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Payless ShoeSource to Liquidate

Payless ShoeSource is entering the retail graveyard.

The discount footwear chain has decided to liquidate its business, closing all 2,100 stores across the U.S. and Puerto Rico. The company will also shutter its e-commerce business. The shutdown was not unexpected, as rumblings of a second bankruptcy filing–it last filed in 2017 and shuttered 673 doors–had been growing in recent weeks.

The closure of Payless follows the liquidation of children’s apparel retailer Gymboree, which is closing over 900 doors. And like Payless, Gymboree also had filed a Chapter 11 petition for bankruptcy two years ago before filing its so-called Chapter 22 last month.

Apparel and retail stores so far have said they will shutter more than 1,800 doors this year. And with the addition of 2,100 stores from Payless, that brings the total to over 3,900 and the year is still young. Sears Holdings Corp. barely avoided liquidation, thanks to bankruptcy court approval of a $5.2 billion bailout by Edward S. Lampert through an affiliate of his hedge fund ESL Investments.

Charlotte Russe earlier this month filed a voluntary Chapter 11 petition, using the process to close 94 stores. It operated 512 stores at the time it filed its petition. Financial advisors are trying to find a buyer, and if no one steps up to buy, the young women’s specialty chain might also see itself shutting down all its stores.

In the case of Payless, its initial troubles were due to an over-leveraged balance sheet when the retailer was purchased by two private equity firms. Martin R. Wade 3rd joined the retailer as chief executive officer when the retailer exited bankruptcy proceedings in 2017. Since then he has tried reinvigorating the brand’s image by expanding the product line and changing some adjacencies in the stores. The retailer late last year even opened a fake Italian luxury store called Palessi in Santa Monica as a publicity stunt to bring awareness to the Payless brand.

Payless’ most recent addition was a collaboration with Sequential Brands Group for a limited edition, holiday collection of footwear inspired by Martha Stewart. Sequential, a brand management firm, owns the Martha Stewart brand. While footwear prices for Martha Everyday ranged between $30 to $35 a pair, the average price point at Payless is closer to $20 a pair.