller demand for their products, but that isn’t the case with Payless. The market for discount footwear is continuously growing; however, Payless has failed to capitalize on that.
Effective immediately, all of Payless’ loyalty rewards programs and outstanding coupons are discontinued. The company does plan to ask the court for permission to honor both gift cards and store credit until March 11, 2019 and continue to let customers exchange and return purchases until March 1, 2018.
The chain is looking to have all North American locations closed by May 2019.