11 ms·
Payless is closing all its U.S. stores
- da_chicken 8y agoUnsurprising. Not because of the state of retail, but because they were purchased in 2012 by an investment firm (Blum Capital) and a private equity group (Golden Gate) that's known for leveraged buyouts. They closed their Australian stores in 2016, and now they're doing the same to the rest of their stores. They've slowly been dividing the assets up and carving/dividing the corpse up to squeeze blood from the stone. I'll leave it up to someone smarter than I am to tell exactly how much of this was corporate raiding and how much was actually unsustainable business.
- pbreit 8y agoYup, blaming this on “the age of Amazon” is a mistake. Same with toys r us and Sears: crushing debt from private equity with no retail competence.
- ghaff 8y agoYes, although private equity generally gets involved in the first place because the company is already on the ropes. Resuscitating a failing retail chain in this day and age has a pretty high degree of difficulty. (Although it can be done; I'd probably argue Best Buy is an example.)
- clairity 8y agoprivate equity will also often get involved when a firm is under-leveraged or otherwise seen to be leaving money on the table by current operations. sometimes that simply means the PE firm has access to cheap debt that the (former) owners do not. resuscitating a retail chain often involves bundling multiple companies and cutting duplication (yum brands, for example).
- indigodaddy 8y agoBest Buy is/was failing? I thought they've always used creative methods to stay competitive and profitable, from what I've read/heard?...
- colechristensen 8y agoDon't these private equity firms earn piles of money in the process in exchange for wiping out creditors and investors? (not to mention staff)
- sadris 8y agoNo. Creditors, after the IRS, are first in line for assets in bankruptcy law.
- jjeaff 8y agoThat doesn't mean in many cases the PE firms aren't getting paid though. They usually charge "consulting fees" to the companies they buy sometimes in the hundreds of millions of dollars. They get that money long before any bankruptcy proceedings start.
- colechristensen 8y agoThe way I understood it is they have their acquisitions raise a lot of money through debt, pay themselves enormous fees out of that debt, and then do hail-mary plays to try to recover the company (which never, probably by intent, work) and then have the company go bankrupt. Pocketing the fees, etc which are in excess of anything they ever put in.
- berliner214 8y agoSo let me get this straight: You think banks willingly loan PE firms billions of dollars so they can pocket consulting fees and put the company into bankruptcy? That's completely wrong. The money put up by PE firms is more at risk than any loan received by a bank. Bain Capital, for instance, lost money on the Toys R Us buyout. The bank would not agree to loan money for a buyout without an explicit covenant that would prevent such shenanigans. The generated cash flow is used to pay down debt; the PE firm usually only makes a profit when it exits its investment. Banks agree to loan to PE firms because buyouts usually work and PE firms are right when they believe they can increase margins. The extra debt load reduces the tax burden and makes the debt easier to pay off.
- buyx 8y agoIt's a worldwide phenomenon. Bain Capital brought a huge, thriving retail business (Edcon) to its knees in South Africa, after a botched leveraged buy-out: https://www.biznews.com/sa-investing/2015/07/15/bains-strategic-blunder-edcon-may-default-on-bond-paymentsafrica-retail-slump https://www.biznews.com/sa-investing/2015/07/15/bains-strate...
- ComputerGuru 8y agoIt may be worldwide, but it’s the same handful of players behind it all. I thought there were some bills in the works to outlaw leveraged buyouts in the USA?
- sys_64738 8y agoBain Capital is the firm associated with newly elected Republican Senator Mitt Romney of Utah. I'd expect those bills will now be derailed.
- drilldrive 8y agoThe market for Toys-R-Us is absolutely still there, and currently there is a vacuum for a better company to step in place. People are simply not going to buy their children's items online; moms just love to try things out in the store for their kids.
- rdtsc 8y agoWe've driven many times by the now closed Toys-R-Us store and lamented how we can't go and pick out toys there anymore. Stores like Target have a toys section and it helps to some extent but the selection is just not there. Also another thing Amazon can't do is last minute gift shopping for the numerous birthday parties kids seem to be invited to.
