Payless Shoesource shouldn't feel alone in the struggle to maintain a viable brick-and-mortar Business right now. Online retailing has done its damage of traditional storefronts, leaving them vacant and struggling to turn a profit. Declaring for Chapter 11 Bankruptcy feels like the beginning of the end, however, for a company that just can't compete in the market anymore.
Filing for Chapter 11
Payless ShoeSource made the decision to file for Chapter 11 bankruptcy on Tuesday. The CEO of the company, W. Paul Jones, admitted how difficult the decision to declare was in a statement.
The decision comes as people do less and less shopping at malls and more of their consuming online, with shoe retailers such as Zappos constantly increasingly in popularity. It wasn't the only bad news from the company, either.
In the wake of bankruptcy, the company will also be closing almost 400 stores in the United States and Puerto Rico. Payless ShoeSource has nearly 4,500 stores across the globe, but they are all facing the same company and industry-wide issues. The company was purchased by two private equity groups in 2012, which has not proven to be a wise investment, nor will it going forward.
An epidemic of problems on the horizon
In March, Moody's made note of the fact that Payless ShoeSource was in trouble, calling the company "distressed." 18 other retailers were included on that list, including J.
Crew and Claire's. Just last month, RadioShack filed for bankruptcy, the second time they've done so in the past two years.
Store closings are a major problem in the retail industry as well. Macy's, JCPenney, and Staples have all closed a large amount of stores during recent financial quarters. Ralph Lauren also shut down a flagship store, while Sears and Kmart are seemingly in danger of going out of business. What's happening to Payless ShoeSource may appear to afflict only one well-known company, but it's indicative of a situation that can destroy brick-and-mortar retail throughout the nation.
