New York - Payless ShoeSource has filed for Chapter 11 bankruptcy protection and is shuttering its remaining stores in North America.
The filing on Monday came a day after the discount shoe chain began holding going-out-of-business sales at its North American stores. Payless filed for bankruptcy in the Eastern District of Missouri, listing $500 million to $1 billion in debt, according to court filings.
The company, based in Topeka, Kansas, updated the number of stores it's closing to 2,500, up from thewhen it confirmed it was planning to liquidate its business. Payless reiterated that stores will remain open until at least the end of March and the majority will remain open until May.
The liquidation doesn't affect its franchise operations or its Latin American stores, which remain open for business as usual, it said.
The debt-burdened chain filed for Chapter 11 bankruptcy protection a first time in April 2017, closing hundreds of stores as part of its reorganization. At the time, it had over 4,400 stores in more than 30 countries. It emerged from restructuring four months later with about 3,500 stores and having eliminated more than $435 million in debt.
"The challenges facing retailers today are well documented, and unfortunately, Payless emerged from its prior reorganization ill-equipped to survive in today's retail environment," said Stephen Marotta, the company's chief restructuring officer.
He noted that the prior Chapter 11 proceedings left the company with too much debt and with too many stores.
Shoppers are increasingly shifting their buying online or heading to discount stores like T.J. Maxx to grab deals on name-brand shoes. That shift has hurt traditional retailers, even low-price outlets like Payless, which joins a list of other big retailers that have gone bust in recent years. In 2018 alone, that included major chains such as Sears, Toys R Us and Claire's, as well as rival shoe stores Nine West and Rockport.
Payless was founded in 1956 by two cousins, Louis and Shaol Lee Pozez, to offer self-service stores selling affordable footwear.