The Smart Set women’s fashion chain is closing, joining a growing array of rivals that are succumbing to an increasingly crowded retail landscape and a sluggish economy.
Smart Set, owned by women’s clothier Reitmans (Canada) Ltd., will shut its 107 stores over the next 12 to 18 months, Reitmans said Tuesday. It will close 31 of them completely and convert 76 of them to its namesake Reitmans or plus-size Penningtons chains or others of its banners.
The closings underline the challenging retail environment and growing number of women’s wear chains that feel the pressure of low-cost foreign rivals, such as H&M and Zara. As these foreign companies expand in Canada – in bricks and mortar and digital shops – they snatch business from incumbents.
“The market is a very difficult market,” Jeremy Reitman, chief executive officer of Reitmans, said in an interview. “We just didn’t want to devote the manpower to that in a very difficult situation.”
From grocers to women’s fashion shops and discounters, retailers feel the urgency to differentiate their offerings in stores and online or give in to burgeoning competition. Retailers that have struggled include clothier Jacob Inc., which had 92 stores and is closing all of them under bankruptcy proceedings, and home goods specialists Bombay and Bowrings, which have more than 110 stores combined and are restructuring under court protection from creditors.
Amid the troubles, stronger players also stand out in a tough market. La Maison Simons, a Quebec-based fashion and home decor specialist, said on Tuesday it will add five of its mega-stores to its current nine as it looks to expand outside of its home province in the next few years. “Canada’s current retail landscape is a dynamic place to do business and Simons will be a significant part of its evolution,” CEO Peter Simons said.
Meantime, Joe Fresh, which is owned by grocer Loblaw Cos. Ltd., is expanding overseas.
But Reitmans, which is struggling to bolster its overall business, is taking a different direction with Smart Set. It makes up about 10 per cent of the Montreal-based retailer’s total annual sales, amounting to roughly $95-million in the year ended Feb. 1.
Executives at Smart Set had tried to reposition the chain to appeal to a slightly older career woman – in her late-20s and 30s – with higher prices, but the strategy failed to take off. The chain had already started to close some of its weakest stores.
“We didn’t get the traffic in the malls – that was a problem,” Mr. Reitman said. “That customer is a major Internet user and we just didn’t get enough foot traffic.”
He said he had considered selling Smart Set and got two offers, but they were unsatisfactory. And he looked at unloading about 70 of its store leases, including those in prominent locations such as the Toronto Eaton Centre.
Costs tied to the Smart Set closing include non-cash asset writeoffs of about $2.2-million after tax to be reflected in Reitman’s third-quarter results, the company said. It doesn’t expect inventory writedowns or material employee severance costs, it said. It will report its third-quarter results on Dec. 4.
John Morris, retail analyst at BMO Nesbitt Burns, said the closings are “a move in the right direction for Reitmans and furthering the steps the company has taken over the last year to right-size costs and improve productivity.”
The closings “will allow the company to refocus its resources and attention toward its other banners,” Mr. Morris said.