Leading apparel retailer Reitmans is closing all its women’s Thyme Maternity and Addition Elle stores in the country over the summer as well as chopping its workforce by about 1,100 employees in its retail stores and about 300 employees at its head office in Montreal as part of its restructuring plan under the protection of the Companies’ Creditors Arrangement Act.
The stores scheduled for closure include 77 Addition Elle and 54 Thyme Maternity locations. The company said it is optimizing its retail footprint as it is building its future on its legacy in retail fashion with three premium brands: Reitmans, Penningtons, and RW & CO. These brands will continue to evolve in an omnichannel retail environment with a combined focus on e-commerce and a solid retail network of physical stores in Canada, added the company.
“The strategic decision to close two beloved Canadian fashion brands was not made lightly, but it is necessary to enable our business to move forward as a profitable organization. All of the efforts we put forth to turn these brands around were derailed by the COVID-19 pandemic and, unfortunately, we can no longer afford the required resources to bring them back to profitability,” said Stephen Reitman, President and Chief Executive Officer of Reitmans (Canada) Limited, in a statement.
“The impact on all of our employees is, by far, the most difficult and emotional part of this whole process. We are heartbroken to have to say goodbye to esteemed colleagues and we are truly grateful for their hard work and many contributions to our company over the years. With an enhanced product offering at Penningtons, where women can find aspirational and affordable head-to-toe fashion, we will do everything possible to make our Addition Elle community excited to continue to shop with us. We are committed to the plus-size market in Canada with both a size-inclusive offering at Reitmans, and dedicated expertise and service at Penningtons.
“As we forge ahead with these three flagship Canadian brands, our intention is to write the next chapter of our company’s history for a stronger and brighter future. We take this opportunity to thank our loyal Thyme Maternity and Addition Elle customers for their incredible support, and we look forward to welcoming them in our other stores for years to come.”
The company currently employs approximately 6,800 people and operates 576 stores consisting of 259 Reitmans, 106 Penningtons, 80 RW & CO., 77 Addition Elle, and 54 Thyme Maternity.
In the coming days and weeks, all physical stores of the company will continue to safely reopen based on governmental guidelines, including all 77 Addition Elle and 54 Thyme Maternity stores. For these two brands, the objective will be to liquidate the inventory in anticipation of their permanent closure, which is planned for July 18 for Thyme Maternity and August 15 for Addition Elle, said the retailer, adding that their respective e-commerce websites are expected to shut down on the same date as the closure of the physical stores.
"I think the consolidation of brands will help the company focus its operations and marketing in the short run and generate much-needed cash as they liquidate. They can become a leaner company by reducing cost and infrastructure,” said Bruce Winder, a retail analyst and President of Bruce Winder Retail.
“Having said that, I still see significant headwinds for the remaining brands based on changing consumer demographics, changing brand preferences and changing ways consumers buy apparel. I like how the firm has highlighted omni-channel as a way forward and look forward to more detailed plans. I feel sad for the employees who will lose their jobs in a brutal retail employment market."
Michael Kehoe, Lead Ambassador in Canada for the New-York based International Council of Shopping Centres, said the restructuring of the Reitmans chain is a significant event on the Canadian retailing scene.
“With 576 stores the impact of the closure of two of its divisions will be felt across the country. Reitmans has such a rich history in Canadian fashion retailing and has been an iconic brand catering to the affordable women’s apparel market for generations. Their sweet spot is the women’s plus-size market that is currently underserved in Canada,” said Kehoe, a veteran of more than 40 years in the industry and broker/owner of Fairfield Commercial Real Estate in Calgary.
“Their focus when they emerge from these troubling times will be clearly in this segment of women’s apparel with a strong e-commerce business along with their repositioned bricks and mortar stores.”
Katherine Chartrand, Director of Corporate Communications at Reitmans, said the company filed for protection under CCAA on May 19 as a necessary measure to ensure the continued success of the business.
“We believe that this decision, as difficult as it may be, remains the only option for moving the organization forward. In this context, we need to optimize our retail footprint, restructure our teams and make important changes to our business,” said Chartrand.
“Closing Addition Elle and Thyme Maternity, two of our beloved brands, is a heartbreaking but necessary decision. They are no longer profitable, and our efforts to turn these brands around were undermined by the COVID-19 pandemic and we can no longer afford the required investments and time to bring them back on the path to profitability.
“We will build our future on Reitmans, Penningtons and RW & CO., successful brands with strong and distinctive positioning that will continue to evolve in an omnichannel retail environment with a combined focus on e-commerce and a solid retail network of physical stores in Canada.”
Chartrand said the company implemented promising strategies in fiscal 2020 that were starting to show positive results in the first quarter of fiscal 2021.
“Unfortunately, all the efforts we put forth to turn these brands around were undermined by the COVID-19 pandemic. The impact of this crisis and the pressure it has put on our cash flows leave us no other choice,” she said.
“For Addition Elle to become profitable, it would have required investments and time that we can no longer afford because of COVID-19. The Thyme Maternity team has done such remarkable work over the years that the brand achieved a market share of over 50 per cent. However, due to the market size and increasing online competition, we have been struggling to make this business profitable. The COVID-19 pandemic was the final straw.
“As for Reitmans, Penningtons, and RW & CO., we will unfortunately have to close some underperforming stores within the rest of our network in the coming weeks and months. This is a part of the restructuring process, but it is too early to confirm the location of these stores. Rest assured our intention is to maintain a solid retail footprint in Canada for these three flagship brands.”
Chartrand said it is difficult to speculate on how consumers will react to the reopening of retail stores in the industry.
“Although, we do expect the COVID-19 pandemic to have an impact on store traffic for the months to come,” she said.