Store closures announced by CTC, while HBC seeks creditor protection
Two big Canadian retailers have announced big plans, with one closing stores while the other seeks creditor protection.
Canadian Tire (CTC) will be closing some stores under its Atmosphere brand as part of a four-year restructuring strategy.
Overall, CTC will shut down 17 “uncompetitive, standalone” Atmosphere stores, with 14 sites to be co-located within SportChek stores, said the company.
The move is part of arevised go-to-market strategy for its Atmosphere business under a new “True North” strategy.
“We will operate more efficiently and go to market more strategically, harnessing our banners and loyalty system to elevate our scale,” said Greg Hicks, president and CEO, CTC, about the strategy.
Family Dollar and The Body Shop, among others, have also announced they are closing numerous locations in Canada.
CTC did not specify whether the closure of Atmosphere stores will result in layoffs for workers. Currently, the company “is trying to place employees impacted by the changes at other locations as their stores in Western Canada close over the next four months,” according to CTV News.
Meanwhile, Hudson’s Bay Company ULC is undergoing Companies’ Creditors Arrangement Act (CCAA) proceedings, following an initial order for creditor protection from the Ontario Superior Court of Justice.
The federal act give financially troubled corporations the opportunity to restructure their affairs.
“By allowing the company to restructure its financial affairs, through a formal Plan of Arrangement, the CCAA presents an opportunity for the company to avoid bankruptcy and allows the creditors to receive some form of payment for amounts owing to them by the company,” noted PwC.
Pursuant to the initial order, the Ontario court has appointed Alvarez & Marsal Canada as the monitor to oversee the CCAA proceedings.
The order also grants a stay of proceedings in favour of Hudson’s Bay and its subsidiaries for an initial period of 10 days, with the possibility of further extensions as deemed appropriate by the court. The stay of proceedings extends to Hudson’s Bay’s real estate joint venture with RioCan.
Lenders have committed a $16 million advance to the company. Hudson’s Bay will be seeking additional financing to fund its operations during the CCAA proceedings.
“While very difficult, this is a necessary step to strengthen our foundation and ensure that we remain a significant part of Canada’s retail landscape, despite the sector-wide challenges that have forced other retailers to exit the market,” said Liz Rodbell, president and CEO of Hudson’s Bay. “Now more than ever, it is critical that Canadian businesses are protected and positioned to succeed.”
Hudson’s Bay said that it – along with other retailers – has been navigating “significant macroeconomic and industry-wide pressures,” including:
Trade and financing uncertainty – Ongoing trade tensions with the U.S. – including the new and wide-ranging tariffs on exports to the U.S., together with retaliatory tariffs imposed by Canada on U.S. imports – have created economic uncertainty, directly impacting refinancing efforts and limiting access to the capital needed to support the business.
Post-pandemic shifts – Marked shifts in Canada’s corporate culture resulting from work-from-home policies has created a permanent and drastic population reduction in downtown stores. This – among other long-lasting impacts of pandemic-related challenges – has put significant pressure on the retail sector.
Economic headwinds – Rising costs of living, higher mortgage rates and a weakening Canadian dollar have strained household budgets, leading to subdued discretionary consumer spending and broader economic challenges.
A majority of Canadian companies remain confident in their ability to endure a prolonged Canada-U.S. tariff war, even if it extends beyond 12 months, according to a previous KPMG report.
CTC is also making numerous changes in its leadership team as part of the company’s new strategy.
Specifically, it has appointed Susan O'Brien as EVP & chief transformation officer. A 17-year company veteran, she was most recently EVP & chief brand and customer officer.
The company also named TJ Flood as EVP & chief operating officer, leading CTC's newly centralized banners, including Canadian Tire, Mark's and SportChek. A 20-year company veteran, he was most recently EVP & president of Canadian Tire Retail and previously president of SportChek. CTC will soon appoint an EVP & chief commercial officer responsible for growing Triangle Rewards, customer insights and core retail processes, it said.
Meanwhile, Darren Myers, CTC's new EVP & chief financial officer, will come on board April 1. He is a three-time CFO at Canadian companies, previously responsible for large-scale transformations in retail and other sectors.
A report released in February noted that Canada Post is laying off nearly 50 managers as part of a cost-cutting initiative following years of financial losses.
