By: Michael Campbell, News Editor
VIRGINIA – Discount shoe retailer Payless ShoeSource announced Tuesday that it will be closing 400 underperforming stores as part of Chapter 11 bankruptcy proceeding.
In a statement, Payless ShoeSource confirmed the bankruptcy filing in the U.S. Bankruptcy Court of the Eastern District of Missouri in an effort to “facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the Company for long-term success.”
As part of the filing, Payless hopes to use the Chapter 11 process to “strengthen its balance sheet and restructure” the company’s debt load, “Invest in specific areas that Payless believes will provide sustainable growth including omnichannel expansion; product and inventory initiatives; and international expansion in Latin America and elsewhere,” all while planning to close nearly 400 “underperforming” locations in the United States and Puerto Rico.
“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” remarked W. Paul Jones, CEO of Payless ShoeSource. “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process.”
The company said it will continue to operate as normal in terms of its customers, vendors, partners, and associates, subject to Court approval, including paying employee wages and health coverage and honoring gift cards both in-store and on their website.
“We are confident that this process will also enable us to leverage Payless’s existing strengths to succeed,” continued Jones. “While we have had to make many tough choices, we appreciate the substantial support we have received from our lenders, who share our belief that we have a unique opportunity to enable Payless — the iconic American footwear retailer with one of the best-recognized global brands — to remain the go-to shoe store for customers in America and around the globe.”
According to Payless’ website, there are at least seven locations in the Tri-Cities and Metro-Richmond areas, including locations inside Southpark Mall in Colonial Heights and along Jefferson Davis Highway in Chester.
As of this report, Payless has not released the list of stores that are scheduled to close as part of the Chapter 11 bankruptcy filing, but, according to their website, a list of closures will be provided “once we’ve talked with our valued Payless store associates.”
When the locations are released, this story will be updated.
This Chapter 11 bankruptcy proceedings by Payless becomes one in a number of recent headline-making filings and store closure announcements by a variety of retailers spanning several segments of consumer goods.
In March, appliance and home electronics retailer hhgregg announced its plans to close 88 of its 220 stores, including a majority of its locations in Virginia, such as Colonial Heights and Chesterfield in an effort to “refocus efforts on its core markets and goals to enhance customers’ experience both in-store and online.”
Video game retailer GameStop said it plans to close around “between two to three percent of its global store footprint,” which comprises of over 7,500 stores across 14 countries after weaker-than-expected sales during the holiday season.
Finally, department store Sears has expressed doubt if they can continue their business in the face of a continued decline in sales and less foot traffic in their brick-and-mortar stores, which includes Kmart following the two companies’ merger in 2004. Kmart has shuttered a majority of its Tri-Cities and Metro-Richmond locations over the course of the past two years.
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