I think they do, if they don’t think it can survive anyway.
That wasn’t exactly the main cause of Payless failing...
https://www.youtube.com/watch?v=GJ35lCrOYC0
They ate a giant debt pill long before they were bought by private equity firms. Yes, the PE guys raided it, but their extractions were still less than the debt they assumed with the Stride Rite acquisition. They also had lost most of their customers by the 2010s.
I learned all I needed to know about Payless after I bought a pair of shoes there and had to walk from the NYC Port Authority to 129 west 27th(it’s not all that far). My Achilles area/heels were bloody. I took a copy of The Village Voice and stuffed a bunch sheets in my shoes and limped back when I was done.
Reading the article it's clear that sometimes they do but often they don't. It's pretty clear that the fund that bought Payless bought it just to loot as much as they could and then dispose of it. They didn't invest in the company, installed management that had little understanding of the industry, and cut costs in areas they shouldn't have.
Living through this PE nightmare now. 3years ago they came with a mission 2021 statement to become the next best thing. In this time it is apparent that the mission is to strangle and choke off the business by not investing in it, not replacing workers that have left all the while saying the workers are not working smart enough. They have no clue on how to run the business and have no desire on hearing from those in the trenches on what works and what doesn’t. 35 year business in the financial services sector about to be vanished in 4 years. I’m looking at you Vista Equity Partners.
About 25 years ago payless drastically reduced the selection of shoes for men and boy’s.
Our family had shopped there almost exclusively since my wife and I got married, but we weren’t going to continue since we would now often need to find another store to get shoes for my son and I.
Women buy more shoes, it’s true.
They decided to cater to that market to the point that they might as well have discontinued shoes for men and boys altogether.
Nd their clerks became insulting in the manner in which they would try to convince men to buy one of two or four similar shoes which were often all they had in one’s size.
Screw them.
Where are those closed factories? The USA? Hell No. So who cares?
Re: Do hedge funds kill businesses?
“Private equity” is a completely different concept than hedge funds.
Hedge funds often “short” the stock of companies that are in trouble.
Private equity actually purchases companies (which are often in financial trouble).
Bottom Line - private equity would have no investors if they killed more companies than they save.
Hedge funds may cull sick and weak businesses, but they also seek out and fund start-ups and new business methods and technologies. A close reading of the article suggests that Payless was too deeply impaired to survive missteps by business executives brought in by the new hedge fund owners.
Retail is ghetto, Who cares?
Private equity and leveraged buyout companies do sometimes kill businesses. Probably not intentionally, but they tend to extract too much cash, and take on too much debt in businesses that they may not fully understand. The result if often failure.
Running a successful business is not easy, and schemes that are designed to extract value instead of build value usually end up badly.
The thing that kills businesses is people with MBA degrees.
The NYT understands Capitalism only slightly better than a dog understands what makes a radio work.
Crappy shoes kill shoe companies. Their shoes are poorly made and uncomfortable.
It didn’t help any that their shoes were made from Chinese cardboard.
More like lousy cheap shoes that hurt your feet.
Used to get my wide Champion sneakers at Payless - can’t find them anywhere. Bummer.
Financial managers are killing the health care industry in America. Don’t ever think a doctor is in charge of a hospital. Accountants are.
Eddie Lampert Shattered Sears, Sullied His Reputation, and Lost Billions of Dollars. Or Did He?
They tend to operate like Vikings.
Extract as much value as possible, leave the place destroyed, and split.