Insolvent fashion chain Mexx Canada is liquidating all of its 95 stores in the wake of overall mixed results among retailers during the holiday selling season and heightened competition.
Mexx, which filed for bankruptcy protection from its creditors late last year, has been unsuccessful in trying to restructure its operations and plans to close its stores by the end of February, Gilles Benchaya, partner at Richter Advisory Group and trustee in bankruptcy, said in an interview on Tuesday.
Mexx, which owed creditors $113.4-million, had hired Richter in September even before the bankruptcy filing to help it shift a bit more upscale – with distinctive European styling – and close about half of its stores in Canada and slash costs, he said. But the Dutch parent's filing for bankruptcy last month derailed those plans, he said.
Other mid-sized chains are in trouble and could falter soon, he predicted. "There's more chance of failings – another difficult year."
Retailers saw varied results during the critical holiday season, with stronger players such as athletic-wear specialist Lululemon Athletica Inc. enjoying gains while others continued to suffer. The vulnerable chains risk feeling more pain in 2015, especially as foreign cheap-chic rivals H&M, Zara and Forever 21 expand further into Canada.
"It's going to be a year of shakeout," said Jeffrey Berkowitz, president of retail real estate specialist Aurora Realty Consultants. "It's a mixed bag this year."
Retailers with many stores in Western Canada, such as Marks (formerly Mark's Work Wearhouse), could feel the fallout of declining oil prices and weakening business in that sector, said David Ghermezian, president of West Edmonton Mall.
So far, his mall's retailers are performing well, with sales probably up more than 7 per cent in December from a year earlier, Mr. Ghermezian said. "But I would anticipate that things will change," he added. Retailers looking for new opportunities may start to "look at Alberta just a little bit differently."
Still, some international chains are eyeing the Canadian market. The fast-growing Japanese-based Uniqlo chain is expected to formally reveal its first stores in this country soon. Toronto's high-performing Yorkdale Shopping Centre has reserved space for Uniqlo to open in 2016, industry sources have said.
And some German grocery discounters, such as Lidl or Aldi, are expected to announce their interest in opening their first stores here after making significant gains in Europe.
Upscale U.S. fashion chain Nordstrom Inc., which launched its first Canadian store in Calgary last September, will roll out two more in 2015, one in Ottawa and the other in Vancouver. By mid-November, Nordstrom's Chinook Centre store was operating "significantly ahead of plan," Jamie Nordstrom, the chain's president of stores, told analysts. His team is "pretty encouraged by the results and the first impression we've made with that customer. But we're going to be in business there for a long time, so we've still got a lot to learn."
A number of Canadian chains, however, are feeling the strains of heated competition and their own missteps. Home goods chains Bombay, Bowring and Benix got court protection from creditors last summer and have closed one-third of their roughly 120 stores, said Richter Advisory Group's Mr. Benchaya, whose firm is monitor in the case.
On Monday, an Ontario court approved the sale of Bombay and Bowring to Fluid Brands, which is owned by Fred Benitah – who is also the previous owner of the insolvent chains. Mr. Benitah and his brother Isaac, who owns an array of clothing chains such as Fairweather and International Clothiers, had secured debt of about $34-million in the troubled retailers, Mr. Benchaya said. "They kept their best stores … They're starting fresh."
Other chains, such as Le Château Inc. of Montreal and Danier Leather of Toronto, are also struggling. Reitmans (Canada) Ltd., which is closing its Smart Set chain, is having a tough time but showed signs of progress during the holidays. For the five weeks ended Jan. 3, Reitmans's sales dropped 2 per cent, but its same-store sales rose 1.9 per cent (at stores open a year or more) and e-commerce sales jumped 90.7 per cent.
In the United States, a number of apparel chains are in trouble, including Body Central Corp., Deb Stores Holding LLC and Delia's Inc. filed for bankruptcy last month, hurt by competition from online and fast-fashion retailers.
Lululemon, for its part, on Monday raised its fourth-quarter outlook, pointing to a stronger than expected holiday season.