Payless To Close All 248 Canadian Stores Liquidation Sales Expected
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TORONTO Payless ShoeSource Canada Inc. says it will soon file for creditor protection in Canada and close all 2,500 of its North American stores this spring.
The Kansas-based companys chief restructuring officer Stephen Marotta says in a release that the closures are happening because a prior reorganization left the company ill-equipped for todays retail environment with too much remaining debt and too large a store footprint.
READ MORE: Payless pranks customers, sells bargain shoes to designer prices and it worked
Documents filed with the Ontario Superior Court show the company had an oversupply of inventory as recently as this winter and was forced to sell merchandise at steep markdowns.
The company, which has also filed for bankruptcy in the U.S., says it will begin closing stores at the end of March, though some will be open until the end of May while it conducts liquidation sales.
WATCH: Online shopping continues to grow steadily
Documents show the brand employs about 2,400 workers in Canada and owns 248 stores in the country.
The documents say the company has failed to pay Februarys rent for 220 of its stores in Canada and reported an operating loss of more than US$12 million last year.
The Palessi Luxury Brand Launch Party
Heres what happened. The company took over a former Armani store in Santa Monica California for a weekend in late November 2018. It created a luxury ambiance and stocked the store with the same Payless shoes that sell for $20$40. It invented an upscale fashion designer called Bruno Palessi, branding the store as a Palessi store. . For the Palessi stores grand opening party, influencers and fashion industry insiders were invited under the guise of inviting them to the new designer brand. When attendees were asked how much they would pay for the displayed shoes, the answer was several hundred dollars. Many attendees even shelled out this much money and purchased the shoes. .
For Payless, this campaign was a huge marketing success. The videos and the articles about the prank went viral, garnering millions of views and likes. More importantly, the company made a convincing case that its shoes are of high quality and value. After all, if industry experts and influencers are willing to pay $600 for a pair, shouldnt us normal consumers be happy to get the same shoes at a small fraction of that price? Luxury branding and retailing experts weighed in, praising the campaigns social media-worthiness and publicity value, but questioning its long-term benefits for Payless.
Payless Shoesource Is Filing For Bankruptcy Closing Hundreds Of Stores
So it closed its stores in the United States and Canada and laid off 16,000 employees. The company said at the time that it would keep open stores outside North America.
In January, the company said it had emerged from bankruptcy protection and appointed a new management team, including Margolis.
The first Payless store is slated to open in November in Miami, where its new headquarters are located. Payless said it plans to have 30 to 45 stores open in early 2021 in Texas and other border states.
Those stores will open in addition to its existing fleet of 700 international stores, including franchised locations. Payless said its new US stores will have an updated look, such as smart mirrors, touchscreen wall panels and AR-powered foot comparison charts.
Payless said its website will reopen for business on Tuesday. Itll feature a mix of clothing, accessories and footwear from its private label brands and new brands its adding to the portfolio, like Kendall + Kylie and Aerosoles.
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Payless Relaunches With New Website Concept Stores After Closing All Locations In 2019
Payless ShoeSource Inc. is expected to file for bankruptcy in February 2019 and close all 2,300 of its U.S. stores.
Payless is back with a new name, location and business model.
After closing all its stores in 2019 after filing for bankruptcy, the iconic footwear store reopened its first brick and mortar store on Tuesday with the launch of a new website.
In its return Payless dropped Shoesource from its name and opened a store in Miami, which represents one of 300-500 stores that the company plans to open within the next five years, it announced Tuesday.
We saw an opportunity for the brand to relaunch into the U.S. market, providing our community with the affordable, value driven products theyve always searched for, now across multiple categories, at a time when value couldnt be more critical, CEO of Payless Jared Margolis said in a statement. Payless is for everyone, and now more than ever, the world needs to pay-less. We are so excited to bring Payless back to you, so you and future generations to come can lead the way forward.
The relaunch revives a company that was founded in 1956. In addition to footwear, the company said it will provide value across a range of apparel and accessories too.
The brand plans to open up to 500 stores across North America during the next five years. Its first prototype store opened in Miami, home of the companys headquarters, on Tuesday.
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Bankruptcy And Revival In 2020
On February 14, 2019, Payless filed for bankruptcy again for a second time and this time they closed all 2,100 stores in the United States by May 2019. On February 19, 2019, it announced would also close 248 stores in Canada. The 790 stores across Latin America and the other stores internationally would not be affected. Payless emerged from bankruptcy on January 16, 2020, with plans to re-launch a U.S. e-commerce site. On August 18, 2020, Payless, officially dropping ‘Shoesource’ from its name, did relaunch its ecommerce website. It also announced plans to open between 300 and 500 free-standing stores in North America over the next five years.
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The Rise And Fall Of Payless Shoesource
The first factor many people will point to is its inability to compete with online retailers such as Walmart and Zappos, which just happens to be owned by Amazon . While this is true in part, Payless had a solid brick and mortar presence in downtown shopping areas of major cities and suburban malls that attracted buyers who were out and about casually shopping.
