US-based lingerie and fashion retailer Victoria’s Secret will see its Canadian store count reduced substantially following a temporary shutdown due to the COVID-19 pandemic. Parent company, L Brands, says that it will permanently shutter 13 of Victoria’s Secret’s 38 Canadian stores, representing almost 35% of the Canadian fleet, as well as one Bath & Body Works location in the country.
It’s part of a bigger announcement that L Brands made this week that includes the closure of about 250 of its Victoria’s Secret stores in North America as well as 50 Bath & Body Works stores. The company is ‘rightsizing’ its fleet as it looks to split the two brands into separate corporate entities while at the same time growing its online business substantially.
L Brands hasn’t yet provided information on which of the company’s stores will be closing. In Canada, the 38 Victoria’s Secret stores include a mix of stores in shopping centres as well as standalone street-front flagships. Several years ago, we reported that Victoria’s Secret’s West Edmonton Mall store was the second-highest selling unit in the company following that of a flagship on Herald Square in New York City. The downtown Vancouver and downtown Montreal Victoria’s Secret flagship stores are among the largest units in the chain.
Over the past six months in Canada, Victoria’s Secret had already been quietly closing many of its stores. In February, Retail Insider reported that Victoria’s Secret had already shut locations at CF Market Mall in Calgary, CF Sherway Gardens in Toronto, CF Richmond Centre near Vancouver, St. Vital Centre in Winnipeg, CF Markville near Toronto, White Oaks Mall in London, and CF Rideau Centre in Ottawa. A ‘Pink’ by Victoria’s Secret also closed at Mapleview Centre in Burlington Ontario. At the time, more store closures were expected.
Private equity firm Sycamore Partners recently stepped away from a US $525 million deal to acquire a 55% stake in Victoria’s Secret. In an earnings call this week, L Brands’ CEO Andrew Meslow said that the company is looking to rightsize its footprint which will include even more store closures in 2021 and 2022. Reasons included “responding to changing consumer behaviours” to create a “healthier and better business” in preparations for an anticipated sale of the Victoria’s Secret division.
Remarkably, Meslow said the company is looking to see online sales grow to about 50% of all retail sales for the Victoria’s Secret brand, following a significant spike in e-commerce following temporary store shutdowns on March 17. A substantial renovation program will see units updated into 2021 and beyond, though it’s unclear how many of those renovations will be for Canadian stores.
Landlords in Canada will once again have to deal with vacant retail space. Many of Victoria’s Secret stores span more than 10,000 square feet each. Before the COVID-19 shutdowns, more than 1,000 individual store locations were already expected to close in Canada in the first quarter of 2020. Some retail chains were exiting Canada entirely amid company shutdowns, while other retailers had filed for creditor protection to close some store locations.
The permanent store closures will continue this year and into 2021 at an accelerated pace. This month, Montreal-based footwear and accessory retailer Aldo obtained creditor protection with plans to close nearly half of its stores. Montreal-based fashion retailer Reitmans also obtained creditor protection and many store closures are expected. In the United States, fashion brand J.Crew filed for bankruptcy this month and its remaining Canadian stores are expected to become history. This week, home furnishings retailer Pier 1 announced that it was closing all 540 of its stores, including 67 units in Canada — that’s not new news, however, as Pier 1 announced in February that its Canadian units would shutter following a Chapter 11 bankruptcy filing in the United States.
More retailers are expected to announce store closures and filings in the coming days and months amid financial struggles due to the COVID-19 store shutdowns. As stores begin to reopen across the country, retailers hope that consumers will come back and shop, though some expect retail sales to be lower than in months past. Concern over becoming ill as well as money lost due to job losses, lost stock market wealth, and other factors such as a desire to save money could see spending reduced. At the same time, the costs to operate stores will increase with new sanitation and hygiene protocols as well as an expected increase in staffing costs.
We’ll follow up on this article when we learn the locations of the 13 Canadian Victoria’s Secret stores which will be shuttering permanently in the coming weeks.