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

Volunteers participate in a work-bee at J.J. Collett Natural Area on March 27. (Photo Submitted)
J.J. Collett natural area proceeding with projects

The nature area appeared on a list of parks and nature areas that were “underutilized” by UCP

A vial of some of the first 500,000 of the two million AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Alberta joins Ontario in lowering minimum age for AstraZeneca vaccine

More than 700,000 doses of AstraZeneca have been administered in this country

Asymptomatic testing will now be available for "priority groups" who are most likely to spread the COVID-19 virus to vulnerable or at-risk populations. File photo by THE CANADIAN PRESS
Alberta identifies 1,516 new COVID-19 cases on Sunday

Central zone has 1,849 active cases

A damaged unicorn statue is shown in a field outside of Delia, Alta. in this undated handout photo. It’s not often police can report that a unicorn has been found, but it was the truth Saturday when RCMP said a stolen, stainless-steel statue of the mythical beast had been located in a field not far from where he’d been taken. THE CANADIAN PRESS/HO, RCMP *MANDATORY CREDIT*
Mounties get their unicorn; stolen statue of mythical beast found in Alberta field

Police are still looking for suspects, and have called in their forensics experts to help

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
In this image from NASA, NASA’s experimental Mars helicopter Ingenuity lands on the surface of Mars Monday, April 19, 2021. The little 4-pound helicopter rose from the dusty red surface into the thin Martian air Monday, achieving the first powered, controlled flight on another planet. (NASA via AP)
VIDEO: NASA’s Mars helicopter takes flight, 1st for another planet

The $85 million helicopter demo was considered high risk, yet high reward

The Rogers logo is photographed in Toronto on Monday, September 30, 2019. THE CANADIAN PRESS/Tijana Martin
Rogers investigating after wireless customers complain of widespread outage

According to Down Detector, problems are being reported in most major Canadian cities

People are shown at a COVID-19 vaccination site in Montreal, Sunday, April 18, 2021, as the COVID-19 pandemic continues in Canada and around the world. THE CANADIAN PRESS/Graham Hughes
Nothing stopping provinces from offering AstraZeneca vaccine to all adults: Hajdu

Health Canada has licensed the AstraZeneca shot for use in people over the age of 18

Deputy Prime Minister and Minister of Finance Chrystia Freeland responds to a question during Question Period in the House of Commons Tuesday December 8, 2020 in Ottawa. The stage is set for arguably the most important federal budget in recent memory, as the Liberal government prepares to unveil its plan for Canada’s post-pandemic recovery even as a third wave of COVID-19 rages across the country. THE CANADIAN PRESS/Adrian Wyld
Election reticence expected to temper political battle over federal budget

Opposition parties have laid out their own demands in the weeks leading up to the budget

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Pall Bearers carrying the coffin of the Duke of Edinburgh, followed by the Prince of Wales, left and Princess Anne, right, into St George’s Chapel for his funeral, at Windsor Castle, in Windsor, England, Saturday April 17, 2021. (Danny Lawson/Pool via AP)
Trudeau announces $200K donation to Duke of Edinburgh award as Prince Philip laid to rest

A tribute to the late prince’s ‘remarkable life and his selfless service,’ the Prime Minister said Saturday

A vial of some of the first 500,000 AstraZeneca COVID-19 vaccine doses that Canada secured. THE CANADIAN PRESS/Carlos Osorio
Canada’s 2nd blood clot confirmed in Alberta after AstraZeneca vaccine

The male patient, who is in his 60s, is said to be recovering

The funeral of Britain’s Prince Philip in Windsor, England, on Saturday, April 17, 2021. Philip died April 9 at the age of 99. (Kirsty Wigglesworth/AP)
PHOTOS: Prince Philip laid to rest Saturday as sombre queen sits alone

The entire royal procession and funeral took place out of public view within the grounds of Windsor Castle

Most Read