MONTREAL – Fashion retailer Le Chateau plans to close another 40 stores across Canada over the next three years as part of ongoing efforts to turn around its money-losing operations.
The Montreal-based company (TSX:CTU.A) has been shuddering under-performing stores and renovating others as it “recalibrates” its retail network in the face of growing e-commerce purchase.
It closed 11 stores in the last year to reach 211 locations and plans to shudder another 14 stores in 2016.
By early 2019, Le Chateau expects to shrink its retail network to about 900,000 square feet or 171 stores, the smallest size since 2007 and a 30 per cent reduction since it began closing stores in 2012.
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The chain said most of the additional closures will be in fashion big box and discount outlet stores.
Le Chateau said it is adjusting to an evolution of consumer shopping habits towards online shopping.
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“In light of this evolution, the high concentration of stores in large urban markets – a successful model in the pre-digital world – is no longer required,” it said in a news release Friday that included last year’s financial results.
The chain lost $35.7 million or $1.19 per share for the 12 months ended Jan. 31.
That compared with a loss of $38.7 million or $1.34 per share a year earlier.
Sales decreased 5.3 per cent to $236.9 million, as same-store sales slipped 1.9 per cent.
The company didn’t disclose total e-commerce sales, but said they grew 34.8 per cent.
READ MORE: Le Chateau third-quarter loss narrows on cost-cutting but sales shrink
In the fourth quarter, the net loss was $6.9 million, a more than 40 per cent improvement over the previous year, as store closures reduced sales 7.5 per cent to $65.2 million.
In the first quarter ended April 9, sales were down 3.7 per cent.
The company renovated five urban stores last year and launched a marketing campaign to raise brand awareness, which boosted women’s wear and footwear sales.
Industry analyst Jean Rickli of J.C. Williams Group said Le Chateau has been slow in closing stores and embracing e-commerce.
“They’re struggling,” he said in an interview.
“I think they are starting to get it now but we find it’s late.”
On the Toronto Stock Exchange, Le Chateau’s shares were up almost 9.1 per cent to 24 cents in morning trading.
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