A Winnipeg-founded retail chain is seeking a Manitoba court’s approval to liquidate its 128 stores across the country.
Warehouse One announced Wednesday that it had begun proceedings under the Companies’ Creditors Arrangement Act (CCAA) that would allow the denim retailer to begin shutting down.
“After careful consideration of all reasonably available options, the company has made the difficult decision to commence the CCAA proceedings to allow for an orderly wind down of its operations, including all Warehouse One and Bootlegger retail locations,” Warehouse One wrote in a news release.
The company currently operates 128 retail stores under its Warehouse One and Bootlegger banners in Alberta, British Columbia, Saskatchewan, Manitoba, Ontario, Newfoundland, Nova Scotia, New Brunswick and Yukon.
Increased competition, operational challenges, poor sales
On Wednesday, the Court of King’s Bench of Manitoba granted an initial order made by the company, which, among other things, prevents its creditors from seeking repayment.
According to a pre-filing report by appointed CCAA monitor Alvarez & Marshal Canada Inc., the denim retailer has suffered financial losses due to increased competition from online retail and fast fashion, operational challenges and generally poor sales performance.
The company’s shareholders and affiliates have given ‘significant funds’ in excess of $39 million through a series of inter-company loans that began in 2020, the filing said.
The company also tried to tighten its belt in a series of cost-reduction initiatives. However, its financial performance continued to deteriorate, the documents say.
“The shareholders are not prepared to advance further funds in the circumstances, and without access to further funding, the applicant cannot pay its obligations in the ordinary course,” the filing said.
As a result, the company is insolvent and unable to pay its rent and payroll costs.
The company now intends to return to court in the coming days to seek a further order to approve the liquidation of its stores.
‘Its time has passed’
Warehouse One was founded in 1977 out of the trunk of Winnipeg denim designer Max Maryk’s car, before he and his family opened their first storefront on Henderson Highway.
Retail analyst Bruce Winder said the company’s closure so many decades later is to be expected, as the retail landscape has shifted substantially since Warehouse One sold its first pair of jeans.
“It just feels like its time has passed. They had a great run. It’s a great story, but I’m really not surprised, unfortunately, that they’re exiting right now,” he said.
According to Winder, mall-based stores like Warehouse One and Bootlegger are struggling, as fewer shoppers flock to the brick-and-mortar complexes in favour of online shopping.
When they do make it to the mall, consumers are met with more international options, often with cheaper prices.
“You’ve got The Gap and you’ve got American Eagle and other sorts of brands. Levi’s has done a really good job as well,” he said.
“So there’s a lot of international companies that have really dialed up their presence in Canada, and even they have struggled at some point.”