- toomuchtodo 8y agoParent life pro tip. Purchase an assortment of toys on clearance and keep them around for emergency party invites.
- rdtsc 8y agoExcellent idea. Thanks!
- pkaye 8y agoAnd you can also buy gift wrap and greeting cards at dollar stores. There is not much difference except for the limited selection.
- deleted 8y ago[deleted]
- carlivar 8y agoGift wrap is something I've learned over time not to cheap out on. Wrapping a present with cheap paper is frustrating. It rips far too easily. The task with quality paper is night and day. Worth a few more bucks per roll if you ask me.
- rb808 8y agoIts amazing to me how many shops I walk past are completely empty these days. I don't know how they can afford to keep the lights on, let alone stock the place. I myself swore I'd never buy clothes and shoes online, but have started doing this too. Its so much easier and cheaper.
- nate 8y agoYep. I'm so surprised there haven't more solutions to get even short term tenants in these places. Pop-up shops on the cheap until a longer term tenant signs. Then I'm also surprised how many salons and banks however can keep filling in these empty stores.
- jjeaff 8y agoCommercial property owners are always reticent to rent at lower prices. They also usually say that turn over is too expensive to let just anyone rent. I can't imagine it being more expensive than vacancy.
- 18pfsmt 8y agoWe have 3 shoe stores in my town of ~30k (not sure how they can continue), but it seems e-commerce is bringing more efficiency to the market and allowing cheaper pricing. Edit: E-commerce is projected to increase to 15% of retail sales by 2021.
- MentallyRetired 8y agoWe shouldn't need cheaper pricing. We should have far less inflation. I recently bought a $15 pair of shoes at Payless. They were fantastic. That said, I'm not sure $15 shoes were even a thing when I was a kid in the early 90s when my parents used to buy me Payless shoes then. Adjusting for inflation, my shoes would have cost $8.43 in 1992. That's insane. These products are INSANELY inexpensive. But nobody buys cheap cars or shoes anymore, do they? Gotta get them social media likes even if it means 72 month payment plans or installment plans on SHOES. We are so screwed.
- 8y ago
- creddit 8y agoWow. As a kid, I always went to Payless for my "dress" shoes up until _maybe_ high school. Going to private Catholic school I always needed new "dress" shoes each year and it was a bit ritualistic for me to go to Payless before the new school year to get a new pair. I believe I also got a lot of my casual sneakers there when I was younger as well.
- hackerbrother 8y agoExact same situation here!
- tenpies 8y agoClothing is surprisingly easy once you've settled your sizes for that brand. Add free return shipping and it's almost more logical to order online since you save the time of going to the store and physically finding the item (which may not even be in stock in your size). I also like that it is much easier to use coupons online than in person, not to mention the extra percent or so off from using affiliate links.
- smaili 8y agoAnother one to add to the list -KB Toys, Sears, Kmart, Blockbuster, Montgomery Wards, Circuit City. Thanks for the memories.
- deleted 8y ago[deleted]
- dredmorbius 8y agoWeird Stuff.
- russellbeattie 8y agoI have a hard time understanding the future macro-economy of the U.S. Where does the money come from and where does it go? We've all seen towns and cities decimated when the factories close or shrink because the thing that's buying raw materials, adding value, and selling it for a profit to generate revenue which is used to pay its workers, taxes, etc. is no longer there. A whole generation or two then moved to becoming simply middle-men, where goods were made somewhere else, marked up to pay rent and employees, and then sold. Now that model is going away as markets become more efficient and Walmart, Dollar General and Amazon (my employer for transparency, though I don't work for the store side) cut out the middle man. Where do 245 million American adults go next to make a living? When robots are driving all the trucks, picking all the fruit, and making most of the goods (all will come to pass within the next 50-100 years), and stores become more about shipping than shopping, where do people work?
- Eric_WVGG 8y agoWell that’s the argument for Universal Basic Income in a nutshell.
- acct1771 8y agoSee Saudi Arabia to see how this ends.
- mymythisisthis 8y ago
- trumped 8y agoAny source more reliable then CNN?
- cronix 8y agoThey broke it first, so most articles are similar, but here: https://www.nytimes.com/2019/02/16/business/payless-shoes-stores.html https://www.nytimes.com/2019/02/16/business/payless-shoes-st...
- trumped 8y agoI always forget that when the subject is not political that you can somewhat rely on them, but thanks anyways for the alternate source.
- trumped 8y agolooks like many other articles were posted first, including this one: https://www.southcoasttoday.com/news/20190215/update-payless-shoesource-to-shutter-all-of-its-remaining-us-stores https://www.southcoasttoday.com/news/20190215/update-payless... ... pro hillary people just like CNN so much
- olliej 8y agoTo clarify - Payless is putting more people out work than the entire coal mining industry in the US. But don’t worry the government is supporting the miners. And subsidizing their employers.
- stri8ed 8y ago> Payless is putting more people out work than the entire coal mining industry in the US Source?
- sndean 8y agoNot the OP, but maybe these numbers? 18000 Payless employees in 2017 [1] ~50000 in mining industry [2], ~10000 in extraction [3] in 2017. So it's probably not true that it's more than the entire coal mining industry. But, more than the number of actual coal miners? Possibly. [1] https://en.wikipedia.org/wiki/Payless_ShoeSource https://en.wikipedia.org/wiki/Payless_ShoeSource [2] https://www.bls.gov/oes/2017/may/naics4_212100.htm https://www.bls.gov/oes/2017/may/naics4_212100.htm [3] https://www.bls.gov/oes/2017/may/naics4_212100.htm#47-0000 https://www.bls.gov/oes/2017/may/naics4_212100.htm#47-0000
- macintux 8y agoThat seems unlikely. Coal mining: ~50,000 jobs (per BLS, described here: https://www.politifact.com/truth-o-meter/statements/2017/jun/05/scott-pruitt/are-coal-mining-jobs-50000-last-year-not-exactly/ https://www.politifact.com/truth-o-meter/statements/2017/jun...) Payless globally: ~18,000 jobs (and international stores are not closing, per https://www.cnn.com/2019/02/15/business/payless-closing-stores-bankrupt/index.html https://www.cnn.com/2019/02/15/business/payless-closing-stor...)
- ComputerGuru 8y agoThere are, give or take, 50k employed by the coal industry in the USA [0]. Payless employs only 18k worldwide [1]. 0: https://en.m.wikipedia.org/wiki/Coal_mining_in_the_United_States#Coal_mining_employment https://en.m.wikipedia.org/wiki/Coal_mining_in_the_United_St... 1: https://www.cnn.com/2019/02/15/business/payless-closing-stores-bankrupt/index.html https://www.cnn.com/2019/02/15/business/payless-closing-stor...
- purplezooey 8y agoMost of our tired strip malls across the US should be demolished for housing.
- ghaff 8y ago"Someone" will doubtless do so if it makes economic sense to do so. In practice, even leaving aside zoning, there isn't a lot of residential demand for apartment buildings in the middle of a strip mall. They actually exist. I'm familiar with a few. But they're not some panacea for housing demand in the highest priced areas.
- bearjaws 8y agoYeah but then that would drive house prices down, can't have anyone ruining my "investment"!!!! /s
- bsder 8y agoMost of them aren't worth it. If a mall is failing, it probably exists in an area that is failing as well. Malls with primarily upper middle class consumers and up are doing quite well.
- Simulacra 8y agoI thought they ALREADY closed. wow.
- ipnon 8y agoI think it's premature to lament the loss of 18k ultimately low quality jobs. The trend of retail giants going out of business means that commercial real estate gets cheaper. For most people starting a business means opening a storefront.
- fucking_tragedy 8y agoIt takes years for retail space to be renovated or converted. Meanwhile, people who are now out of a job will need to eat until then.
- antisthenes 8y agoJust as a random tid-bit, I take walks after lunch through a shopping plaza. There was a Payless store that opened around 2016 and stayed open for less than a year until being closed. Not sure what that was about. Guess it was never doing that well.
- deleted 8y ago[deleted]