Payless closing stores

Payless ShoeSource is set to begin the liquidation of almost 400 stores as part of its bankruptcy process.

With the oversight of a joint venture between liquidation advisers Great American Group and Tiger Capital Group, Payless will be holding store closing sales at 389 locations in the U.S. and Puerto Rico over the coming weeks.

The retailer’s approximately 3,600 remaining stores will not be holding liquidation sales.

Payless filed for Chapter 11 earlier this month, becoming another name on a growing list of retailers with plans to collectively close scores of stores, including Macy’s Inc., Sears Holdings Corp., Abercrombie & Fitch Co. and Bebe Stores Inc.

According to the shoe store’s prepackaged bankruptcy plan, Payless intends to reduce its funded debt to $469 million from $838 million, while ensuring fair recoveries to all stakeholders, along with a rationalization of its store fleet in hopes of returning Payless to profitability.

While it’s proven difficult for many retailers to emerge from bankruptcy as a going concern business, Payless senior vice president and chief financial officer Michael Schwindle has characterized the company as “highly relevant with a deeply loyal customer base.”

Schwindle noted in the company’s reorganization plan that in the U.S., “76 percent of household disposable income and three out of four children under the age 10 live within five miles of a Payless store.”

During 2016, Payless pulled in worldwide sales of $2.3 billion and $95 million in earnings before interest, taxes, depreciation and amortization. The company operates mainly in North America and Latin America. North America accounted for $1.8 billion sales last year.

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