Payless ShoeSource parent to close 475 stores, including P.R. locations
Collective Brands Inc., parent company of discount shoe chain Payless ShoeSource, will be closing 475 “underperforming and low-volume, non-strategic stores,” including an unspecified number in Puerto Rico, the company announced Wednesday upon reporting shaky second quarter results.
The Kansas-based retailer has already engaged Perella Weinberg Partners and Kurt Salmon to “explore a full range of alternatives for Collective Brands.”
When broken down, the company said it will close a total of 400 Payless locations, while the remaining 75 are Stride Rite Children’s stores.
“This year, the company expects to close more than 300 of those stores. Approximately 270 of the stores slated to close this year are Payless and about 45 are Stride Rite Children’s locations,” the company said in its second quarter report. “These actions will be taken to optimize the profitability of markets by removing many low sales volume stores which are cash flow negative or slightly positive but cannot support the assortments and staffing that the company believes its stores should offer.”
The company operates about 70 Payless ShoeSource stores in Puerto Rico.
Collective Brands reported a second-quarter loss of $35 million, which includes a one-time charge of $83.6 million related to the decline in value of its stores, the report showed. Net sales for the second quarter increased 4.9 percent to $882.4 million.
The company estimates the costs for lease terminations, severance, and other exit costs related to closing the 475 stores could be between $25 million and $35 million.
“While the second quarter was challenging for the company, we are taking aggressive actions to improve the business,” said Collective Brands Inc. CEO Michael J. Massey.
“In Payless Domestic, we are gaining a much greater understanding of our customers and their needs and expectations,” he said. “With this clarity, we are taking short-term actions to improve our performance, accelerating key initiatives, and adjusting our longer term strategies.”