Montreal-based retailer Bentley Leathers Inc. announced Wednesday evening that it was restructuring amid financial challenges associated with operating more than 250 stores. This follows last month’s announcement that the company would revive its retail operations that included a new prototype store format that was launched in suburban Montreal.
Several sources began contacting Retail Insider last week providing information on the possible filing — we awaited a formal announcement prior to reporting anything in this publication.
The company’s President and CEO, Walter Lamothe, said in an interview on Wednesday evening that he expects Bentley Leathers to pull through and see success after a right-sizing of the chain’s base of stores, while at the same time rolling-out of its new customer-centric retail design.
Bentley Leathers filed a notice of intention to propose the restructuring of its operations on Wednesday November 27. While not mentioned in a press release, a source said that parent company Novacap had finalized a deal with Re:Capital which describes itself as “a multidimensional financial services company providing a range of restructuring services to businesses and insolvency practitioners, as well as investing in stressed situations, in Canada and Australia.”
In a press release, Bentley Leathers attributed its financial troubles on changing consumer behaviour as well as the “impact of the digital disruptions”. Furthermore, operating more than 250 stores “significantly impacted the profitability of the company.”
At the same time, the Bentley Leathers press release offers hope for the future of the chain, as reiterated by Mr. Lamothe. “Given Bentley still has a significant opportunity to grow and to allow the continuation of its operations, the Company filed today a notice of intention to make a proposal for restructuring.” The restructuring, and presumably the relationship with Re:Capital, is intended to keep Bentley Leathers operational into the future. “This process has been put in place to secure the long-term viability of the Company for the best interest of its employees, customers and suppliers.”
Store closures haven’t been announced as of yet, though it appears that unprofitable locations will be shuttered as part of the announced restructuring. “We are currently in the process of analyzing each store’s performance and its contribution to the Company’s profitability,” said the press release.
“While it is too early to identify the exact number of store closures or head office impact, Bentley will be closing less profitable stores while planning to keep the majority of its stores. These are some of the measures that will be put in place to ensure the company’s long-term viability.”
Last month, Retail Insider reported that Bentley Leathers was launching a “store of the future” concept that would be rolled-out nationally in 2020. Four of those are now open. Journalist Mario Toneguzzi reported that Bentley Leathers had plans to “transform the brand into a solution and experience company with the goal of helping Canadians create lasting memories and supporting the communities they have catered to for so many years.” In an interview with Retail Insider, Walter Lamothe said that the retailer would continue to be the leading chain in the country and that by the spring of 2020, RFID tags would be added to its bags to protect personal data, for example.
Bentley Leather’s new store concept launched last month at CF Fairview Ponte-Claire in suburban Montreal. Its design is intended to simplify buying bags and luggage with two new “moment zones” in an effort to create a compelling retail experience. Three other concept stores have since opened.
Restructuring will allow Bentley Leathers to close under-performing stores as it restructures its operations. Many retailers in Canada signed store leases several years ago at a time when shopping centres were able to command significant rents.
The Canadian retail industry has changed and sources say that several more retailers are also expected to announce restructuring efforts in Canada in the coming weeks.
Landlords in Canada are grappling with retailers shuttering stores at a challenging time. This week, US-based fashion retailer Forever 21 will close its Canadian stores, which will result in nearly a million square feet of space being vacated across the country. Various other retail chains have closed stores across Canada in 2019, including Town Shoes, Payless Shoes, Gymboree, Crabtree & Evelyn, Green Earth and Hudson’s Bay’s Home Outfitters chain of stores, among others. That follows the colossal failure and exit of Target from Canada in 2015, as well as the more recent shuttering of all Sears Canada stores in early 2018.
Job losses will be another result as some Bentley Leather stores close, and a timeline has yet to be revealed. We’ll follow up on this story as it progresses.