What to Know
- Payless ShoeSource has emerged from Chapter 11 bankruptcy, with a renewed focus on its international operations.
- The company’s new managers said the U.S. is the “biggest growth opportunity,” but they didn’t provide specific plans about how they will achieve growth there.
- Payless closed all of its stores in the U.S. last year, but it continues to operate in Latin America, Southeast Asia and the Middle East.
Payless ShoeSource said Thursday it has emerged from Chapter 11 bankruptcy protection for a second time, with a renewed focus on its international operations.
It filed for bankruptcy in February and ultimately shut down all of its 2,500 U.S. stores. The retailer — founded in 1956 in Topeka, Kansas — also wound down its e-commerce operations. But the liquidation did not impact its franchised or Latin American stores.
Payless previously filed for Chapter 11 in April 2017, eliminating nearly 700 stores and roughly $435 million in debt. It emerged about four months later.
The company has appointed a new executive management team and said it will unveil its strategy to turn the business around, and grow again in the U.S., later this year.
Payless’ “biggest growth opportunity” remains the U.S., said CEO Jared Margolis. But it remains unclear how the company is plotting its comeback there.
“We intend to leverage Payless’ existing infrastructure, which is best in class and already includes product design and development, distribution, marketing, and a strong relationship with major footwear manufacturers,” Margolis said. He previously was president of licensing agency for CAA-GBG.
U.S. & World
Payless is still operating in Latin America, Southeast Asia and the Middle East. It has more than 710 stores, including those with franchises, in more than 30 countries. The international business has sold roughly 25 million pairs of shoes over the past 12 months and has a database of 11 million customers who have purchased something within that time.
The largest business unit is Latin America, which will be led by Justo Fuentes. Fuentes previously was president of multinational footwear and fashion accessory manufacturer and retailer BATA in Latin America.
When Payless filed for bankruptcy in 2019, it was facing increasingly stiff competition in North America from larger competitors like T.J. Maxx parent TJX Companies and shoe retailer DSW. More consumers have also been turning to the internet to buy sneakers, sandals and high heels.
With cash tight, Payless was unable to invest online. It also had about $470 million in outstanding debt, and arguably way too much real estate.
As part of its comeback strategy, Payless said it plans to collaborate with high-profile individuals and brands.
“This plan will include a strong digital component to allow an omnichannel approach to the Latin market, as well as several product strategies that will allow Latin consumers to continue seeing Payless as their primary source of high-quality, value-priced family footwear,” Fuentes said in a statement.
This story first appeared on CNBC.com. More from CNBC:
