Ailing Shoe Retailer Hires Firm to Explore Strategic Options After $35 Mil. Second-Quarter Loss
Collective Brands Inc., the parent company of Payless and Stride Rite shoe stores, said Wednesday it plans to close 475 lower-performing stores and will explore strategic options, which typically include the possible sale of the company.
The company, which announced a loss of $35 million in the second quarter, said its board and executives hired Perella Weinberg Partners and Kurt Salmon as advisors to conduct a review of strategic and financial alternatives "to further enhance shareholder value."
Collective Brands plans to close 400 Payless and 75 Stride Rite stores with weak sales in the U.S., Canada and Puerto Rico over the next three years, with about 300 stores shutting down this year.
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Collective Brands operates 4,844 stores, including 4,461 Payless stores. The company opened 18 new stores, closed 20 and relocated 14 in the second quarter.
The company said it will immediately begin to work with landlords to execute the store closings. Collective Brands took non-cash asset impairment charges of $19 million in the second quarter relating to stores slated for closure.
The company estimated that future lease termination, severance and other costs associated with the closings could be in the range of $25 million to $35 million. Lease termination costs will be recorded when the stores are closed or lease terminations are negotiated with property owners.