Payless ShoeSource is the latest brick-and-mortar retailer to feel the effects of an online shopping society. The discount retailer has filed for Chapter 11 bankruptcy this week, with plans to immediately close 400 stores 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,” said Payless CEO W. Paul Jones in a statement.
The retailer was successful for many years, catering to the masses by selling shoes for everybody at affordable prices and offering popular sales such as its BOGO deal, where you buy one pair for regular price and get a second for half off. Yet low prices and name recognition still can’t beat online retail giants like Amazon, as more people are choosing the comfort and ease of one-click shopping over having to visit a store–especially if that store is inside a mall.
Earlier this year, Moody’s released a report naming a number of retailers it considers “distressed,” and Payless ShoeSource was on the list, along former top shops like J.Crew, Sears, JCPenney and Claire’s. It isn’t shocking to see so many apparel retailers closing shop, especially when record stores are pretty much obsolete and major bookstore chains are a dying breed. Add in the heavy costs of rent and building maintenance and you can see why these once dominant companies are now struggling.
But Payless has no plans to go out of business, and it’s working on reducing as much debt as possible to keep their doors open. Payless has negotiated close to $385 million of debtor-in-possession financing from lenders, which will be used to keep the business running and make a fresh start. That said, history has shown that many companies (such as Sports Authority) just can’t move past their tumultuous financial issues.
Currently, Payless has more than 4,400 stores in over 30 countries.