Payless Climbs Out of Bankruptcy

Payless store

Payless ShoeSource makes its way out of the bankruptcy bubble, reportedly coming out of bankruptcy as early as Wednesday, according to a Reuters report.

The footwear retailer filed for bankruptcy in March.

According to the report, the footwear retailer is putting efforts into brick-and-mortar sales during a time when e-commerce seems to be the way to go for its competitors. Payless’ re-emergence gives the company a second chance, according to the report, after getting rid of half of $847 million in debt it built up under private-equity ownership.

Payless plans to open more stores in Latin America, and begin new franchises in Asia. Meanwhile, the company has closed around 700 stores and has said it will close up to 800, mostly mall-based in the U.S., during its bankruptcy.

However, Payless says it will open four mega stores in the U.S., in addition to the 3,200 locations it already has in the U.S. and overseas. The company also plans to invest around $230 million over five years to help adjust inventory quickly due to customer demand.

Latin America alone contributed almost 40 percent of the company’s $95 million in EBITDA in 2016, despite the fact that it makes up less than 10 percent of its global store footprint, and the area’s sales continue to grow. A Payless spokeswoman told Reuters that the company plans to add 22 locations across Peru, the Dominican Republic, Coasta Rica, Honduras and Nicaragua this year, with more to come next year.

“There’s an extremely loyal Payless customer, who is basically a mother, who knows she can go into a store at any time and find a quality product at a reasonable price,” Payless’ lead restructuring lawyer, Nicole Greenblatt of Kirkland & Ellis, told Reuters.

Coming back from bankruptcy gives the company a somewhat renewed balance sheet and puts Payless in better graces with vendor contracts across the globe.

The real question lies in whether or not the company will be able to pull off a focus on brick-and-mortar during a time when other companies are turning to online sales.

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