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Photo: Paul Hennessy/NurPhoto via Getty Images

Private equity's retail apocalypse hit another miserable milestone yesterday, with Payless ShoeSource refiling for Chapter 11 bankruptcy. The shoe store chain also plans to liquidate all 2,500 of its North American locations, costing around 16,000 people their jobs.

The bottom line: Physical retail is under severe stress, regardless of ownership structure, but private equity is almost always buying into mature industries that are prone to disruption. Engaging in large dividend recaps only makes the margin for error that much smaller, and the likelihood for failure that much larger.

Timeline:

  • Payless was taken private for around $1.3 billion in 2012 by Golden Gate Capital and Blum Capital. The firms would later pull hundreds of millions of dollars out of the company via dividend recaps, which ballooned its debt load to unmanageable levels.
  • The company first filed for bankruptcy in mid-2017, with some creditors actually getting a bit of compensation related to the dividend recaps (although the PE firms didn't admit any fault).
  • But the new majority owner, via creditor conversion, was Alden Global Capital — a private investment firm best known in media circles for buying newspapers and then cutting costs to the point of disrepair.
  • The rep for some short-term Payless lenders told a bankruptcy judge yesterday that Alden's stewardship since the original bankruptcy was a "total failure."

Go deeper: Payless' second bankruptcy follows a pattern

Go deeper

Restaurant software meets the pandemic moment

Illustration: Annelise Capossela/Axios

Food delivery companies have predictably done well during the pandemic. But restaurant software providers are also having a moment as eateries race to handle the avalanche of online orders resulting from severe in-person dining restrictions.

Driving the news: Olo filed last week for an IPO and Toast is rumored to be preparing to do the same very soon.

Bryan Walsh, author of Future
2 hours ago - Technology

How the automation economy can turn human workers into robots

Illustration: Sarah Grillo/Axios

More than outright destroying jobs, automation is changing employment in ways that will weigh on workers.

The big picture: Right now, we should be less worried about robots taking human jobs than people in low-skilled positions being forced to work like robots.

House passes $1.9 trillion COVID relief package

Photo: Screenshot via C-SPAN

The House approved President Biden's $1.9 trillion COVID relief package on a 219-212 vote early Saturday morning, sending it to the Senate for a possible rewrite before it gets to Biden's desk.

The big picture: The vote was a critical first step for the package, which includes $1,400 cash payments for many Americans, a national vaccination program, ramped-up COVID testing and contact tracing, state and local funding and money to help schools reopen.