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Payless Exits Bankruptcy With Plan to Open Stores

Third time’s the charm?

Footwear retailer Payless ShoeSource has emerged from Chapter 11 bankruptcy court protection, and the new management team plans to rebuild the U.S. store base.

Payless filed its second bankruptcy court petition in February 2019, two years after a first filing that saw 673 stores close. The 2019 filing liquidated operations in the U.S., Puerto Rico, and Canada, shut down the e-commerce platform and closed all 2,100 stores. The company’s overseas business, which includes franchised stores, remained in operation and was not impacted by the U.S. filing. Payless also filed a separate bankruptcy petition in Canada.

Payless exited bankruptcy earlier this month with an existing global retail footprint of more than 710 stores spread across more than 30 countries. The reorganized firm operates 420 stores in Latin America and in the U.S. Virgin Islands. Another 290 franchisee stores serve the Middle East, India, Indonesia, Thailand, the Philippines and Africa.

“I am pleased to have the opportunity to lead this iconic retail brand into a new strategic phase with a strengthened balance sheet and clean financial outlook,” CEO Jared Margolis said. “We will implement a new comprehensive strategic plan to strengthen our relationship with our vendors and suppliers, support our global franchise partners and deepen the trust of our customers,”

Margolis was previously the president of CAA-GBG, the largest licensing agency in the world formed via a joint venture between fashion management firm Global Brands Group and the entertainment and sports agency Creative Artists Agency.

The value price-point footwear retailer plans to evaluate new technologies to streamline and optimize the customer experience and apply the new approach across all distribution channels worldwide. Payless is also looking to collaborate with high-profile individuals and brands to bring exclusive product offerings to its customers, much as it tapped Christian Siriano and Martha Stewart for inspiration in the past.

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Margolis is looking to leverage the retailer’s existing infrastructure, including design and development, to allow the reorganized firm to be more nimble, innovative and better able to fast-track what the CEO calls Payless’ “biggest growth opportunity,” the U.S. market.

Payless sold about 25 million pairs of shoes globally over the past 12 months and has an active database of 11 million customers who have purchased within the past year, the retailer said. The Latin American market is currently Payless’ largest business unit, headed by Justo Fuentes, CEO of Payless Latin America.

“In the past year, we have implemented many new strategies to increase our market share and in-store footprint in the region, and in 2020 we are going to build upon this even further,” Fuentes said. “This plan will include a strong digital component to allow an omnichannel approach to the Latin market, as well as several product strategies that will allow Latin consumers to continue seeing Payless as their primary source of high-quality, value-priced family footwear.”

Payless was founded in 1956 in Topeka, Kansas.