In a sign of the fragile, crowded retail landscape, a cross-country discount chain has succumbed to its difficulties and is closing all its stores.
XS Cargo Co. of Mississauga this weekend started to liquidate all of its 50 stores after filing for protection from creditors in the summer with the goal of restructuring and emerging as a going concern.
"Unfortunately, efforts to restructure the business did not result in an economically sustainable model," said Bradley Snyder, executive managing director of Tiger Capital Group. It was named by XS Cargo recently to run the going-out-of-business sale.
The failure to resurrect the insolvent discounter underlines the highly competitive retail market that has seen an array of chains flounder this year as a growing number of foreign players expand in Canada.
U.S. discount giants Wal-Mart Stores Inc. and Costco Wholesale Corp. are aggressively adding new stores and products, while Target Corp. launched here in 2013 and, while facing its own challenges, is squeezing rivals by stealing away business. At the same time, U.S. e-commerce powerhouses such as Amazon.com Inc. are picking up customers as shoppers increasingly shift online.
Domestic chains have felt the brunt of the shifts. This summer, a trio of home décor chains owned by the same family that owns fashion chains Fairweather and International Clothiers, got court protection from creditors. Bombay & Co. Inc., Bowring & Co. Inc. and Benix & Co. Inc. are now working to restructure their operations. A few months earlier, clothier Boutique Jacob Inc. filed for bankruptcy and is closing its 92 stores.
Other chains, such as Reitmans (Canada) Ltd. and Le Chateau Inc., are struggling with declining financial results. U.S.-owned office-supplier specialist Grand & Toy is closing its remaining stores, although it continues to operate online. U.S. clothier Aeropostale Inc is shutting stores here.
XS Cargo, founded, 1996, operates in eight provinces. It purchases and sells prominent brand-name goods from distressed companies in a broad range of merchandise categories including furniture, house wares, electronics, appliances , fashion, sporting goods and health and beauty aids.
XS Cargo's liquidation sales of up to 40 per cent off the latest prices stand to further squeeze rivals as consumers head for the troubled retailer's bargains. Mr. Snyder said the retailer is shipping fresh merchandise from XS Cargo's warehouses daily to the stores.
XS Cargo stores are located mainly in strip malls. The company also runs two distribution centres in Mississauga and Edmonton.