Corporate News

By Krista A. M. Montealegre, National Correspondent

Payless files for bankruptcy in US; SSI says PHL stores not affected

Posted on April 06, 2017

OPERATIONS of discount shoe retailer Payless will continue in the Philippines after the Kansas-based company filed for bankruptcy and closed its underperforming stores in the United States, its local distributor said on Wednesday.

Shoes sit on display in the window of a Payless ShoeSource store in New York. Collective Brands, Inc., owner of Payless ShoeSource, filed for bankruptcy with the US Bankruptcy Court in St. Louis. -- BLOOMBERG
Tantoco-led SSI Group, Inc. said the Philippine operations of Payless will not be affected by the bankruptcy filing of Payless, Inc. with US Bankruptcy Court in St. Louis.

“It will be business as usual for Payless’ international operations, including the Philippines, as these business segments have been doing well and are profitable,” SSI said.

SSI plans to add five more Payless branches to its network of 75 stores this year.

Privately owned Payless, with 4,400 stores in more than 30 countries, plans to cut debt by almost half and will immediately close about 400 underperforming stores in the US and Puerto Rico. It listed $1 billion to $10 billion in liabilities in its filing.

It is the latest brick-and-mortar retailer to suffer from changing consumer habits, including increasing preference for online shopping and fewer trips to the mall.

Despite the growth of e-commerce in the Philippines, the local retail industry is “at a very different point in its life cycle” compared to the United States where the likes of e-commerce giant Amazon are stealing consumers away from shopping malls.

“Growth of retail in the Philippines continues to be supported by our young population as well as increasing consumer incomes. E-commerce in the Philippines is currently a small percentage of retail sales,” SSI said.

At end September, SSI had a store network of 720 stores covering 141,483 square meters. The portfolio of brands stood at 114, as it discontinued Desigual, Fruits & Passion and Guiseppe Zanotti.

For the first nine months of 2016, SSI earnings dropped 56% to P306.1 million, from P701 million a year ago, as the country’s largest specialty retailer felt the pinch of increasing competition.

Shares in SSI fell two centavos or 0.89% to close at P2.22 apiece on Wednesday.