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.
Study: Retailers need to get in shape to meet demand for fast fashion
The hottest fashion trend today is speed—and retailers need to be in the fast lane to remain competitive.
That’s according to new research from Kurt Salmon, part of Accenture Strategy, which finds that speed and agility are the top priorities for every retailer competing in fast fashion.
With one in eight younger consumers (18 to 24 year olds) shopping every week and buying a fashion item at least once every two weeks, retailers need to gear themselves up to meet the growing demand for fast, on-trend, fashion-led styles, the report said.
“Young consumers have a ‘see now, buy now, wear now’ mentality when it comes to fashion, which has been driven by big fashion houses making the latest designs and styles available to buy straight from the catwalk,” said Dan Murphy, managing director, Kurt Salmon. “This is challenging retailers to improve their operational agility to meet rising demand for current trends.”
Retailers are under increasing pressure to turn around new lines in record time, according to the report, and many have been working hard to reduce their lead times to meet this growing demand for fast fashion. One leading fashion retailer is now delivering new lines in two to three weeks. But speed is only part of the success equation.
“Retailers need to accurately analyze what is selling in real-time and be in a position where they can react quickly,” advised Murphy. “According to one major fashion retailer, there is now only a 24 to 36-hour window from browsing to buying. Retailers that actively engage with their customers, analyze shopping and social media habits, and pre-empt future trends, will be the winners in the fast fashion market.”
Retailers should expect the insatiable appetite for fast fashion to continue as today’s younger shoppers age.
“There is no reason to believe that younger consumers, who have grown up wedded to devices and social media, will expect anything less than instant gratification in years to come, and continue to possess the same sense of style and image,” Murphy said.
Here are more findings from the report:
*Speed of delivery of online orders is also highly important to consumers. One in five of 18 to 20 year olds want same day delivery, and a further 13% want delivery in less than half a day. Twenty-one to 37 year olds are slightly more relaxed with almost a third happy for their orders to arrive the next day.
*Shoppers buy for the present, with 53% of all consumers surveyed wearing items within a week of purchase, and 15% wearing items the very same day. For younger consumers (18 to 24 year olds), the numbers increase; 60% wear items within a week of purchase, and one in five wear items on the same day of purchase.
*The majority of younger shoppers claim that ethical sustainability is a key factor informing their purchasing decisions, but their actions suggests otherwise. Less than half (48% ) of 18 to 24 year olds recycle their clothes. Additionally, 50% retailers surveyed say they are actively exploring new ways to extend the product lifecycle, using recycled materials, or facilitating clothes swapping and sharing
In addition to surveying consumers, Kurt Salmon conducted interviews with 23 CEOs and senior executives at leading global fashion retailers to explore the ‘see now, buy now, wear now’ trend and the readiness of retailers to deliver.
Walgreens posted mixed Q2 results
Despite gains in prescription marketshare and comparable pharmacy sales across its U.S. base, Walgreens Boots Alliance missed analyst expectations for its second quarter.
Walgreens Boots Alliance reported adjusted earnings per share of $1.36 for the quarter, ended Feb. 28, which came below the FactSet consensus of $1.37. Total revenue declined 2.4% to $29.4 billion, missing the FactSet consensus of $30.3 billion.
Walgreens Boots Alliance's retail pharmacy USA division realized second quarter sales of $21.8 billion, an increase of 1.5% over the year-ago quarter. Same-store sales increased 2.4%.
Pharmacy sales, which accounted for 66.5% of the division’s sales in the quarter, increased 3.7%. Comparable pharmacy sales increased 4.2%, primarily due to increased volume.
“Our results this quarter were in line with our expectations despite some challenging conditions we faced in a number of markets," said Stefano Pessina, Walgreens Boots Alliance executive vice chairman and CEO.
"I am particularly pleased with the growth in pharmacy volume and market share in the retail pharmacy USA division, which saw the highest comparable prescription growth in more than seven years," he said. "At the same time, we continue to work toward gaining regulatory approval of the pending acquisition of Rite Aid Corporation by the end of July, consistent with the amended merger agreement announced in January.”
Walgreens Boots Alliance continues to be actively engaged in discussions with the Federal Trade Commission regarding the pending acquisition of Rite Aid, the company noted, and the extension of the end date of the agreement to July 31 allows the parties additional time to obtain regulatory approval.
The transaction is subject to approval by the holders of Rite Aid’s common stock, the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. Walgreens Boots Alliance said it continues to expect that it will realize synergies from the acquisition of Rite Aid in excess of $1 billion, to be fully realized within three to four years of the closing of the merger.