Reitmans Files for and Obtains Bankruptcy Protection

Date:

Share post:

Iconic Canadian retailer Reitmans, which has been in existence for close to 100 years, has obtained protection under the Companies’ Creditors Arrangement Act to “facilitate its operational, commercial, and financial restructuring” as it reacts to the negative impact of the COVID-19 (coronavirus) pandemic.

The company, which is a leading ladies apparel retailer with retail outlets throughout Canada, 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.

“Filing for protection under the CCAA is truly the hardest decision we have had to make as an organization in our almost one hundred years of history, but this pandemic has left us no choice – we believe that this is the only course of action to ensure we remain successful in the future,” said Stephen Reitman, President and Chief Executive Officer of Reitmans, and grandson of the company’s founders, in a statement.

PHOTO: MALL CHAMPLAIN

“We have many strengths: we’re the Canadian leader in specialty retail, we have a strong leadership team and talented employees, great national brands, an omnichannel retail strategy with robust online sales, and most importantly, loyal customers who have been shopping on our websites at a record pace since the start of the pandemic. We will dedicate ourselves to the restructuring of our business, and then we’ll carry on with what we do best: offering affordable fashion and great service to our customers and communities for many years to come.”

The news on Tuesday comes as many retailers across North America struggle with the devastating impact the pandemic is having on the sector. Also on Tuesday, Pier 1 Imports announced that it has filed a motion seeking Bankruptcy Court approval to begin an orderly wind-down of the company’s retail operations as soon as reasonably possible after store locations are able to reopen following the government-mandated closures during the COVID-19 pandemic. J.C. Penney also announced recently it will permanently close nearly 30 percent of its 846 stores as part of a restructuring plan under bankruptcy protection.

Bruce Winder, a retail analyst at Bruce Winder Retail, said this period is the acceleration of retail as a number of forces being felt in retail before the pandemic were hurting companies like the ones that are going bankrupt right now.

“What this has done is this has accelerated those changes. You look at some of the stores that are closed that are going for it (creditor protection and bankruptcy) they were weak anyways. The value proposition was weak. They were not best in class. A lot of them have huge debt on their balance sheet because they were owned by venture capital or private equity,” said Winder. “So they didn’t have the balance sheet to weather the storm. Their business model was outdated. In other words, it wasn’t sort of modern and contemporary.

“So they were going to fall anyway. All this did is push them over the edge quicker.”

Winder said more of this will be taking place in the coming days, weeks and months.

“Sadly you’re going to start to see more of this happen in the next few weeks and even months and it’s all a function of how strong is their balance sheet, how patient are their investors, and where do they fall from a category standpoint. This year will be the story of bankruptcies in Canada, in the U.S. and around the world where you’re seeing the brands who are weaker, the brands who have poor balance sheets, old business models, many of them, not all, are going to have to close down and enter Chapter 11 (U.S.) or in our case (Canada) CCAA.

PHOTO: REITMANS
PHOTO: REITMANS FACEBOOK

“It doesn’t mean that they’re all gone. Some of them will come out of it leaner and meaner but I would suggest that most won’t.”

In a news release, Reitmans said the CCAA process will allow the company to implement a restructuring plan that addresses the impacts of COVID-19 in order to build a more resilient organization that will be positioned for long-term success.

“Throughout this process, the Company will remain fully operational through its brands’ e-commerce websites; all physical stores will re-open in conformity with provincial and regional governmental guidelines. As the restructuring gets underway, the Company will look to optimize its retail footprint in Canada to emerge from this process in a stronger state,” it said.

PHOTO: REITMANS

“The retail landscape has been in constant flux over the past several years, resulting in the evolution of consumer behaviour and purchasing patterns. Reitmans has implemented a successful digital-first strategy, amongst other omnichannel initiatives, to drive sustainable growth in this evolving retail environment. However, the COVID-19 pandemic forced the closure of all retail stores, and pushed the retail industry into a new and unknown era.

“In conjunction with its filing under the CCAA, the Company has undertaken a process to secure an interim financing (DIP) that shall provide the required liquidity to meet all of the anticipated needs of Reitmans and its brands to continue normal operations following the opening of its retail locations and throughout the CCAA process. Reitmans is also in discussion with lenders with respect to a permanent financing upon exit from the restructuring process.”

In its fiscal year 2020 which ended February 1, Reitmans reported sales decreased by $53.5 million or 5.8 percent, to $869.5 million from fiscal year 2019. Net loss for fiscal 2020 was $87.4 million ($1.56 basic and diluted loss per share) as compared with $6.8 million net earnings ($0.11 basic and diluted earnings per share) for fiscal 2019.

