Payless Is Allegedly Preparing For A Second Bankruptcy
After shuttering stores and an impressive marketing stunt that had the internet talking, it seems like a certain discount shoe retailer is still struggling.
Back in 2017, Payless ShoeSource filed for Chapter 11 bankruptcy. The company had plans to restructure all of its North American stores and two of its Hong Kong-based entities, while immediately shuttering 400 underperforming locations in the U.S. and Puerto Rico.
With help from lenders, Payless was able to exit bankruptcy later in 2017, but not without closing stores and cutting jobs at its headquarters.
And now a report says that Payless might be preparing for a second bankruptcy.
In January of this year, Payless hired investment firm PJ Solomon to look into “strategic alternatives,” which included a sale, restructuring, or bankruptcy filing.
According to Bloomberg, the discount footwear retailer is now allegedly making plans for its second trip to bankruptcy court. The company is reportedly seeking a loan and discussing plans to close a massive amount of stores — potentially all North American stores.
Bloomberg spoke with unnamed sources who are not authorized to speak publicly.
While Canada has seen a number of retailers shut down over the past few years, things look much worse in the United States.
Despite spending 2018 much leaner and testing new concepts like holiday pop-up stores and headline-grabbing marketing tactics, Payless has been unable to increase sales enough to the point of comfort.
In August 2018 at the end of the fiscal quarter, Payless’ sales missed its target by $26 million. While in-store sales rose 3.3%, the discount footwear retailer saw reduced foot traffic across North America overall and fell way below its projected 9.9% increase.
Payless has kept mum on the subject so far.
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