Canadian women’s retailer Northern Reflections is poised to grow after a corporate and financial restructuring process that is being supported by JAMCO Capital Inc., a Vancouver-based venture capital firm.
Christopher Kape, President of JAMCO Capital, said Northern Reflections, which was founded in 1985, has been a mainstay in the Canadian retail landscape for decades, and “this restructuring event ensures it will continue to bring its much-loved ladies wear to Canadian women across the country for years to come.”
JAMCO is a family office/venture capital firm that actively invests its own capital and puts its operating knowledge into a very diverse group of companies.
“We’ve not done anything in the retail space until now. We’ve mostly focused on the ecommerce, online space over the last 20 some odd years. But we are agnostic in our industries. It just so happens that most of the industries that we’ve invested in have been wellness or skin care or online gambling around the globe, which in and of itself has paid off tremendously in the last few years just because of the changes in the legal landscape in that industry,” said Kape.
Northern Reflections delivers moderately-priced fashions nationwide, strategically focused on the largely underserved demographic of women aged 45 and over.
“To be honest, the retail space has never been that attractive in so far as how fast it was growing. It was a mainstay of course of the economy but when you looked at the ‘new economy’ from 2000 onwards, everything was focused on hyper growth in the online space. We were always attracted to that. We always look for ways to achieve higher returns with our capital,” said Kape.
“The reason why Northern Reflections became something exciting for us is because 2020 of course was the worst year on record for Canadian retailers — it might have been the worst year on record in the history of the world for any retailer. When you’re chasing opportunity, it’s like the stock market, you kind of look for diamonds in an industry where things have been kicked down quite a bit. Certainly COVID has presented a tremendous amount of challenges during the last year and a bit. But many companies in retail have slimmed down as a result of COVID, have renegotiated with landlords and suppliers in an effort to stay afloat. Almost everybody is operating as lean and as efficiently as possible.
“For some retailers that still has resulted in CCAA (creditor protection) filing or some sort of court order protection or in some cases a full on bankruptcy. In other words, that’s resulted in a very slimmed down and lean operation. Northern Reflections was somewhere in the middle of there. It has done everything it could but it still needed some capital to get to the other side of COVID and the reason why it needed that capital is they were under tremendous stress to repay back their asset based lending. I won’t say who the lender is but it is one of the Canadian banks.”
Kape said JAMCO looked at a number of other deals including a high profile one which he can’t name. The company had touched base in the past year with different ABL groups letting them know that if any retailers came to them with problems and needed some capital injection JAMCO might be interested. The venture capital firm then began to receive a number of inquiries.
“Northern Reflections is one of those darlings. It operates in a great space with fewer competitors, even fewer as a result of COVID. It’s really cleaned itself up. It has quite a number of employees. It’s a good Canadian company. A nice business to save. And it had a lot of appeal from the perspective of the fundamentals of the business,” said Kape.
The JAMCO investment will allow Northern Reflections to maintain its 135-store footprint from coast to coast along with its approximate 800 jobs.
“This has been a collaborative achievement that brought together all our stakeholders: our dedicated employees, manufacturers, suppliers, landlords, vendors and others,” said Lalonnie Biggar, president of Northern Reflections. “Like so many other retailers, COVID-19 brought unforeseen challenges to our operations. Now, thanks to the significant financial support of JAMCO, we are set up for success as we emerge from this period as a stronger, more efficient and better focused organization.”
Kape said Northern Reflections has migrated to newer ways in having customers interact with the retailer including purchases over the phone, curbside pickup, and ecommerce.
“And we’re talking about an older demographic of women in Canada and they were a little bit resistant, not as a full group, but it’s a little harder to move people to the online space when they’re in their 60s, 70s. We took a lot of time in showing them how beneficial it was to utilize all these new tools we had available to them to continue their shopping,” he said.
“The company knows its customer base quite well. The managers and employees in the stores are actually on a first name basis with many of their customers and they were able to really guide them through the processes via phone or via email in all these other ways to do things. And we did have an uptick in that type of shopping by quite a substantial percentage. It didn’t of course account for replacing the loss in bricks and mortar sales but it certainly was a great uptick.
“As far as growing from the 135 store footprint, there’s a tremendous amount of opportunity once COVID is kind of abated. Many of our competitors are either under court protection or have closed completely. We believe that with a few of these groups out of the way, it lends itself to a new landscape for us where our competition is a little less and where we can open up new stores in shopping centres and facilities that maybe were unavailable to us before in the sense that they were very expensive for the lease rates or there were competitors in the area that made it a little bit hard to justify opening in those locations. Now the landscape has completely shifted such that we will be able to roll out into these new areas.”
Northern Reflections’ office is based in Toronto and will remain there. The entire employee base will be kept including the executive management team.
“Canadian household spending decreased in 2020 by quite a substantial amount of money, lending itself to a huge amount of savings. The last figure I read was over $200 billion and most of those Canadians . . . are all interested in getting back to what I would include the new normal which has to include socializing, getting out there, restaurants, going to work. Even if it’s going to change, it’s still going to require a lot more outward focus. With that savings, with that extra money, with the ability to go back out, and quite frankly a lot of us have gained a little bit of weight and with the fact we’ve gained some weight we need a new wardrobe,” said Kape.
“We anticipate that the retail sector is going to see a big resurgence once COVID is behind us. People will have to go shopping. They will have to go get new clothing. And it’s one of those things that’s very hard to do online exclusively. This is where I could see the true opportunity for JAMCO.”