Michael Kehoe, Lead Ambassador in Canada for the New-York based International Council of Shopping Centers, called the Reitmans’ court protection a significant event on the Canadian retailing scene.

“The firm has been a pillar within the retailing fabric of the country for a generation and the problems they face are common in these challenging economic times. The firm had faced challenges in the recent past related to unproductive locations, high rents, changing shopping patterns and shifting demographics,” said Kehoe, a veteran of more than 40 years in the industry and broker/owner of Fairfield Commercial Real Estate in Calgary.

“The face of shopping centres in Canada will be forever changed as fashion mainstays like Reitmans with their numerous retail banners will emerge from restructuring with a significantly reduced footprint. Retailing is always changing and evolving and Reitmans will carry on in an era of the omnichannel environment.”

2 COMMENTS

  1. Reitman’s bankruptcy, and their subsequent shuttering of Addition-Elle is going to have a bigger impact than I believe most are aware. The average Canadian woman is a size 16. Very few "standard size" retailers carry 16 or above. If you’re a size 20 or above, it’s Penningtons or Addition-Elle (Laura Plus is hard to find, poorly stocked, and very expensive for fabrics that don’t warrant it. Or crossing the border for admittedly MUCH better selection and quality.
    So, if Addition-Elle, and Penningtons close, the plus size woman is forced to shop outside Canada unless a newer option appears.
    Now, both stores have been dropping the ball significantly for a long time. They’ve been trying to sell cheap synthetics that wear poorly and fit worse. They offer almost nothing for the profesional woman who prefers not to wear shredded pants, "sexy" tops that are skin tights with holes all over, or "bodycon", a sad euphemism for poorly cut ad cheating on fabric.
    Plus size wmen need a store where we can go and be sure of finding what we need: quality cotton, linen, or wool trousers, cut well and attractive. Blouses or well made knit tops or sweaters in natiral fibers and attractive styles. Tailored jackets. Quality jeans. Lingerie selection that offers both workaday practicality and date night sexy.
    It’s a tough role to fill because the plus size body varies greatly and is not as easy to cut for as a curveless size 2. A savvy retailer would see this as a golden opportunity.

  2. There is a store in Edmonton, Alberta named Fashion Addition whose clothes I love. I am a plus size and they have casual (Columbia), dress and work style clothes. But unfortunately they are only in western Canada. Would be nice if they expanded to major cities, ie Ottawa, in eastern Canada. Claire France has always been a favourite and fortunately they have retained some of their stores. Their clothes are also for the plus size and they carry casual and dress styles of good quality. I am hoping Pennington’s stays open, was very disappointed when Addition-Elle closed their stores.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

More From Retail Insider

Iconic Flo’s Diner in Toronto’s Yorkville Forced to Close After 33 Years Amid Landlord Dispute 

Retail Insider interviewed Flo’s co-owner who discusses the “heart wrenching” situation where he is being forced to close his business that began on Bellair Street in 1991.

Anatomy of a Leader: Teresa Spinelli, Owner of Alberta-Based Italian Centre Shop Ltd.

Spinelli discusses her leadership of the popular retailer which has expanded over the years, describing how she struggled to run the company at first and grew to love it.

Upscale Canadian Fashion Brand SMYTHE Expands with New Standalone Calgary Store [Interview/Photos]

It's the second store location for the Toronto-based brand, which is seeing success with its exclusive womenswear collections.

Toronto’s CF Sherway Gardens Hits Sales Milestone with Exciting Retail Growth and Future Plans [Interview]

The shopping centre is adding new retailers as sales per square foot hit an all-time high, with plans to re-tenant Nordstorm as foot traffic grows following Eataly's opening in the mall a few months ago.

ECS Coffee Opens Canada’s Largest Coffee and Espresso Equipment Gear Showroom and Retail Space in Toronto [Interview]

The new Etobicoke location is unique to Canada if not North America, according to its founder, with coffee roasting, equipment showroom, over 500 varieties of coffee, Youtube studio and various in-store experiences. He has plans to expand the concept nationally.

New Loblaws City Market Opens in Vancouver’s ‘The Post’ Building, Adding Grocery Competition to the Downtown Core [Podcast]

Craig and Lee discuss the opening of a new Loblaws City Market in downtown Vancouver's renovated Post building, and they explore its potential impact on local grocery shopping.

