Consumer FAQ

Why did Payless file for Chapter 11? Why now?

Payless’s Chapter 11 reorganization will facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the Company for long-term success. As part of this path forward, Payless intends to:

Strengthen its balance sheet and restructure Payless’s debt load;

Invest in three specific areas that Payless believes will provide sustainable growth: omnichannel expansion; product and inventory initiatives; and international expansion in Latin America and elsewhere; and

Optimize its store footprint, with the immediate closure of nearly 400 underperforming locations in the U.S. and Puerto Rico; and work to aggressively manage the remaining real estate lease portfolio either by modifying terms, or evaluating closures of additional locations.

 Is Payless continuing to do business?

Yes. Payless will continue to operate its business in the ordinary course in terms of its customers, vendors, partners and associates.

In conjunction with the restructuring, Payless has entered into a Plan Support Agreement (PSA) with certain of its first lien and second lien term loan lenders to reduce its debt load by almost 50%, materially lower its annual cash interest costs, access significant additional capital and provide a path to an expedited emergence from Chapter 11 with a sustainable capital structure for the future. The PSA demonstrates the strong support of our senior lenders for a consensual restructuring and their conviction in the future of Payless as well as providing a clear path to emergence.

The Company has negotiated agreements with certain of its existing lenders to provide Payless access to $385 million of debtor-in-possession financing, which includes access to $305 million of ABL financing and $80 million of new term loan financing. In total the debtor-in-possession financing will provide Payless with access to up to $120 million incremental liquidity during the Chapter 11 cases. This incremental liquidity will ensure that suppliers and other business partners/vendors will be paid in a timely manner for authorized goods and services provided during the Chapter 11 process, in accordance with customary terms.

The $80 million of new term loan financing will also ensure the Company has the exit financing required to emerge from Chapter 11 well positioned for future growth and profitability post-restructuring.

Does Payless have enough money to continue operating while it is implementing its reorganization plan?

We have negotiated agreements with certain of our existing lenders to provide Payless access to $385 million of debtor-in-possession financing, which includes access to $305 million of ABL financing and $80 million of new term loan financing. In total the debtor-in-possession financing will provide Payless with access to up to $120 million incremental liquidity during the Chapter 11 cases. This incremental liquidity will ensure that suppliers and other business partners/vendors will be paid in a timely manner for authorized goods and services provided during the Chapter 11 process, in accordance with customary terms.

How will this affect day-to-day operations?

The Chapter 11 process enables Payless to continue conducting normal business operations while it restructures its business operations and balance sheet. Payless will continue to rigorously manage spending to ensure the Company is well-positioned to succeed upon emergence.

Does Payless plan to close stores? Will products be discounted?

Nearly 400 underperforming locations will be closed immediately, and Payless is working to aggressively manage the remaining real estate lease portfolio either by modifying terms or evaluating closures of additional locations. We have hired a third party to oversee the liquidation process for the closing locations, and that oversight will include specific discounting and promotional plans. You can find further information about store closings at payless.com/locations.

Will stores continue to have the shoes I am looking for?

Yes. Our merchandising teams have been working diligently to make sure that our inventory in sufficient in all of our locations, and our customers can also always visit payless.com too.

How long is the process likely to take?

Restructurings vary in time. Given the agreement we have with a substantial number of our lenders going into this process, we are focused on achieving our objectives quickly so that we can emerge in the shortest time possible. The agreement we made with our lenders assumes we will emerge from the Chapter 11 process in approximately 4 months.

Where can I go for more information?

Additional information on the restructuring can be found at www.paylessrestructure.com  or by calling the Company’s toll-free Restructuring Information line at (844) 648-5574 (or if you are calling from outside the U.S or Canada, +1 (347) 505-5254). Information about the claims process will also be available at https://cases.primeclerk.com/payless.

Is Payless going out of business?

No. Under Chapter 11, Payless will continue to operate its business in the ordinary course in terms of its customers, vendors, partners and associates.

Like many retailers, Payless has had to take a close look at its business to make sure our Company is taking the right steps in a fast-changing and challenging consumer and economic environment. Our Chapter 11 filing enables us to facilitate the financial and operational restructuring necessary to strengthen its balance sheet and position the Company for long-term success.

This is a difficult, but necessary decision for Payless, and one we take with an understanding for the impact that it may have on everyone, including our customers. We are confident the outcome will be a stronger Payless for our customers, vendors and suppliers, associates, business partners, and other stakeholders throughout this process.

How can I find out more about store closings?

You can find more information about store locations at payless.com/locations.

Where can I find information about sales at the stores that are closing?

Please look for more information at your local store.

How do I know if my local store is closing?

Please look for more information at payless.com/locations.

Will the filing affect the selection of products that are offered?

