The company that owns clothing shops Ricki’s, Bootlegger and Cleo is preparing to close stores and eliminate jobs as part of a restructuring after the retailer won court protection from creditors Thursday.
Ontario-based Comark Inc., which was granted creditor protection under the Companies’ Creditors Arrangement Act, said all three banners would be affected but didn’t specify how many locations would close.
Comark, which has more than 300 stores, is the latest to fall victim to a brutally competitive retail landscape that’s claimed more than half a dozen established names in the past several months — not least Target Canada.
Retail spending had remained surprisingly strong up until December, according to Statistics Canada data, but spending has taken a tumble since then. Experts suggested on Thursday a slowdown in retail spending is now taking hold, something that will further exacerbate pressure on retailers.
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Elevated debt levels are helping to curb discretionary spending among some households, while the loonie’s drop is lifting prices on products like clothing and footwear, Avery Shenfeld, CIBC’s chief economist said.
“Retailers are paying more for stuff,” Shenfeld said, and those costs are flowing into prices.
Spending slowdown
The economic damage inflicted by lower oil prices on things employment and consumer confidence “dramatically outweigh” the extra lift in the pocketbook consumers are getting from lower pump prices, the economist said.
Comark’s chief executive, Gerry Bachynski, said the retail company has the support of its lenders and shareholders.
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“Together, we are firmly committed to emerging from creditor protection financially stronger, more competitive and well-positioned for the future,” he stated in a news release.
The company said it will continue to update in store stock with the latest brands and honour its reward programs, gift cards and exchanges.
Comark has about 400 employees at its headquarters and Cleo office in Mississauga, Ont., Bootlegger regional office in Richmond, B.C., Ricki’s office in Winnipeg and a distribution centre in Laval, Que.
Battered sector
The number of employees at the stores wasn’t immediately available. Established in 1976, the company faces many of the same challenges that has battered Canada’s retail sector.
Marketing expert Brynn Winegard of Winegard & Co. says more small- to medium-sized Canadian retailers will close over the coming months as the economy weakens and consumer confidence takes a hit.
“Unless the oil prices and spending power increase soon we’re headed to an economic downturn and so it doesn’t mean good things for retail because that’s where everyone gets hit first,” she said.
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Lingerie and swimwear retailer Boutique La Vie en Rose signed a deal this week to buy Bikini Village and keep most of the insolvent chain’s stores open. But other retailers haven’t been as lucky. Mexx, Boutique Jacob, Target, Smart Set and Parasuco are in the process of closing stores.
— with files from Canadian Press
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