Tossed in the Bargain Bin: Payless to Close 400 Stores
April 17, 2017
The discount retail shoe store Payless ShoeSource released a statement April 4 announcing it has filed for Chapter 11 bankruptcy and plans to close 400 underperforming stores in the US and Puerto Rico, including 24 locations in Southern California.
Payless Shoesource was founded in Topeka, Kansas in 1956, with the mission of providing “fashionable shoes and accessory items at affordable prices,” and has since expanded to over 4,000 stores in over 30 countries; shoes, ironically, the company can no longer fill.
In the statement, Payless explained that the closures are a part of a plan to reconfigure the company by prioritizing attention to improving sales in their remaining locations, restructure the company’s debt load, and work toward expanding into Latin America.
“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” says Paul Jones, Payless Chief Executive Officer in the statement. “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners, and other stakeholders through this process.”
Payless’ announcement follows a number of other major retailers, including chains like Sears, Macy’s, JCPenney, and K-Mart, who have also announced mass closures of the first quarter of 2017. This comes after the release of a report by the Bureau of Labor Statistics, indicating job growth in March to be 98,000, just over half the predicted job growth for the month.
An article published by Yahoo Finance blames the failure in retail stores on online shopping alternatives, such as Amazon, a company that the article claims is destroying an “entire sector of the U.S. Economy.” Despite the huge drop in employment and the high rate of retail store closures, Amazon recently announced an initiative to hire 30,000 new part-time employees.
Retail services have been shifting to online sources, more aggressively now than ever. Online retailers save money by having fewer employees, on leasing and maintaining location property, and provide convenience to their customers; however none can compete with Amazon. Purchases through Amazon accounted for 53 percent of online purchases, leaving competing retailers online efforts in the dust.
Payless ShoeSource reminds customers the closures will not interrupt online sales and stores performing up to expectation will continue to function as before. Lists of closing locations are available online.