TORONTO – Mounting debts and a challenging retail market are forcing Payless ShoeSource Canada Inc. to shutter all of its North American stores by May.
A crane operator installs a Payless Shoesource sign to the front of the store Thursday afternoon, Jan. 19, 2012, on Range Line Road in Joplin, Mo. 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 move comes just after Payless filed for bankruptcy in the U.S. and after Ohio-based shoe brand DSW Inc. shut down its Town Shoes Ltd. brand and the 38 stores it had in the country, saying the “competitive landscape for mid-luxury, mall-based footwear has dramatically changed, comparable sales have deteriorated consistently and generated significant operating losses.”
Payless, which was founded in 1956 and previously filed for bankruptcy in 2017, has faced a similar market, revealed its chief restructuring officer Stephen Marotta in a press release, where he said the brand had tried to rejig its operations to no avail.
“The challenges facing retailers today are well documented, and unfortunately Payless emerged from its prior reorganization ill-equipped to survive in today’s retail environment,“ said Marotta, who joined the company in January.
“The prior proceedings left the company with too much remaining debt, too large a store footprint and a yet-to-be realized systems and corporate overhead structure consolidation.”
Documents filed with the Ontario Superior Court on Tuesday show the company’s Canadian operations, which employ about 2,400 workers, had an oversupply of inventory as recently as this winter and was forced to sell merchandise at steep markdowns.
The documents said the company failed to pay February’s rent for 220 stores it owns in Canada and reported an operating loss of more than US$12 million last year.
Marotta said in the filings that the company has been unable to integrate its physical stores with a digital offering. Only 200 stores are equipped with such a service, he said, leaving Payless “unable to keep up with the shift in customer demand.”
As a result, he said Payless will begin closing its 2,500 North American stores at the end of March, though some will be open until the end of May while the company conducts liquidation sales.