We thought you would like to know how the closing of multiple Payless stores might affect many strip centers. Payless, known for selling inexpensive shoes, is considering closing up to 33% of its 3,000 locations.
Earlier this month, Reuters reported that Payless had hired PJ Solomon to “evaluate strategic alternatives,” that could include a sale or restructuring of the company less than two years after emerging from bankruptcy protection.
If Payless ShoeSource decides to close any of its stores, landlords likely will face a tough challenge when working to refill the spaces with quality tenants.
Scores of Payless shoe outlets are located in Class B malls already struggling with the loss of Sears or JCPenney stores, and backfilling those spaces “with any credit tenants, will be nearly impossible,” said Nick Egelanian, president of retail consulting firm SiteWorks Retail Real Estate Services.
Egelanian founded Annapolis, Maryland-based SiteWorks, after serving as VP of Real Estate and new store development for Crown Books
As for Payless’ real estate, Egelanian said it would be easier for owners of locations in strip centers and urban spaces to backfill the space. He expects that a wide variety of users, “from food to fashion” might be interested in Payless outlets.
Payless ShoeSource declined to comment for this story or on any plans to restructure or close stores.
When comparing Payless’ real estate to struggling children’s clothing retailer Gymboree, Egelanian said the latter’s locations are better. “Gymboree has a much more discerning real estate program with few really bad locations,” he said.
Gymboree Group filed for Chapter 11 bankruptcy protection earlier this month and has plans to close 809 stores.
Payless is having financial trouble because sellers of commodity retail items are experiencing slow growth in a competitive environment.