Specialty footwear giant to shutter hundreds of stores amid Chapter 11 filing
Payless ShoeSource filed for Chapter 11 bankruptcy protection amid growing competition from off-price retailers and online.
The retailer, which has some 4,400 locations in more than 30 countries, plans to immediately close nearly 400 stores in the United States and Puerto Rico as it attempts to boost its balance sheet and restructure its debt load.RCS Real Estate Advisors has been retained as Payless’ real estate consultant to market the leases of the stores that are closing and renegotiate the leases of the locations that will remain open.
“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” stated Payless CEO Paul Jones.
Payless listed liabilities between $1 billion and $10 billion, according to the filing. It had roughly $500 million to $1 billion in assets. The company plans to continue to operate its business as usual during the filing.
“We intend to use the Chapter 11 process to implement a comprehensive path forward to meaningfully enhance our growth profile and profitability, positioning us to continue to thrive as a sustainable business in the face of the retail industry’s radical, unprecedented transformation,” Payless said in a statement.
Payless is the tenth retailer to file Chapter 11 this year, reported CNBC, which cited a recent study by AlixPartners.
Payless has entered into an agreement with certain parties to reduce its debt load by nearly 50%. That agreement is also designed to "materially lower annual cash interest costs access significant additional capital, and provide a clear path to emergence on an expedited basis,” the company said. The chain has also negotiated agreements with certain of its existing lenders to provide it with access of up to $385 million of debtor-in-possession financing.
Payless’ two Hong Kong-based companies involved in logistics and supply chain were also included in the filing.
Rochester outlet center adds Macy’s building
A mall-to-outlet center conversion underway in Rochester, New York, took a big step forward this week with the acquisition of a Macy’s building on the property.
Rochester-based Wilmorite is in the process of transforming its million-plus sq. ft. Marketplace Mall into Marketplace Outlets, which it foresees as a draw for shoppers from a 60-mile radius. Preliminary plans for the Macy’s building, which it purchased for an undisclosed amount, call for partial demolition of the front of the building to make way for two freestanding restaurants that will be flanked by retailers.
The mall-to-outlet plan was further advanced with announcements from Express and Ann Taylor Loft that they would convert their stores at the mall from full-price to outlet formats by this summer.
“These positive announcements further demonstrate the strength of the Marketplace location and the dynamic Rochester market,” said David Hinkle, principal of The Outlet Resource Group, which is advising Wilmorite on the project.
New York & Company Outlet, Aeropostale Factory, and Children’s Place Outlet are already open and operating at the center.
Noted industry veteran rejoins R.J. Brunelli
When Michael Murphy started his career as a mall marketing director with Ernest W. Hahn in California, the Beatles had just recently broken up and enclosed malls were the new wave in retail. Now, after four years as director of retail services at Cushman & Wakefield, Murphy has returned to R. J. Brunelli & Co.to take up his former position as senior sales associate.
Murphy served nearly all positions on up to general man ager at malls in Virginia, Montana, and Utah, as well as California. Through most of the 1980s, he helped Debbi Fields grow her three-store business to 700 locations as senior VP and director of Mrs. Fields’ Cookies. In the 1990s, Murphy became VP of leasing for 40 shopping centers owned by Kravco Company.
At the Old Bridge, New Jersey-based R.J. Brunelli, he will represent foodservice and grocery clients in eastern Pennsylvania markets.