COVID-19 has slammed Canada’s fashion sector like a hurricane, causing serious damage and likely leaving a few casualties in its wake.
The mass closing of malls and offices along with the cancellation of celebrations and big events has been devastating, says the head of Harry Rosen, one of the country’s leading men’s clothing retailers.
“We’re surviving,” said company chairman and CEO Larry Rosen, adding that online orders have surged almost 500 per cent.
“It’s been very, very strong, but it still doesn’t make up for our national retail footprint.”
Rosen said the coronavirus has accelerated trends facing the sector, including the growing “casualization” of the workplace and e-commerce sales.
“I mean, people aren’t wearing a sports jacket when they’re working from home,” he said.
While some office-wear sales may never come back even after offices reopen, Rosen believes most will because there will always be times for people to dress up for business or special occasions.
“If people can sit at home and wear a pair of sweats, they’re going to wear a pair of sweats, but this will change. It will come back. How quickly no one’s really sure, but it will come back.”
The company has responded to the challenges by taking advantage of federal support programs, cutting costs, shoring up its liquidity and marking down products earlier, with the summer sale starting before Father’s Day.
Rosen said the 66-year-old company will continue but competitors that came into the crisis with a lot of debt will be at risk.
“I think a number of companies will seek statutory protection. I don’t believe it’s over. I believe there’s still more to go.”
Reitmans (Canada) Ltd. announced last month that it will close two of its retail chains and lay off roughly 1,400 workers as the company continues a restructuring amid the pandemic.
The Montreal-based retailer plans to shutter its 77 Addition Elle stores on Aug. 15 and 54 Thyme Maternity locations on July 18.
Well-run brands are feeling the pain but will likely survive, experts say. Many others that faced problems before the pandemic will not. (Hannah McKay/Reuters)
Modasuite Inc., which operates Frank and Oak, recently filed a notice of intention that it plans to file a proposal under the Bankruptcy and Insolvency Act.
Total retail apparel sales will decrease 28 to 32 per cent in 2020, while luxury apparel sales should drop 16.8 per cent, says Trendex, a marketing intelligence company specializing in the Canadian and Mexican apparel markets.
It expects 10 to 15 major apparel chains will either close or drastically reduce their retail footprint.
“Bottom line, apparel retailing five years from now will be almost the same as it is today,” it wrote in its monthly report, adding that sales will not revert to 2019 levels until 2023.
Luxury brands like Harry Rosen aren’t likely to be hurt as much as the mid- to lower-end apparel and footwear retailers, says Bruce Winder, a retail analyst and author of the book Retail Before, During and After COVID-19.
“Some of the losers will be sort of those folks who are living at the margin,” he said in an interview.
“They’re not the best brand, they have a bit of a weak value proposition and their balance sheet was a little weak before all this hit. All this is doing is it’s pushing them over the edge.”
Among the chains that are likely hurting is Hudson’s Bay, said Winder, which may be forced to reduce its national footprint by 30 to 40 per cent.
“They are hurting big time. The Bay is literally sinking quickly and we don’t see the carnage because they aren’t public anymore.”
The chain, which recently reopened its Canadian stores and Saks locations, didn’t respond to requests for comment.
Strong fashion retailers like Aritzia Inc., H&M and Zara have been hit but will survive, Winder added.
Vancouver-based Aritzia said while interest in casual wear has increased as clients adapted to working from home, it believes there will be an appetite to refresh wardrobes as social and work environments reopen.
“As warm weather arrives and office work gradually resumes, we’re seeing encouraging customer response to both our office wear and more casual styles for summer 2020,” founder and CEO Brian Hill wrote in an email.
He noted that e-commerce sales grew by more than 150 per cent after its 96 stores were closed in mid-March.
The virus’s impact on the retail industry has been “without precedent” but the company’s financial position is strong and the affinity for its brands will help it to weather the storm, Hall recently told analysts, adding he’s expected a “long slow ramp” to a new normal.
Working from home has also been positive for yoga pants maker Lululemon Athletica Inc,. which has seen one of the largest quarterly gains in market share in recent years, says CEO Calvin McDonald.
“A new normal emerged, and we were encouraged to see how quickly our guests were embracing both working and sweating from home,” he said during a quarterly earnings call.
Unlike some fashion retailers, Lululemon has a high percentage of core products with a shelf life beyond the current season and has limited markdown risk.
McDonald believes virtual workouts will continue even as studios reopen and be part of the lifestyle shift to less formal wear.
“I think the things that won’t change play to our strength, and that’s living an active, healthy lifestyle. And the things that will change equally play to our strength, and that is more work-from-home, looking for comfort.”
Roots Corp. said it experienced the same benefit from a change in individual habits as business shifted to work from home.
“We benefited from higher demand for our extensive sweats offering in our online channel. To capitalize on this demand, we created a new sweats focus section of our website,” said CEO Meghan Roach.
She said there was a little extra pickup in sales of sweats for men as they sought comfort “below the screen.”
One of the tools retailers have used to offset the challenges is to renegotiate monthly rents.
Roach said Roots didn’t pay its April rents and will assess each store’s profitability to determine “the right store footprint for us to have in Canada, and how we balance it off … with our e-commerce business.”
Rosen also expects to see its retail footprint reduce over time after closing one store when the lease expired.
“Over time, I think it’ll be reduced and particularly as online is becoming such a much bigger share of our business.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
