Tom Dougherty, CEO – Stealing Share
27 February 2019
Payless brand ignored the signs
Last week, the Payless brand filed for Chapter 11 bankruptcy protection. The discount shoe retailer expects to close all its nearly 2,500 stores in North America.
I hate seeing retailers continuing to fail. I hate the fact that many people will be put out of work, their lives and the lives of their families disrupted. It makes me mad that so many people who get paid a lot of money continually fail to adapt to the changing retail market place.
To put the Payless brand closure in a bit of perspective, it first filed for Chapter 11 back in April of 2017. It emerged from Chapter 11 in August of that year with nearly a half a billion dollars less debt. It also closed nearly 400 stores as well.
But what really gets me is what Stephen Mariotta, the chief restructuring officer, said about the latest filing. “The challenges facing retailers today are well documented, and unfortunately Payless emerged from its prior reorganization ill-equipped to survive in today’s retail environment. The prior proceedings left the Company with too much remaining debt, too large a store footprint and a yet-to-be realized systems and corporate overhead structure consolidation. As a consequence, despite our substantial efforts, we were ultimately unable to operate the North American retail and e-commerce operations on a sustainable basis.”
“It doesn’t take rocket science to figure this stuff out. But you actually have to give a shit about your brand. It’s amazing to me that so many well-paid people don’t.”
The Payless brand knew it was in trouble years ago
In this week’s bankruptcy filing, Payless says it holds about $470 million in debt.
So basically, the first filing in 2017 was neither a wake up call or a chance to start over. Reading Mariotta’s statement, it seems the Chapter 11 filing in 2017 was the reason the company had to re-file and close its stores in 2019.
The reality is that, in 2017, the Payless brand held no meaning. In 2019, it still doesn’t mean anything.
Well that’s probably not true. The Payless brand, as suggested by its name, means (meant) cheap shoes. Not inexpensive or good value, simply cheap. People yearn to save money and find a good deal. However, few want to be associated with cheap. Payless simply meant you will pay less, i.e. we have cheap shoes.
It doesn’t take rocket science to figure this stuff out. But you actually have to give a shit about your brand. It’s amazing to me that so many well-paid people don’t.
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