Collapsed Payless Shoes saved in sale to global shoe retail giant

Payless Shoes has been saved from administration after being purchased by global shoe retailer Payless ShoeSource for an undisclosed price.

The 220-plus strong discount footwear chain was placed in voluntary administration in September last year with Deloitte partners David Lombe and Vaughan Strawbridge appointed as administrators.

The administrators have sold the business and its assets as a going concern to Payless ShoeSource after restructuring Payless Shoes into a 150-store network across NSW, Victoria, Queensland, South Australia, Western Australia and the ACT.

Payless ShoeSource operates around 4,400 shoe stores in more than 30 countries throughout the world, including the United States, Canada and Latin America.

Payless Shoes was not previously affiliated with Payless ShoeSource; however, the business was modelled after Payless ShoeSource stores in the United States including a similar store format, target customer and focus on value.

Payless ShoeSource has been in control of and running the business under the Payless Shoes brand from last week.

It is offering positions on the same terms and conditions to Payless Shoes’ 850 employees across the head office and store operations.

Strawbridge said the sale demonstrated that, with effective restructuring, retail businesses could be turned around and jobs could be retained.

“In the space of six months, Payless Shoes has been turned from an operation facing financial distress into a profitable business that has attracted a global buyer,” he said.

“Achieving this sale is a significant outcome, and one which has been made possible by the hard work of many people and the understanding and support of employees, suppliers and landlords.”

David Gordon, executive director of corporate advisory at Bentleys in Melbourne, told SmartCompany using the administration to exit the major loss-making stores was a positive.

“Payless has got an overseas owner now which has all the advantages of sourcing and bulk purchasing,” he says.

“Now it just requires good, solid local management and Payless probably needs some investment in revitalising the store fitout and fixtures.”

Gordon says there is a market in Australia for an inexpensive shoe chain but store locations are key.

“The location of stores needs to be rethought as low priced shoes might have a high margin percentage but the margin dollars are not very high, so the volume required to support a high rental site would be something that needs to be thought about,” he says.

 

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