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Payless ShoeSource files for bankruptcy protection

Payless ShoeSource said it will immediately close nearly 400 of its 4,400 stores. (Matt Rourke / AP)

Shoe chain Payless ShoeSource Inc. has filed for Chapter 11 bankruptcy protection, becoming the latest retailer to succumb to increasing competition from online rivals such as Amazon.com Inc.

The Topeka, Kan., company said Tuesday that it will immediately close nearly 400 stores as part of the reorganization. The company, founded in 1956, has more than 4,400 stores in more than 30 countries.

Payless plans to reduce its debt by almost 50%, lower how much it pays in interest and line up funds. The company said some of its lenders have agreed to make available up to $385 million to keep the stores running.

“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” Payless Chief Executive Paul Jones said in a statement.

Shoppers are increasingly shifting their buying online or going to discount stores such as T.J. Maxx to grab deals on designer brands. That shift has hurt traditional retailers, even low-price outlets like Payless.

Moody’s Investor Service said in February that the number of “distressed” retailers —those with cash problems and lots of debt that are facing strong competition — has jumped, reaching the highest rate since 2009. It named Payless as one of the retailers.

Several retailers have closed stores or gone out of business in 2017. The Limited closed all 250 of its remaining stores early this year. It had operated nearly 400 stores at the end of 2000. Teen retailer Wet Seal said in January that it would close its 171 stores.

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