The store closing bug has claimed its latest victim, with Payless ShoeSource reportedly shuttering as many as 1,000 stores as part of a restructuring plan, according to Bloomberg.
The discount shoe retailer may file for bankruptcy if it's unable to reach a deal with creditors, and a decision on whether to restructure in or out of court could be reached as soon as late February.
Payless has more than 4,400 stores in 30 countries, a much more extensive store footprint than the other retail brands experiencing turmoil. Closing 1,000 stores would leave the brand with more than 3,000 locations, but that’s still a lot of square footage for a company carrying more than $600 million in debt.
In September 2016, the brand said it would close 300 to 500 stores in the next three years, intending to concentrate on larger, more omnichannel-focused “Super Stores.” But with plans to close 1,000 stores, it's unclear how far Payless could expand the “Super Store” concept going forward.
With off-price competitors such as TJX and shoe warehouse DSW gaining steam, Payless stores of all sizes are simply having a harder time staying profitable.
The retailer hired law firm Kirkland & Ellis LLP to mull options for handling its $600 million debt. The company’s largest remaining debt commitment is a $520 million term loan due in 2021, according to data compiled by Bloomberg.
Payless isn’t the only retailer teetering at the edge of potential bankruptcy; U.S. hunting and fishing chain Gander Mountain is preparing to file for bankruptcy as early as this month, according to a report from Reuters.
Gander has been under immense financial pressure from the pending $5.5 billion merger of outdoor rivals BassPro Shops and Cabela’s.