Payless Launches Comeback, Stresses Digital Shift

Payless ShoeSource is making a comeback, despite a raging pandemic and a sketchy economic recovery. The brand, which was first launched in 1956 and declared bankruptcy in February 2017 and again in 2019, will lead with a stepped-up eCommerce presence and an ambitious store opening plan.

“We are in truly unpreceded times, and it’s undeniable that this year’s back-to-school season will be unlike any other,” said Jared Margolis, CEO of the newly branded Payless. “We are fully aware that we’re relaunching in a time when many have lost their jobs, finances are tight, and parents nationwide are adjusting to working from home and facilitating at-home schooling for their children, all while serving the most important role as parent. However, during this time we also know that kids all over the country are leading the way – through their imaginations, resilience and determination. We’re excited and proud to be in a position to bring the Payless brand back to life to provide parents with the value they need, and kids with the styles they will love, in a way that acknowledges and celebrates every single one of our consumers.”

Payless first filed for Chapter 11 in April 2017, eliminating nearly 700 stores and $435 million in debt. It emerged about four months later. It then declared bankruptcy again in February of 2019, when it shut down all of its 2,500 U.S. stores and drew down its eCommerce presence. The chain emerged from that bankruptcy in January of this year.

“We’re back and bringing more community responsibility, fashion-forward footwear and on-trend partnerships to our 60M+ Payless customers who have missed us,” said Margolis in a statement. “We saw an opportunity for the brand to relaunch into the U.S. market, providing our community with the affordable, value-driven products they’ve always searched for.”

The company’s new Payless.com site re-launches today (Aug. 18) with major brands like AirWalk, American Eagle, K-Swiss, Kendall + Kylie and Aerosoles. The site features one-click checkout and a younger look and feel than its previous incarnations.

The company has also set a goal of opening 300 to 500 freestanding stores across North America over the next five years. The first will be a prototype store in Miami, Florida. The new store locations will add to the brand’s existing 700 international stores – 298 franchises and 412 Latin America and Central America locations. The company is promising a high-tech, connected experience for the site, with smart mirrors, touchscreen wall panels and augmented reality (AR) applications.

Margolis told The Wall Street Journal that the company’s prior troubles are allowing it to restart without the overhead of U.S. locations and what he called “antiquated technology.”

“Starting from scratch puts us in a good position,” said Margolis, who joined Payless in October of 2019.

The company is owned by a group of investors led by hedge fund Alden Global Capital and investment advisory firm Axar Capital Management. Margolis said he hopes to negotiate a new style of leasing arrangement with potential landlords, in which the tenant pays rent based on a percentage of sales rather than a fixed fee.

Payless is launching a cause-related marketing initiative with its “Powered by Payless” program. “Looking ahead to the fall 2020 season, a growing number of individuals nationwide will be unable to access internet or the technology needed for new, at-home and hybrid learning, or the meal services provided through in-school lunch programs,” said the company. “Recognizing the brand’s responsibility to do its part, as part of the new effort, Payless is partnering with deserving schools across the country to provide students, teachers and their families with the online connectivity technology, complimentary lunches and shoes to power the body and mind for this new and different school year ahead.”