Canadian Tire Acquires 10 Bed Bath & Beyond Leases to Open Brand Stores [Interview]

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Canadian Tire Corporation is expanding its Mark’s store footprint with the acquisition of several real estate leases formerly held by Bed, Bath & Beyond in Canada.

The retail giant announced Tuesday it was acquiring 10 of those leases for $1.6 million. 

Acquiring these leases will enable CTC to continue building on the growth of its Mark’s and Pro Hockey Life (PHL) banners. CTC has designated six of the 10 leases acquired for Mark’s relocations in Grande Prairie, Medicine Hat, Red Deer and Strathcona County (Alberta), Langley (BC), and Oakville (Ontario), it said.

“Following our 10th consecutive quarter of growth in Q4 2022, Mark’s is continuing to build on its incredible momentum in the Canadian market by strategically relocating six retail spaces to more convenient and larger sites,” said PJ Czank, President of Mark’s, in a statement. “These relocated stores will feature more products and deeper assortments of our best brands to meet the needs of our customers in Alberta, British Columbia and Ontario.”

Photo: Bed Bath & Beyond

In addition to the Mark’s relocations, the agreement will allow CTC to implement plans for four new Pro Hockey Life (PHL) stores in Ontario. The 10 leases combined represent more than 242,000 square feet of retail space, added the company.

Canadian Tire Corporation, Limited is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Its retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark’s, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands. 

There are close to 1,700 retail and gasoline outlets. In addition, CTC owns and operates Helly Hansen, a leading technical outdoor brand based in Oslo, Norway. 

Retail Ventures CND Inc. was retained by Bed Bath & Beyond Canada LP and Alvarez & Marsal Canada Inc. (court monitor), to facilitate the sale of leases or other property rights for 54 leases of Bed Bath & Beyond and the 11 leases of Buy Buy Baby across the country.

Pro Hockey Life at South Edmonton Common

Sam Winberg, Principal/Broker of Retail Ventures CND, said the brokerage worked under the direction of Dave Rosenblatt, Partner at Osler, Hoskin & Harcourt, LLP in Toronto, in the process that concluded on March 31.

He said 48 leases were “purchased”.  

“There were a total of 65 leases for sale but through the due diligence process some leases were not able to be sold. Various reasons like insufficient term, exclusives or restrictions,” he said.

“Some landlords bought back their own leases to control future tenancy. Retailers bought the rest of the stores. There is very little large format space available in the better power centres across Canada.  Demand for space is stronger than supply.”

In a previous Retail Insider story, Winberg, who was an original founder of Northwest Atlantic Canada in 1991, which was sold to JLL in 2018, said interested parties could purchase the lease and have the courts endorse the assignment.

“When Bed Bath & Beyond filed (under the Companies’ Creditors Arrangement Act), the Monitor reached out to us because we had experience doing this and have asked us to help them in trying to create value from the 65 leases that Bed Bath & Beyond and Buy Buy Baby have.

“During (court) filings, the Monitor’s job is to try to create value to pay debts of the filing company.”

Bed Bath & Beyond’s flagship store in the Chelsea neighborhood in Manhattan

Court documents filed in the Ontario Superior Court of Justice on February 10 under the Companies’ Creditors Arrangement Act indicated that the Bed Bath & Beyond Group has been in financial difficulty for the past several years, suffering significant net losses since 2018. 

“Over this period, BBB Canada itself has seen dramatic declines in revenues. In an effort to improve the Bed Bath & Beyond Group’s financial performance, former management embarked on a series of initiatives designed to transform the business. Unfortunately, the COVID-19 pandemic and the broader economic downturn significantly disrupted the Bed Bath & Beyond Group’s operations, putting further financial strain on the entire enterprise, including BBB Canada, and hindering the transformational efforts of management,” said the documents. 

“The Bed Bath & Beyond Group’s situation significantly worsened throughout 2022, with declining year-over-year sales in both the United States and Canada, multiple credit rating downgrades, cash flow constraints, and significant inventory reductions. Cash constraints caused delays and stoppages of merchandise shipments to BBB Canada’s stores, causing inventory levels to decrease dramatically.”

As of January 31, BBB LP employed approximately 387 full-time employees and 1,038 part-time employees in connection with its retail operations across Canada.

“The North American retail industry has experienced a period of rapid change and shifting consumer demands over the past number of years. Even prior to the COVID-19 pandemic, retailers like the Bed Bath & Beyond Group faced dramatic declines in retail foot traffic as consumers shifted their spending to online platforms like Amazon and Wayfair. The rapid changes resulted in a surge of retail bankruptcy filings,” said the court documents. “The Bed Bath & Beyond Group was not immune to the foregoing challenges. By 2018, its revenues were declining and it was reporting significant net losses. Recognizing the need to quickly adapt, the Bed Bath & Beyond Group’s former management developed a comprehensive plan to transform its business and position itself for long-term success.

Closed Store Signage at Bed Bath & Beyond Lincoln Square in Manhattan (Image: Dustin Fuhs)

“Unfortunately, the Bed Bath & Beyond Group’s efforts to restructure its operations was interrupted in its early stages by the global COVID-19 pandemic in March 2020. The impact of the COVID-19 pandemic extended beyond the immediate effect of store closures and resulted in global supply chain disruptions and persistent inflation. Ultimately, the Bed Bath & Beyond Group’s liquidity constraints resulted in a significant number of key suppliers either tightening or revoking the ability of the Bed Bath & Beyond Group to access inventory on credit. 

“In 2022, the Bed Bath & Beyond Group announced that it had taken steps to address its liquidity constraints and improve its balance sheet and cash flows. The process of remedying the Bed Bath & Beyond Group’s business and financial decline, however, continued to be complex and challenging throughout the Fall of 2022. While the Bed Bath & Beyond Group successfully reduced its accounts payable, raised gross proceeds of approximately US $75 million through an at-the-market offering program, and cleared out a significant portion of its excess private-label goods, inventory issues continued to plague the Bed Bath & Beyond Group through the 2022 holiday season.”

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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