A woman in a face mask exits Le Chateau at Guildford Town Centre in Surrey, B.C., Friday, Dec. 4, 2020. The clothing store is going out of business amid the global COVID-19 pandemic. THE CANADIAN PRESS/Marissa Tiel

A woman in a face mask exits Le Chateau at Guildford Town Centre in Surrey, B.C., Friday, Dec. 4, 2020. The clothing store is going out of business amid the global COVID-19 pandemic. THE CANADIAN PRESS/Marissa Tiel

Pandemic shutdowns the last straw for some Canadian retailers, push others to brink

Some retail chains went into 2020 already saddled with massive debt and too many stores

For some, fashion retailer Le Chateau Inc. was the edgy store of their youth and 1990s clubwear. Others recall a place of prom dresses, business apparel and accessories.

“It was a trendsetting store,” says Toronto resident Tara Greene. “As a teen, it was a very cool and exciting place to shop.”

After six decades in operation, the Montreal-based clothing company joined the ranks of dozens of big-name retailers that have buckled under the weight of pandemic restrictions, filing for court protection in October and liquidating stores.

It’s been a year of unrelenting pain in retail, with widespread economic shutdowns toppling cornerstones of Canada’s retail industry just as easily as small operations.

And experts warn there are more casualties to come, as the second wave of cases forces further restrictions — decimating cash flow and exposing broader underlying problems.

Some retail chains went into 2020 already saddled with massive debt, too many stores and a track record of underperformance.

“The sector has been in a bit of turmoil even before the pandemic,” says Ramesh Venkat, director of the David Sobey Centre for Innovation in Retailing and Services at Saint Mary’s University in Halifax.

“Retailers that started the year in financially bad shape just couldn’t survive. They didn’t have the financial resources to make it through these hard times.”

Retail analysts say many also lacked a strong e-commerce presence and failed to keep up with shifting consumer behaviour.

“Some just aren’t appealing to the next generation of shoppers,” says John Archer, chief development officer with the Toronto retail consultancy firm Three Sixty Collective.

“The Gen Zeds are different than millennials and some stores like Forever 21 realized even before the pandemic they weren’t cutting it for the new generation.”

Then the pandemic hit, compelling many retailers to close or drastically curtail hours and customer capacity.

The shutdown sent overall retail sales into free fall, plummeting 30 per cent in April compared with a year earlier, Statistics Canada reported.

Clothing and shoe stores were hardest hit, down a staggering 87 per cent and 79 per cent, respectively, compared with April 2019.

The mounting toll of restrictions — on top of the existing problems hounding retail — was too much for some.

READ MORE: Clothing retailer Le Chateau plans to close its doors, files for CCAA protection

Household names like footwear empire Aldo Group, outdoor recreation outfit Mountain Equipment Co-operative and clothing retailer Reitmans (Canada) Ltd. have all filed for creditor protection since the start of the pandemic.

So have Comark Holdings with clothing brands Ricki’s, Cleo and Bootlegger, Groupe Dynamite with brands Garage and Dynamite, and Ann Canada Inc. with women’s clothing brands Ann Taylor and LOFT.

While some stores will disappear, experts say others are using creditor protection to step back from a risky retail environment and restructure after years of poor results.

Reitmans, for example, had seen its share price steadily decline for more than decade when the pandemic struck.

The Montreal-based company filed for creditor protection in May and began restructuring, liquidating its Addition Elle and Thyme Maternity stores to focus on its three remaining brands — Reitmans, Penningtons and RW & CO.

Indeed, some of companies filing for creditor protection could come back “leaner and meaner,” Archer says.

“If they were on the ropes already, they may have taken advantage of legal protection to take a breather and work with their suppliers and landlords and figure out how many stores they need.”

Still, Canada’s retail landscape is expected to lose thousands of stores as a result of restructuring and bankruptcies, putting many retail workers out of a job.

The first quarter of the year is a notoriously slow period for many retailers, and experts say without a robust holiday sales period it will be difficult for some to stay in business through the winter months.

“There are some companies that are obviously not thriving already, so with any sort of blip on the radar they are definitely going to have some issues,” says Anwar White, a lecturer with the Bensadoun School of Retail Management at McGill University.

But he says the insolvencies brought on by the pandemic are part of a normal economic cycle that has just been accelerated and compressed into a shorter time frame.