But the latter of these two target areas, suburban malls, is another reason for its decline and fall. Malls throughout the country have fallen on hard times, with many of them closing due to reduced traffic as some have become sites of higher crime rates. More than a few mall closings were the direct result of the decline of other traditional retailers such as J.C. Penney and Sears. If you had been to a major mall before 2008 you would likely have found a Sears and/or J.C. Penney store on one end of the mall. Payless was bound to feel the impact of significantly reduced mall traffic sooner or later.
A third factor is the retail shoe business itself. One reason Walmart and Zappos are strong survivors of the retail shoe business is that they have the cash to keep the ever-changing styles in stock. The online competition is one thing, but Payless needed the capital to stay competitive, capital it had to borrow after its first bankruptcy filing. When the sales didnt match up with the new debt, the handwriting was on the wall in large print.
Trouble In The Supply Chain
The new C.E.O., Mr. Jones, and the rest of the executive team assembled by Paylesss new private equity owners in 2012 had a lot to do.
The company had modernized its logo and branding years earlier but had been so stingy with capital spending that around 70 percent of stores still had 1980s vintage signs. The companys outdated information technology systems updated inventory only once a day making it impractical to offer buy-online, pick-up-in-store offerings.
Mr. Jones and his team started in on plans to upgrade technology, expand profitable international operations and invest in the high-growth areas of athletic footwear. But even with all those outdated stores and technology, capital spending remained only at levels comparable to the previous ownership: $75 million to $80 million per year.
Meanwhile, the company made huge payments to its private equity owners.
In the two-year period ending in January 2015, Payless generated $322 million in Ebitda, a common metric for operating profits; paid $352 million in one-time dividends to shareholders; and made $83 million in interest payments.
For every dollar that came in the door of the company in that span, it paid out $1.09 to its owners and 26 cents to its lenders. That left the company with less of a financial cushion to ride out any future challenges. And the future, as it turned out, held some major challenges.
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What Happened To Payless Cashways Inc
Payless Cashways Inc. was a major building materials retailer inthe 1980s and 1990s and many consider it the first national chainto implement the powerful DIY strategy. They operated throughoutthe Mid West under the names Payless Cashways, Hugh M. Woods,Furrow, Lumberjack, Knox Lumber and for a while Sommerville Lumberwas a wholly owned subsidiary. They faced their first majorchallenge in the mid 80s when they were the target of a leveragedbuyout led by Asher Edleman and Sutherland Lumber. The resultingPayless Cashways stock buyback left them saddled with debt thatalmost stopped the expansion and steered the retailer to be leftbehind by the upstart “Big Box” home centers like Builders Squareand Home Club . The company struggled through thenineties with moderate successes and recurrent failures and neverregained the glory days of their first big expansion. The laststraw was the burst of the dot com era that left many banksunwilling to continue the dream of it ever becoming a viablecompetitor to the successful Home Depot and emerging Lowes chains.On Sept. 10th, 2001 the company was orderedto be liquidated.
How A Pandemic And A Recession Created The Climate For A Payless Comeback
But the firm ran into major challenges during the 2009 economic downturn as consumer spending plummeted, and it never again found its footing for multiple reasons, according to experts.
With Payless, it seems there are two primary components: First, the company does most of its business in brick-and-mortar stores, and as weve seen in the last five to seven years, there has been a huge shift in sales and foot traffic in malls and standalone stores as compared to those made online, explained fashion attorney Elizabeth Kurpis. , the companies that ultimately succumb to bankruptcy are generally straddled by too much debt.
Payless first staggered into bankruptcy court in April 2017 laden with nearly $840 million in liabilities much of which stemmed from a 2012 leveraged buyout by private equity firms Blum Capital and Golden Gate Capital.
At the time, Payless contentious court proceedings included allegations from vendors and landlords that dividend payouts to its private equity owners made the company especially susceptible to collapse at a time when other factors were also hurting the industry at large.
In 2017 court documents, a group of Payless unsecured creditors stated, The depletion of their coffers put the company on a dangerous path that ultimately led to this instant bankruptcy filing.
Nevertheless, four months later, Payless was able to emerge from Chapter 11 after it shed about $435 million in funded debt and ditched hundreds of stores.
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Payless Is Making A Comeback With 500 New Stores And A Revamped Website
Three years since filing for bankruptcy the first time in 2017, and roughly a year after filing a second time and closing all locations, Payless is making a comeback.
Payless shoppers first learned of the plans to return in January, when the discount shoe store announced that it had emerged from Chapter 11 protection, appointed a new executive management team and was pursuing a new strategy that included a plan to open retail stores in the United States.
Now, more details of the plan have emerged, including an immersive e-commerce platform and up to 500 new store locations.
Dropping ShoeSource from the name to now be known simply as Payless, the brand claims it will continue to offer the same value to shoppers across a range of apparel, accessories and footwear.