Loblaw Announces $2 Billion Investment in Canada for 2024 with Dozens of New Stores and 7,500 New Jobs [Expert Comment]

The retail behemoth will be growing substantially this year, following backlash over profits as inflation continues to impact Canadians.

Dubai-Based Asian Street Food Concept ‘Wok Boyz’ Expands into Canada with Plans for Multiple Locations [Interview]

The company's founder says the popular concept, with personalized meals, has an opportunity to grow substantially with its high-quality ingredients and theatrical flare, complete with fiery customer-facing woks.

Calgary Surge Basketball Team Launches Innovative Pop-Up at CF Chinook Centre to Boost Community Engagement [Interview]

The retail activation, which opened this month, is resulting in heavier foot traffic in a quieter part of the mall.

Upscale Pusateri’s Fine Foods to Close Yorkville Grocery Store in Toronto After 20 Years

The 5,500 square foot store opened to much fanfare in 2003, with valet parking, private chefs and pricey goods. 

Loblaw and Walmart Could be Forced to Adhere to Grocery Code of Conduct with Legislation [Op-Ed]

Sylvain Charlebois says that it's rare for all of Canada's political parties to agree, signalling a shift that could force grocers to comply amid record inflation.

Factory Direct to Shut All 14 Stores Amid Bankruptcy, Liquidation to Begin Saturday

The company, founded in 1995, is one of Canada’s largest privately owned discount retailers which struggled with declining sales and increasing costs following the pandemic.

What to Expect for the Canadian Retail and Hospitality Sectors in 2024 [Video Interview]

Michael Kehoe provides an expansive overview of what's expected for Canada's retail industry in 2024, and how the commercial real estate industry is becoming more dynamic than ever.

Anatomy of a Leader: David Lui, CEO of Kit and Ace and Co-Founder of Unity Brands

Lui has an extensive background in retail with over 30 years of experience and is known for his award-winning brand transformations, e-commerce and digital knowledge along with his passion for scaling businesses.

Robotic Retail Gaining Traction in Canada, But Some Consumers are Being Left Behind [Op-Ed]

Automated retailers without in-store staff are opening across Canada, such as Aisle 24, RC Coffee and PizzaForno -- but consumers without smart phones, credit cards, or with vision issues may not be able to access these retailers says a researcher.

Oakridge Park Announces 1st Luxury Retailers, Attracting Top Brands to Vancouver [Podcast]

Craig and Lee discuss the latest Oakridge Park announcement, highlighting the addition of luxury and upper contemporary brands to Vancouver's retail landscape and how it will impact downtown.

Interview on What it Takes: Lee Valley Tools Named Top Retailer in Ontario for Customer Service

The company's COO Jason Tasse discusses the retailer's secret sauce for having an engaged workforce, while also discussing plans to expand with more stores and retail concepts.

Survey Data Shows Canadians will Prioritize Romance Over Budget Cuts This Valentine’s Day [Interviews]

David Litwin of Moneris notes that Valentine's is an interesting bellwether for what businesses might expect from consumers for the rest of the year.

Anine Bing to Open 2nd Canadian Storefront at the Four Seasons Hotel in Toronto 

The US-based women’s fashion brand recently opened its first Canadian store at Yorkdale, and will open its second location in a downtown luxury hotel. 

Retail Burnout Crisis in Canada: The Call for Empathetic Leadership and Proactive Solutions Amid Operational Strains [Feature]

It's never been more difficult to work in retail, with store managers burning out amid lower staffing numbers, increased task and store robberies. Two industry experts discuss the situation.

RECENT RETAIL INSIDER VIDEOS

Advertisment

Subscribe to the Newsletter

Subscribe

* indicates required

RECENT articles

Iconic Flo’s Diner in Toronto’s Yorkville Forced to Close After 33 Years Amid Landlord Dispute 

Retail Insider interviewed Flo’s co-owner who discusses the “heart wrenching” situation where he is being forced to close his business that began on Bellair Street in 1991.

Anatomy of a Leader: Teresa Spinelli, Owner of Alberta-Based Italian Centre Shop Ltd.

Spinelli discusses her leadership of the popular retailer which has expanded over the years, describing how she struggled to run the company at first and grew to love it.

Upscale Canadian Fashion Brand SMYTHE Expands with New Standalone Calgary Store [Interview/Photos]

It's the second store location for the Toronto-based brand, which is seeing success with its exclusive womenswear collections.

