Reitmans files for creditor protection

The already struggling retailer says a planned restructuring will include "optimizing" its bricks-and-mortar footprint.
Reitmans_Store

Reitmans hopes to restructure after filing for creditor protection, as the retailer is the latest to have COVID-19 inflame pre-existing financial struggles.

The mid-range fashion retailer noted in a Tuesday press release announcing the application that it will remain fully operational through its brands’ e-commerce websites, and that all brick-and-mortar store locations will re-open as they are allowed to in each province in which it operates. On Tuesday, Ontario and British Columbia began their latest phases of reopening retail stores, following similar steps in Quebec and Alberta earlier this month.

As part of the process, Reitmans plans to implement a restructuring plan that addresses the ramifications of COVID-19 in order to “develop a stronger organization that will be better-suited for the long term.” Even though it plans to reopen its stores once allowed to, the company adds in the release that it will look “to optimize its retail footprint in Canada” to emerge from this process in a stronger state – it currently operates 576 stores in Canada across the Reitmans, Penningtons, RW & CO., Addition Elle and Thyme Maternity banners. The company says it had previously implemented a “successful” digital-first strategy to drive sustainable growth in a challenging retail environment, before the onset of the COVID-19 pandemic added to the uncertainty in the sector.

Reitmans began May by offering a grim outlook for its future, saying it would need additional financing to meet its financial obligations. That warning came as the impact of the pandemic exacerbated struggles the retailer was already facing, as total sales were already down 5.8% for the 2020 fiscal year, before the impact of the pandemic shutdown were felt.

According to Statistics Canada, 60% of retail businesses reported their revenue was down by at least 20% in the first quarter of 2020.

Earlier this month, Aldo filed for creditor protection as a result of the economic impacts of COVID-19 as well. According to filings, Aldo will need to reduce expenses if it’s going to restructure its operations and “survive the economic and financial crisis” brought on by the pandemic. The retailer said its stores would re-open once allowed to; however, filing said this restructuring would include terminating a number of leases in the U.S. and Canada – it had not being paying rent on its locations for April and May – and focusing on online sales.

 

 

 

 

 

 

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