The assets and store leases of leading Canadian luggage and travel products retailer Bentley & Co. Ltd. have been acquired by Paul Nassar, owner of Hart Stores.
The majority of Bentley’s 140 stores will be retained as part of the transaction, although around 40 stores may close as part of a restructuring of the businesses retail footprint, said Walter Lamothe, President and CEO of Bentley.
Nassar owns Hart Stores and several other small to medium retail operations in Canada. In 2015, he acquired 60 Hart Stores out of bankruptcy. Since then, Hart Stores have grown to over 120 stores with a presence in Ontario, Quebec and the Maritimes.
Bentley was founded in 1987, and is the largest retailer of suitcases, handbags, backpacks, business bags and travel accessories in Canada.
In November 2019, Bentley Leathers Inc. filed a notice of intention to propose the restructuring of its operations. The changing consumer behavior, the impact of the digital disruptions combined with operating over 250 stores across the nation have significantly impacted the profitability of the company, it said at the time.
According to Insolvency Insider, Bentley & Co. Ltd., filed an NOI on July 17 listing $26 million in liabilities, including approximately $8.8 million in secured debt to HUK 89 Limited.
“The company had previously filed an NOI in 2008 and filed again in 2019, at which time it was acquired by HUK 94 Limited, a subsidiary of turnaround specialist Hilco Capital. Despite Hilco’s significant investment in Bentley, sales have fallen short of expectations in recent years and the business has been facing serious liquidity constraints,” said Insolvency Insider.
“In late 2023 and early 2024, Bentley was the target of two ransomware attacks that compromised its systems and caused it significant financial losses. Furthermore, the company has been unable to maintain profitability in the long-term since the pandemic, in part due to consumer preference for online shopping, which has made it difficult for Bentley to remain profitable while operating more than 140 stores.
“The purpose of the NOI proceedings is to consummate a sale to a company owned by Paul Nassar, a well-experienced player in the Canadian retail market who owns the Hart chain, which has approximately 130 locations in Canada, and recently acquired the Korvette chain, a prominent player in the Quebec retail market with approximately 60 stores and 600 employees in Quebec.”
Bruce Winder, Retail Analyst and Author, said the announcement reinforces just how hard the retail business is in the current consumer environment.
“For a company like Bentley, they face several headwinds including: declining mall traffic, changing consumer shopping habits where retailers like Amazon and other discounters, along with specialty luggage brands dominate, price pressure from these same retailers and a very stingy consumer who has lowered demand for discretionary items,” he said.
“With the Hart purchase Bentley gets a new owner with success at street fighting on value and runs a low cost operation. Qualities that will make Bentley leaner and meaner to compete in this very tough market.
“Congratulations to Hart stores and Paul Nassar on the purchase. Bentley lives on to fight another day.”
George Minakakis, Founder and CEO of the Inception Retail Group, said consolidation of retail brands in transition or peril of extinction is a common theme today.
“This strategy of removing the growing costs of back-of-the-house support has worked as long as the financial burden of acquisitions isn’t overwhelming. The fit seems to be right for Hart. The category still has demand, albeit a great deal of competition, which understandably requires the closing of stores,” he said.
“It is a situation where many midsized brands will find themselves in need of survival, as we have seen the same in department stores. The retail landscape continues to shift, with consumers pulling back and larger retailers making a strong move to become technology-first companies (with AI).
“Retail survival is taking on a new form; in my opinion, this was a good transaction, and it will be interesting to see how Bentley evolves as a result.”
Carl Gagnon, President of IMAGO, said Bentley historically was known for offering a wide – flea market style – variety of travel/work/fashion related items at bargain prices, often without a focus on quality or style – in the most basic shopping experience there is.
“The challenge arose when the retailer attempted to shift these long-time established consumer habits. This required significant effort from the whole organization and investments to demonstrate and communicate why consumers should now value quality and style and be willing to pay more at Bentley – this while aiming to attract a new customer base that never considered Bentley for travel luggage and accessories. This type of brand transformation required educating consumers on the reasons behind Bentley’s new direction. In this context, changing consumer habits can take a lot of time and be quite costly,” he said.
“Many retailers are proving that omnichannel strategies and physical retail are far from obsolete. On this path, Bentley’s attempt to differentiate itself from both online and offline competitors by going vertical and launching its own house brand, TRACKER, was arguably a step in the right direction. However, the company shift in focus and marketing investment needed to successfully launch a new brand are substantial, and for a smaller company like Bentley, time and resources were unfortunately limited simply by the size and fragile situation of the company.
“Maybe aspirations were simply too big.”
Michael Kehoe, Broker of Record with Fairfield Commercial Real Estate, said the acquisition of Bentley & Co. Ltd. by Hart Stores is good news on the Canadian retailing scene.
“It’s all part of the shifting sands in retail ownership in a tough retail environment. I am calling this “the summer of discontent” as 2024 consumers are unhappy and it’s affecting shopping patterns and retail sales. As Bentley joins the Hart family of stores a sense of stability is welcomed across the shopping centre sector and other retailing venues for the 200+ stores across the country,” he said.
“Some stores will be transitioned I am sure, all part of the Darwinian struggle that is retailing in 2024. Bentley has been a category dominant fixture on the Canadian retail landscape for 35 years and I am happy to see this legacy brand carry on.”
