Payless ShoeSource has filed for bankruptcy and is closing all its US stores — 2,500 across the country and in Puerto Rico.
The company confirmed the news to CNN Business on Friday and announced the closures on Saturday. Liquidation sales began the following day and will continue through May, a spokesperson told CNN, though some stores will begin closing in March. Payless filed for bankruptcy on Monday night, CNBC reports, and has approximately $470 million in outstanding debt.
There are several reasons for Payless’s demise. As the New York Times notes, brick-and-mortar stores were the core of Payless’s strategy, which may have hurt sales now that a growing number of customers prefer to shop online. (It’s worth noting that in addition to closing its physical storefronts, Payless is shutting down its online store.)
The shuttering of mall department stores across the country also hurt Payless — these bigger retailers serve as “anchor stores” that drive people to malls and other shopping centers, and closing them hurts foot traffic for smaller stores with more specific offerings like Payless.
The discount shoe retailer also had trouble competing with other bargain stores, especially those that sell marked-down versions of pricey name brands, as well as with Amazon and Zappos. It made some questionable moves to stay relevant, including orchestrating a hoax where it anonymously invited influencers to the launch of Palessi, a faux-luxury store that carried Payless shoes.
“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,” Payless’s chief restructuring officer Stephen Marotta told CNBC in a statement.
This isn’t the first time the discount shoe retailer has attempted to restructure its debts. Payless previously filed for bankruptcy in April 2017 and closed 400 stores in the process, but that move wasn’t enough to save the company from its dire financial situation. “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,” Marotta told CNBC. Those proceedings, he said, were the result of an “antiquated” inventory system and strikes that delayed shipments before crucial holidays like Easter. More recently, the company claims it has faced “unanticipated” delays from its suppliers, which have contributed to its financial problems. CNBC reports that Payless lost $63 million in 2018 and $4 million the previous year.
Payless is the latest in a series of retailers, including Toys R Us and Sears, that have turned to bankruptcy and liquidation in an attempt to reduce debt. both Toys R Us ended up liquidating anyway; Sears, meanwhile, was saved from liquidation by its former CEO, billionaire Eddie Lampert, whose mismanagement of the company was one of the main factors that led to its near-insolvency.
Payless won’t be closing all its stores, though: A spokesperson told CNN Business that its international franchises and Latin American stores won’t be affected. If you live in the US, the next few months may be your last chance to grab a pair of Payless shoes. Unless you feel like catching an international flight, that is.