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Payless Shoe Source has announced that it will close nearly 400 stores around the country, representing just shy of 10 percent of its 4400-store global fleet.

The motivation is financial - the company needs to improve its balance sheet and restructure its debt if it is to survive.

Payless CEO Paul Jones said in a statement, “While we have had to make many tough choices, we appreciate the substantial support we have received from our lenders who share our belief that we have a unique opportunity to enable Payless — the iconic American footwear retailer with one of the best-recognized global brands — to remain the go-to shoe store for customers in America and around the globe.”

No word on how many employees will lose their jobs with the closures.
KC's View:
Obviously, getting your balance sheet right … you know, balanced … has to be an absolute priority in these circumstances. And if that means cutting out the dead wood so you can concentrate on the parts of the company that have greater profit potential, so be it. You have to make those hard decisions.

But … without being intimately familiar with Payless Shoe Source, I'd like to make another observation. (I'm not just unfamiliar with its stores. I can't recall ever having been in one. But my observation is more general in the sense that it could be applied to any retailer that finds itself in similar straits.)

The question I'd ask is if the problem is purely financial. Is it just a matter of some stores not contributing to revenue and profit, or being too costly to run because of labor and real estate expenses? Or is there something more fundamental at work, some way in which a company has allowed its traditional way of doing things to become an anchor on innovation? Is there a way in which the business model has grown out of touch with current and future consumer needs, and incapable of competing in the current environment?

(I mentioned above that I've never been to a Payless Shoe Source. But you know where I spend the vast majority of my shoe dollars? One word: Zappos.)

The question is whether Payless Shoe Source has done enough to examine its very soul. Or, in this specific case, sole.