“I’m not thinking about this as a doom and gloom situation,” White says. “This experience has forced retailers to really digitally evolve in lightspeed ways and do things completely differently than they’ve done before.”

Yet unlike usual economic cycles, the current uncertainty plaguing the retail industry hinges in part on the length and scale of store closures.

Retail analyst Bruce Winder says he expects the new year, and a potentially worsening second wave of the pandemic, will usher in more bankruptcies.

But he says the number of insolvencies could be offset by federal aid, including the wage and rent subsidies.

“You’re going to see a number of companies propped up by government subsidies that probably without them would have been in (creditor protection) a long time ago,” Winder says.

“These sort of zombie companies are operating with maybe 10 or 20 per cent of their normal revenues but they’re still in business because the government is propping them up.”

Brett Bundale, The Canadian Press


Like us on Facebook and follow us on Twitter.

Want to support local journalism during the pandemic? Make a donation here.

CoronaviruseconomyRetail

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

An Abbotsford man was killed in a motor vehicle accident on Highway 3 on Monday, Jan. 18. (Black Press file photo)
Abbotsford man killed in Highway 3 crash near Hedley

Fatality was discovered by passing tow truck driver

Mackenzie Ashley-Lynn Gilfillan was last seen Jan. 10 in the 45000-block of Menholm Road. (RCMP photo)
RCMP asking for help to find missing Chilliwack woman

Mackenzie Ashley-Lynn Gilfillan was last seen Jan. 10 in the 45000-block of Menholm Road

Abbotsford Recreation Centre is among the local arenas that are part of an in-depth review and analysis by the city. (File photo)
City of Abbotsford conducts survey on six local arenas

Input is part of in-depth analysis of current and future needs

A warrant was issued for Darwyn Sellars, 31, on Nov. 4, 2019, according to Black Press. (CrimeStoppers)
B.C. man’s rack of charges include Abbotsford and Williams Lake offences

Sentencing delayed against Darwyn Sellars, who pleaded guilty to lengthy list of charges

Singletree Winery in Abbotsford has opened two domes where customers can enjoy wine tastings and local goodies. (Photo by Megan Ashley Creative)
Abbotsford winery first in Fraser Valley to open wine-tasting domes

Singletree Winery offers two themed transparent enclosures

Provincial health officer Dr. Bonnie Henry prepares a daily update on the coronavirus pandemic, April 21, 2020. (B.C. Government)
B.C. adjusts COVID-19 vaccine rollout for delivery slowdown

Daily cases decline over weekend, 31 more deaths

A female prisoner sent Langford police officers a thank-you card after she spent days in their custody. (Twitter/West Shore RCMP)
Woman gives Victoria-area jail 4.5-star review in handwritten card to police after arrest

‘We don’t often get thank you cards from people who stay with us, but this was sure nice to see’: RCMP

An elk got his antlers caught up in a zip line in Youbou over the weekend. (Conservation Officer Service Photo)
Elk rescued from zip line in Youbou on Vancouver Island

Officials urge people to manage items on their property that can hurt animals

A Trail man has a lucky tin for a keepsake after it saved him from a stabbing last week. File photo
Small tin in Kootenay man’s jacket pocket saved him from stabbing: RCMP

The man was uninjured thanks to a tin in his jacket

Tla-o-qui-aht First Nation Chantel Moore, 26, was fatally shot by a police officer during a wellness check in the early morning of June 4, 2020, in Edmundston, N.B. (Facebook)
Frustrated family denied access to B.C. Indigenous woman’s police shooting report

Independent investigation into B.C. woman’s fatal shooting in New Brunswick filed to Crown

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Delta Police Constable Jason Martens and Dezi, a nine-year-old German Shepherd that recently retired after 10 years with Delta Police. (Photo submitted)
Dezi, a Delta police dog, retires on a high note after decade of service

Nine-year-old German Shepherd now fights over toys instead of chasing down bad guys

Nurses collect samples from a patient in a COVID suspect room in the COVID-19 intensive care unit at St. Paul’s hospital in downtown Vancouver, Tuesday, April 21, 2020. (THE CANADIAN PRESS/Jonathan Hayward)
5 British Columbians under 20 years old battled COVID-19 in ICU in recent weeks

Overall hospitalizations have fallen but young people battling the virus in hospital has increased

Most Read