Toronto’s CF Sherway Gardens Hits Sales Milestone with Exciting Retail Growth and Future Plans [Interview]

The shopping centre is adding new retailers as sales per square foot hit an all-time high, with plans to re-tenant Nordstorm as foot traffic grows following Eataly's opening in the mall a few months ago.

ECS Coffee Opens Canada’s Largest Coffee and Espresso Equipment Gear Showroom and Retail Space in Toronto [Interview]

The new Etobicoke location is unique to Canada if not North America, according to its founder, with coffee roasting, equipment showroom, over 500 varieties of coffee, Youtube studio and various in-store experiences. He has plans to expand the concept nationally.

New Loblaws City Market Opens in Vancouver’s ‘The Post’ Building, Adding Grocery Competition to the Downtown Core [Podcast]

Craig and Lee discuss the opening of a new Loblaws City Market in downtown Vancouver's renovated Post building, and they explore its potential impact on local grocery shopping.

Loblaw Announces $2 Billion Investment in Canada for 2024 with Dozens of New Stores and 7,500 New Jobs [Expert Comment]

The retail behemoth will be growing substantially this year, following backlash over profits as inflation continues to impact Canadians.

Dubai-Based Asian Street Food Concept ‘Wok Boyz’ Expands into Canada with Plans for Multiple Locations [Interview]

The company's founder says the popular concept, with personalized meals, has an opportunity to grow substantially with its high-quality ingredients and theatrical flare, complete with fiery customer-facing woks.

Calgary Surge Basketball Team Launches Innovative Pop-Up at CF Chinook Centre to Boost Community Engagement [Interview]

The retail activation, which opened this month, is resulting in heavier foot traffic in a quieter part of the mall.

Upscale Pusateri’s Fine Foods to Close Yorkville Grocery Store in Toronto After 20 Years

The 5,500 square foot store opened to much fanfare in 2003, with valet parking, private chefs and pricey goods. 

Loblaw and Walmart Could be Forced to Adhere to Grocery Code of Conduct with Legislation [Op-Ed]

Sylvain Charlebois says that it's rare for all of Canada's political parties to agree, signalling a shift that could force grocers to comply amid record inflation.

Factory Direct to Shut All 14 Stores Amid Bankruptcy, Liquidation to Begin Saturday

The company, founded in 1995, is one of Canada’s largest privately owned discount retailers which struggled with declining sales and increasing costs following the pandemic.

What to Expect for the Canadian Retail and Hospitality Sectors in 2024 [Video Interview]

Michael Kehoe provides an expansive overview of what's expected for Canada's retail industry in 2024, and how the commercial real estate industry is becoming more dynamic than ever.

Anatomy of a Leader: David Lui, CEO of Kit and Ace and Co-Founder of Unity Brands

Lui has an extensive background in retail with over 30 years of experience and is known for his award-winning brand transformations, e-commerce and digital knowledge along with his passion for scaling businesses.

Robotic Retail Gaining Traction in Canada, But Some Consumers are Being Left Behind [Op-Ed]

Automated retailers without in-store staff are opening across Canada, such as Aisle 24, RC Coffee and PizzaForno -- but consumers without smart phones, credit cards, or with vision issues may not be able to access these retailers says a researcher.

Oakridge Park Announces 1st Luxury Retailers, Attracting Top Brands to Vancouver [Podcast]

Craig and Lee discuss the latest Oakridge Park announcement, highlighting the addition of luxury and upper contemporary brands to Vancouver's retail landscape and how it will impact downtown.

Interview on What it Takes: Lee Valley Tools Named Top Retailer in Ontario for Customer Service

The company's COO Jason Tasse discusses the retailer's secret sauce for having an engaged workforce, while also discussing plans to expand with more stores and retail concepts.

Survey Data Shows Canadians will Prioritize Romance Over Budget Cuts This Valentine’s Day [Interviews]

David Litwin of Moneris notes that Valentine's is an interesting bellwether for what businesses might expect from consumers for the rest of the year.

Anine Bing to Open 2nd Canadian Storefront at the Four Seasons Hotel in Toronto 

The US-based women’s fashion brand recently opened its first Canadian store at Yorkdale, and will open its second location in a downtown luxury hotel. 

Retail Burnout Crisis in Canada: The Call for Empathetic Leadership and Proactive Solutions Amid Operational Strains [Feature]

It's never been more difficult to work in retail, with store managers burning out amid lower staffing numbers, increased task and store robberies. Two industry experts discuss the situation.