Shoe chain Payless ShoeSource has filed for Chapter 11 bankruptcy protection, becoming the latest retailer to succumb to increasing competition from online rivals like Amazon.
The Topeka, Kan.-based retailer said Tuesday that it will immediately close nearly 400 stores as part of the reorganization. Founded in 1956, it has over 4,400 stores in more than 30 countries, including five stores in Fort Worth, three each in Arlington and Hurst and others in Watauga, Burleson, Mansfield, Lake Worth and Cleburne. On its website, the company said it expects to release a list of store closings on Wednesday.
Payless plans to reduce its debt by almost 50 percent, lower how much it pays in interest and line up funds. The company says some of its lenders have agreed to make available up to $385 million to keep the stores running.
“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” said said Payless CEO Paul Jones in a statement.
Payless said it expects to continue to operate its business, honoring employees’ wages, healthcare coverage and other benefits without interruption. It also said customers’ existing gift cards with Payless stores and Payless.com will be honored.
Shoppers are increasingly shifting their buying online or going to discount stores like T.J. Maxx to grab deals on designer brands. That shift has hurt traditional retailers, even low-price outlets like Payless.
In fact, Moody’s Investor Service said earlier this year that the number of “distressed” retailers — those with cash problems and lots of debt that are facing strong competition — is at the highest rate since 2009. It named Payless as one of the retailers.
Several retailers have closed stores or gone out of business in 2017. The Limited closed all 250 of its remaining stores early this year. It had operated nearly 400 stores at the end of 2000. Teen retailer Wet Seal in January said it would close its 171 stores. And Fort Worth-based RadioShack is closing more than 500 stores as part of its second bankruptcy.
Staff writer Steve Kaskovich contributed to this report.