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Payless Shoesource files for bankruptcy, will close 400 stores

MarketWatch logo MarketWatch 4/4/2017 Tonya Garcia

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Payless Shoesource, the affordable family footwear retailer, announced Tuesday that it has filed for Chapter 11 bankruptcy in order to restructure its North American entities, as well as its Hong Kong-based logistics and supply chain entities.

As part of the restructuring, the company will close nearly 400 stores in the U.S. and Puerto Rico, plans to reduce its debt by 50% and will invest in areas including online expansion, product and inventory efforts, and global growth.

The company has entered agreements with certain existing lenders to gain access to up to $385 million of debtor-in-possession financing. New term loan financing totaling $80 million will aid the company as it emerges from bankruptcy.

Payless has about 4,400 stores in more than 30 countries, the company said. The SPDR S&P Retail ETF is down 9.5% for the past year while the S&P 500 index (spx) is up 14.2% for the period.

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