Payless ShoeSource Emerges From Bankruptcy, Relaunching Brand in the U.S.

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Payless ShoeSource has emerged from Chapter 11 bankruptcy protection after filing last February, the retailer announced this morning. The company has appointed a new executive management team led by CEO Jared Margolis.

The discount footwear retailer, however, declined to provide specific details at this time about its strategy to relaunch the brand in the U.S., a spokesperson said.

Margolis was previously president of CAA-GBG, a joint venture between accessories, footwear and apparel maker Global Brands Group and entertainment and sports agency Creative Artists Agency. CAA-GBG was described as the largest licensing agency globally.

“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. 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 said in a statement.

He went on to say that the U.S. remains Payless’s largest growth opportunity and that the company intends to leverage its existing infrastructure, which includes product design and development, distribution, marketing and strong relationships with large footwear manufacturers. In addition, Payless is in the process of considering new technologies to improve the customer experience across all distribution channels, according to the company.

Payless will continue to focus on selling footwear for the entire family at a value price point, according to the announcement, while collaborating with high-profile individuals and brands to offer exclusive products.

The company noted that internationally, it sold about 25 million pairs of shoes over the past 12 months, and that it has an active database of 11 million customers who have purchased products during that time. The retailer said it intends to put in place an omnichannel distribution strategy targeting both new and existing markets.

Despite the retailers’ troubles, there was and continues to be a place for Payless in the retail landscape, said Mary Ann Domuracki, a managing director at investment bank MMG Advisors.

“In this climate, it is more likely for a company to emerge if it has a good business plan and a differentiated product,” Domuracki said. “If Payless can differentiate itself on product and do it in a way that is both current and makes it simple for the shopper, then it can be successful.”

Payless, however, steps back into a competitive landscape that includes DSW, which embraced parts of Payless’s strategy, as well as Amazon, T.J. Maxx and Marshalls, she cautioned.

As for the company’s new CEO, Domuracki said that with brand partnerships gaining prevalence, including Louis Vuitton’s licensing of the NBA brand and H&M’s licensing of the NFL name, bringing someone on board with that kind of background is savvy.

Meanwhile, Payless Latin America, the company’s largest business unit, will be led by CEO Justo Fuentes. He previously served as president of footwear and accessories company BATA Latin America, where he supervised the operation of over 1,000 retail stores, commence, catalogue, wholesale distribution and manufacturing.

“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. This plan will include a strong digital component to allow an omnichannel approach to the Latin market,” Fuentes said in a statement.

Payless first filed for bankruptcy in April 2017. Following its filing in February last year, it ultimately closed all of its stores in the U.S. The retailer continues to have an existing global retail footprint spanning Latin America, Southwest Asia and the Middle East. In those territories, Payless and its franchisees own and operate more than 710 retail locations in over 30 countries, according to the company.

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