We do not expect this to be the case. We have best-in-class design and sourcing capabilities that enable us to offer high quality, relevant trend-right merchandise at a significant discount to peers. Our merchandising strategy provides a wide selection of core products alongside the latest fashion styles; includes a portfolio of strong proprietary brands such as American Eagle by Payless, Champion, KangaROOS, Christian Siriano for Payless, Disney, Marvel and others; and design partnerships with Fila, Steve Madden and Skechers.

What’s the impact on my gift card? Is it still valid?

Yes. They are valid. Payless is continuing to honor gift cards as usual and will continue to make gift cards available for purchase.

Will I still be able to get gift cards?

Yes. Payless will continue to make gift cards available for purchase.

Is there any impact on the Loyalty Program?

No. You may enjoy all benefits of the Payless Rewards program as you normally would. Sign up for the program in stores or online at Payless.com.

What happens if my local store closes?

If your local store closes, please visit Payless.com to find another store near you or to shop online.

Is there anything I can do to prevent my local store from being shut down?

Please know that we take this seriously.  We regret the impact that the realities of today’s retail marketplace have caused us to need to close some stores.  We are entering into every decision carefully, including working closely with our landlords to try to enhance performance at certain stores – to avoid shutting them down.  If you visit www.paylesscorporate.com  it will tell you about other Payless locations that are closest to you.

Can I still purchase online?

Yes. We continue to have the wide range of merchandise for which you count on us available on our website.

Why should I continue to shop at Payless? What if it goes out of business?

Payless is not going out of business.

We have best-in-class design and sourcing capabilities that enable us to offer high quality, relevant trend-right merchandise at a significant discount to peers. Our merchandising strategy provides a wide selection of core products alongside the latest fashion styles; includes a portfolio of strong proprietary brands such as American Eagle by Payless, Champion, KangaROOS, Christian Siriano for Payless, Disney, Marvel and others; and design partnerships with Fila, Steve Madden and Skechers.

As part of this path forward, Payless intends to:

Strengthen its balance sheet and restructure Payless’s debt load;

Invest in three specific areas that Payless believes will provide sustainable growth: omnichannel expansion; product and inventory initiatives; and international expansion in Latin America and elsewhere; and

Optimize its store footprint, with the immediate closure of nearly 400 underperforming locations in the U.S. and Puerto Rico; and work to aggressively manage the remaining real estate lease portfolio either by modifying terms, or evaluating closures of additional locations.

Is your merchandise going to be more expensive if you now need money?

No. We are committed to being the affordable footwear resource for America’s families. That means our price points and promotions will not change as a result of the filing.

Is it true that Payless is not paying its factories in Asia?

There have been many inaccuracies reported by the media. Payless has worked diligently with vendors, suppliers, and factory partners to ensure we have product available for our consumers. We will continue to work with key partners to ensure inventory flow returns to more normal levels. We acknowledge that our financial challenges have made it a difficult time for partners we have worked with for many years. We are confident that our decision to restructure will result in a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through the process.

What is Payless’s plan for competition against other retailers?

As part of this path forward, Payless intends to:

Strengthen its balance sheet and restructure Payless’s debt load;

Invest in three specific areas that Payless believes will provide sustainable growth: omnichannel expansion; product and inventory initiatives; and international expansion in Latin America and elsewhere; and

Optimize its store footprint, with the immediate closure of nearly 400 underperforming locations in the U.S. and Puerto Rico; and work to aggressively manage the remaining real estate lease portfolio either by modifying terms, or evaluating closures of additional locations.

What will happen to the associates at my store if it closes?

We will make every effort to offer open positions at nearby stores to associates whose store is closing. If there is not an available opening, Payless associates will receive severance pay and, if eligible, benefits to help in their career transition.

 I have a customer issue that has not been resolved—what will happen with that now?

Our customer service team will continue to resolve customers’ issues as they arise. You may contact our Customer Support Center at 1-800-426-1141 with any outstanding customer service requests.

I ordered an item online? Will it still be delivered?

We do not anticipate any delays fulfilling orders placed on payless.com.

Are gift cards being honored in closing stores?

Yes. Gift cards will continue to be honored in closing stores.

I can’t find the item I’m looking for. Is this because of strained relations with manufacturers?

If we are out of an item you are looking for it is likely because it is on back order due to popularity. We do not anticipate that our in-store and online merchandise will be impacted as we move forward.

What is the impact on Payless’s return policy?

The Chapter 11 process has no impact on Payless’s return policy.

What is the return policy at stores that are closing?

All purchases at closing stores are final. We will not be accepting returns at any location.

Can I return an item to a store that is closing?

No. A store that is closing cannot accept and process returns.

Will closing stores accept coupons?

No. Stores that are closing will not be accepting coupons-either email or loyalty coupons.

Can closing stores accept gift cards and merchandise credits?

Yes. Closing stores can still accept gift cards and merchandise credits.

Can closing stores still sign customers up for the Loyalty Program in store?

Yes. Closing stores can still sign customers up for the Loyalty Programs in store.