Canadian footwear retailer the Aldo Group Inc. has filed for creditor protection, saying that it plans to restructure the business to cope with the impact of the COVID-19 pandemic.
The Montreal-based company’s store banners – Aldo, Call It Spring and Globo – will continue to operate their e-commerce websites, and will reopen stores that are temporarily closed as government restrictions are lifted.
On Thursday, the Aldo Group obtained an initial order under the Companies’ Creditors Arrangement Act from the Superior Court of Quebec and has applied for creditor protection in the United States. It also plans to do so in Switzerland, where it has operations.
The company conducted a review of strategic alternatives, and decided the CCAA process is required to “stabilize the business” and “to preserve the company for the long term and survive through this challenging period,” Aldo said in a statement.
“It is no secret that the retail industry has experienced rapid and significant change over the last several years. We were making strong progress with the transformation of our business to tackle these challenges; however, the impact of the COVID-19 pandemic has put too much pressure on our business and our cash flows,” chief executive officer David Bensadoun said in the statement.
Aldo has approximately 8,000 employees and 700 stores in total. Including franchised stores, it has operations in more than 100 countries.
Ernst & Young Inc. has been appointed the monitor in Aldo's CCAA proceedings.
The pandemic has put considerable pressure on retailers, as many stores have been forced to close to help curb the spread of the virus. Online sales have surged as people stayed home, but have not made up for lost sales from bricks-and-mortar locations.
In some cases, the disruption is putting businesses at risk. Late last week, Reitmans Canada Ltd. announced that it was in search of financing to meet its financial obligations, and that the business could fail if it “is unable to obtain such financing in the limited time period required.”
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