According to a news release, the brands goal is to open 300-500 freestanding stores across North America;over the next five years, beginning with the launch of the first prototype store in;Miami.
The new stores will have updated technology, including smart mirrors, touchscreen wall panels and an augmented reality foot comparison chart.
While there is no word yet on when or where the rest of the new stores will open, the website is already up and running and features well-known labels like AirWalk, American Eagle, K-Swiss, Kendall + Kylie, Aerosoles and more.
Payless Is Making A Comeback With 500 Stores And A New Name
Payless has dropped ShoeSource from its name.
The company formerly known as Payless ShoeSource is making a comeback after emerging from Chapter 11 bankruptcy in January, this time with a new name.
The discount shoe retailer announced last week it is planning up to 500 standalone stores across North America over the next five years. The company also has dropped ShoeSource from its name and will just be known as Payless moving forward.
Payless first store is set to open in Miami later this year.
No New Jersey stores have been confirmed yet, a Payless spokeswoman told NJ Advance Media.
Payless shuttered all 2,300 North America stores in 2019 after filing for bankruptcy for a second time in less than two years. Its international stores in Latin America, the Middle East and Asia werent affected.
The company first filed for bankruptcy in April 2017.
Payless is known for its affordable shoes and accessories, including private label brands AirWalk and American Eagle. Select products are also offered on .
The company is now headquartered in Miami instead of its original Topeka, Kansas location. It was founded in 1956.
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Did Nike Buy Vans
Mr. Bodecker is the first VP-level executive to head a skateboard division in the company. In addition to its investment in Savier Inc., Nike recently bought one of Vans local Orange County competitors, Hurley International Inc., a clothing company that targets skaters and surfers and that doesnt yet make shoes.
Definitely Destruction But Was It Creative
Payless is now a carcass of a company, with no stores in the United States and a relative handful of employees in a headquarters that once held 800.
Theres a certain model of capitalism under which this failure, painful as it was for those who lost their jobs, is a win over all. Strong, well-managed companies rise up and replace failures, producing a more competitive economy that benefits everyone over the long run.
But theres an alternate way of viewing things.
For one thing, plenty of retail companies are doing reasonably well, making sound tactical decisions around store closings and smart investments in digital retail.
Payless wasnt hopeless, said Beth Goldstein, a footwear industry analyst at NPD Group: It would have needed significant investment and right-sizing, and it wouldnt be up to the level of what it was 10 years ago, but there would still be a business.
Instead, Ms. Goldstein concludes, much of the sales Payless once made migrated to just three other retailers: Walmart, Target and Amazon, including through its Zappos subsidiary.
What do the most successful markets look like? They feature lots of rivals in constant competition, always testing new strategies as they compete for workers, suppliers and customers. Thats what makes a truly dynamic economy, the kind where creative destruction of all types can occur.
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Will That Payless/ Palessi Experiment Really Do Much To Change The Brands Negative Stigma
Im smelling ADDY or Shorty marketing award coming for Payless ShoeSource for its latest marketing ploy to reprove its relevancy to the millennial crowd. If you havent already checked out their latest social experiment featuring social influencers, youre in for a treat. Basically, Payless created a fake premium footwear brand, Palessi, and hosted a pop-up event in L.A. featuring the latest in Payless shoes. Why they called it Palessi? Probably to make their own name sound Italian and fancy because, of course, consumers just eat that up. Long story short, attendees went crazy over the selection and bought typical Payless shoes for way more that theyd usually cost. You can read more here.
So, the real question is, will that marketing stunt be enough make a dent in the long held stigma facing the Payless brand. Lets start at the positive, what Payless has working for them. Well, for years they have been leaders in low-cost mass-market shoes and size inclusion. Theyve had trendy, contemporary styles and extended women sizes for as long as I can remember. Bad news is that their shoes arent made with the highest quality standards when it comes to comfort or materials.; So, consumers believe that Payless shoes are of low quality. I personally dont shop there because their shoes are too wide for my feet, but I probably would browse there more often if I could ever find Narrow width shoes there.
Do you shop at Payless? If so , why do you?
Collective Licensing International Llc
Payless, operating as Collective Brands, Inc. formed a division called Collective Licensing International, LLC in January 2004, which was based in Englewood, Colorado. CLI held and owned various clothing and sport brands, particularly “youth lifestyle brands” and board-sport brands such as Airwalk, Vision Street Wear, Sims, Lamar and LTD, World Snowboarding Championships, Sugarboards, Carve, genetic, Dukes, Rage, Ultra-Wheels, Hind, Spot Bilt and Skate Attack. The primary purpose of the division was to develop brands and provide them with marketing and branding guidance in various markets.
In 2010, CLI acquired Above The Rim from Reebok International for an undisclosed amount.
On July 14, 2014, Authentic Brands Group acquired some assets from Payless’s division Collective Licensing International, LLC.
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