Landlords are not cutting the footwear chain any slack.
Payless ShoeSource is looking to make another large round of store closings not even two months after seeking to reorganize under bankruptcy protection.
The retailer is asking federal bankruptcy court in St. Louis, Missouri for permission to close 112 stores outright and potentially up to another 296 stores if Payless can’t get a break on rent from landlords, according to court papers. If all these stores close, Payless will have shuttered 800 stores, or about 20% of its pre-bankruptcy fleet, including the closings underway.
“We remain hopeful… negotiations will result in consensual modifications and rent concessions with respect to these additional stores and that many of the 296 will remain open,” a spokeswoman told Fortune in an e-mail statement for comment. The court hearing is set for June 8.
Payless has struck a deal with its lenders to cut 40% of some $838 million in funded debt, according to the Wall Street Journal. Those creditors are to get equity in the company, while others should get “significant recoveries” the Journal said.
The chain was founded in 1956 in Topeka, Kansas, and employed about 22,000 people at the time of its bankruptcy filing in April. In its last year as part of a publicly traded company, 2012, it had U.S. sales of about $2 billion. The retailer rose to prominence by offering customers a new approach: self-service in a shoe store in exchange for lower prices. But Payless has struggled in an increasingly competitive footwear world, with everyone from DSW to T.J. Maxx encroaching on what had been its turf.
Even as a number of retailers have ultimately liquidated after seeking bankruptcy protected, Payless has said it intends to emerge from Chapter 11 with stores.