Canadian Retail Space for Lease
In the last 18 months, numerous retailers have abandoned the Canadian market place. Most have cited online competition and a turbulent economic context as key threats to their success. Here are some of the most notable retailers that have recently freed up Canadian mall space.
Target – Target entered and exited the Canadian market with the same amount of consumer and media attention. Analysts widely noted that the retailer had not met consumer expectations with its product offering, omitting many of the brands available at US locations from its 133 Canadian stores and website. But the Canadian issues did not seem to impact overall performance as Target’s US parent boosted dividends by 7.7% to US$0.56/share and doubled the share buyback program to US$10Bn with its Q1 2015 financials.
Black’s Photography – Telus, Black’s Photography’s owner since 2009, announced last week that it would be shutting down all 59 locations across Canada. The 70-year-old chain said that it had been struggling in the face of a changing photography retail landscape as fewer customers opted for printing photos in favour of online sharing. Black’s has attempted to reinvent itself: since 2014 it has focused on digital prints and photo gift items, but it was unable to achieve growth and profitability.
Future Shop – In March, BestBuy announced that it would close down 66 Future Shop stores and convert the remaining 65 to BestBuy locations to eliminate brand redundancy. Electronics retailers have fallen victim to “show rooming” with more customers visiting the stores purely to test out products and buying them later online for less. Analysts see this as a shift in consumer attitudes away from large retail spaces to smaller, boutique experiences.
Sony – A former leader in consumer electronics, Sony quietly and quickly removed itself from the Canadian market earlier this year without much discussion. The company released a statement that it would close 14 stores across Canada and directed consumers to purchase its products at third-party retailers.
Mexx – Mexx Canada filed for bankruptcy protection in late 2014, owing creditors $113.4 million (mostly to related companies Mexx Europe and Lifestyle). After restructuring efforts failed in both Canada and the Netherlands with no buyer emerging to continue operations, Mexx closed all 95 stores in Canada in the first 60 days of 2015.
Jacob – A Canadian retailer since 1977, Jacob abandoned restructuring efforts and began closing down its 92 stores in late 2014. Despite efforts to “breathe new life into the company” with a re-launch plan and attempts to find new financing, the insolvent retailer began to liquidate inventory in stores and online. The company cited a difficult economic environment and decrease in mall traffic as reasons for its declining sales.
Smart Set – In November, Reitmans revealed plans to close 31 Smart Set stores across Canada and convert the remaining 76 stores to operate under its other banners. Previously, Reitman’s tried to reposition Smart Set, which comprised about 10% of all sales, to attract a more urban demographic of young career women but faced fierce competition. The decision came as part of overall company restructuring.
Posted by Olga Ivleva, Senior Associate, Range Advisors
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