‘V’ recovery too late for some retailers

Permanent closures – including Army & Navy – pockmark Canada’s retail sector despite reports of a promising sales recovery in May and June

By
Glacier Real Estate Media
August 4, 2020





Jacqui Cohen, Army & Navy
— Jacqui Cohen, owner of Army & Navy: closing for ever after 101 years. | Chung Chow

A spike in consumer buying that has sparked hope for a “V shaped recovery” from the pandemic comes too late for scores of retailers who have closed for good.

Canadian retail sales in May rose 18.7 per cent from April, led by vehicle sales and clothing stores, with most sectors showing gains, based on Statistics Canada data.

“If June’s preliminary estimates for a 24.5 per cent increase holds, sales are already back to February levels,” according to Bryan Yu, deputy chief economist at Central 1 Credit Union.

E-commerce sales continued to rise, with sales up 110 per cent from a year ago in May, making up 8 per cent of sales.

“Despite persistence of high levels of unemployment due to the pandemic, Canadian retailers are experiencing a ‘V’ shaped recovery,” Yu said.

But the carnage started early in the pandemic and  has continued into August.

Some retailers are already throwing in the towel, and more are expected to follow in the coming weeks and months.

April saw Vancouver-based footwear chain Ronsons close its 18 stores, all in B.C., after 32 years in business.

On May 9 Vancouver-based Army & Navy announced it would permanently close its five remaining stores after 101 years in operation. That includes the Army & Navy flagship store in downtown Vancouver as well as outlets in New Westminster, Langley, Edmonton, and Calgary.

"In March, we were forced to shutter all of our stores and layoff our staff,” said Army & Navy owner Jacqui Cohen. “We had hoped to re-open but the economic challenges of COVID-19 have proven insurmountable."

In May, Montreal-based footwear retailer Aldo filed for bankruptcy protection. The company has announced plans to close half of its locations, with a goal to remain operational.

On August 3 clothing giant Ascena Retail Group Inc., the parent company of Ann Taylor, Loft and Justice, said it will close all of its clothing stores in Canada. The closures are part of the Chapter 11 bankruptcy proceedings and restructuring New Jersey-based Ascena began in the wake of COVID-19.

There are four Ann Taylor, nine Loft and 37 Justice stores in Canada.

Other struggling U.S. chains with stores in Canada  include clothingchain J. Crew, which has already filed for bankruptcy; health and nutrition retailer GNC, which filed for bankruptcy  in the U.S. on June 24 and said it will close at least 29 stores in Canada; L. Brands, which is closing 250 Victoria’s Secret stores in the U.S. and Canada this year, and others, according to Retail Insider.

B.C.’s retail downturn has been shallower than those in other parts of the country, Yu noted, since the pandemic outbreak surfaced in February.

Through five months, B.C. sales fell 6.9 per cent from the same period 2019 amid deep declines at auto, furniture and clothing stores and gas stations. In contrast, with much of the population staying and working at home, grocers, building material stores and electronics stores have seen sales rise.

But Yu said the apparent retail recovery is likely to face headwinds once federal fiscal programs wind down

“Momentum is expected to slow in the second half this year as the economy settles into a new normal of a weak economy, and high unemployment, while fiscal support rolls off,” Yu cautioned.


Frank O'Brien is the editor of Western Canada's biggest commercial real estate newspaper, Western Investor, as well as a contributing editor at West Coast Condominium, real estate contributor to Business in Vancouver and a regular media commentator on real estate investment.
Copyright © Western Investor

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