PayLess ShoeSource filed for bankruptcy Tuesday, and will immediately close nearly 400 of its 4,400 retail stores, including one in Westfield Valencia Town Center.
The Topeka, Kan.-based chain’s other two SCV outlets, on The Old Road in Stevenson Ranch and on Soledad Canyon Road in Canyon Country, will remain open.
“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” CEO Paul Jones said in a statement. “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process.”
The first quarter of 2017 was brutal for brick-and-mortar retail chains. PayLess was the 10th so far this year to file for federal bankruptcy protection, according to a March 31 article on Consumerist, a blog published by the owners of Consumer Reports.
The other nine cover the retail gamut from clothing (The Limited) to electronics and appliances (hhgregg, RadioShack) to purveyors of outdoor gear (Gander Mountain, MC Sports, and Eastern Outfitters).
Specialty retailers BCBG Max Azria and Wet Seal, and Gordmans, a department store based in Omaha, Neb., round out the list
Two key factors are driving the slew of bankruptcies: competition from online shopping and a heavy debt load many retail chains took on after being bought by private equity firms.
While some of those chains liquidated their operations and went out of business, PayLess intends to refinance its debt and remain a going concern.
“We intend to use this process to strengthen our balance sheet and restructure PayLess’ debt load, invest in specific areas that we believe will provide sustainable growth,” the company said.
PayLess, which has nearly 22,000 employees worldwide, is a privately held company owned by Golden Gate Capital and Blum Capital Partners.
Its retail brands include Champion, American Eagle by PayLess, designer label Christian Siriano for PayLess, skate brand Airwalk, Dexter and Dexflex Comfort and Brash.
Specifically, the company said it will expand its own online operations and expand operations in Latin America and other international markets and adjust its product lineup.
But the company acknowledged that deeper cuts may be in the offing.
In addition to “the immediate closure of nearly 400 underperforming locations in the U.S. and Puerto Rico,” the company said in a statement that it will “work to aggressively manage the remaining real estate lease portfolio either by modifying terms, or evaluating closures of additional locations.”
According to an FAQ on its website, PayLess stores slated for closing will still accept gift cards. But they won’t accept email coupons or loyalty coupons or take returns.