Payless has hired an adviser to help it avoid a second bankruptcy less than 18 months after emerging from its first Chapter 11.
Citing sources familiar with the matter, Reuters reported that a sale or restructuring are two of the options being considered. The company is also thinking about closing at least one-third of its approximately 3,000 stores.
Payless has hired investment bank PJ SOLOMON to help determine its best course of action. Court documents show that the shoe retailer came out of bankruptcy in 2017 with about $400 million in loans, after cutting its debt from over $800 million. During the bankruptcy process, Payless estimated it closed around 673 stores, on top of the around 273 it shut down between 2016 and its initial declaration of bankruptcy in early 2017. In total, Payless shut down more than 900 stores.
“We have accomplished our goals of strengthening our balance sheet and restructuring our debt load, positioning Payless to create substantial value for our stakeholders and achieve long-term success,” CEO Paul Jones said at the time.
Payless wouldn’t be the first retailer to file for bankruptcy again so soon. Earlier this week, it was reported that Gymboree is set to file for bankruptcy for the second time in less than two years. In 2017, the company closed approximately 450 locations. As a result, Gymboree was able to cut its debt by $1 billion and closed a quarter of its stores. With this anticipated filing, Gymboree will close around 900 stores it operates under the Gymboree, Janie and Jack and Crazy 8 brands.
But Payless is trying to avoid that fate. In an effort to boost business, it opened up its first pop-up shop in New York City in November, with other locations around the country. The stores were set to offer shoes, as well as a collection of handbags and accessories, in a pop-up that featured “a more modern look and feel than traditional Payless brick-and-mortar stores,” the company said.