By: Howard Riell
Aldo Group Inc., a well-known footwear retailer, said it has kicked off a formal court restructuring process. The chain was forced to close its stores in the face of the pandemic, which only exacerbated its already problematic balance sheet.
The Montreal, Canada-based retail chain includes approximately 3,000 stores and has 8,000 employees around the globe. Executives filed for court protection through the Companies’ Creditors Arrangement Act in Canada, and is hoping for similar protection in the United States. The firm of Ernst & Young Inc. was appointed as the monitor in the Canadian proceedings.
The company is a world-leading creator and operator of desirable footwear and accessory brands. The organization operates under two signature brands, Aldo and Call It Spring, and a multi-brand retail concept, GLOBO. The Aldo Group is also an industry-recognized wholesale distributor and third-party sourcing provider of fashion footwear, handbags and accessories.
“The impact of the Covid-19 pandemic has put too much pressure on our business and our cash flows,” Chief Executive Officer David Bensadoun said in an official statement. “After conducting an exhaustive review of strategic alternatives, we determined that filing under CCAA and related proceedings is in Aldo’s best interest to preserve the company for the long term and survive through this challenging period.”
Aldo’s pre-petition debt includes a C$300 million ($214 million) revolving loan arranged by Bank of Montreal that matures in October 2022, the company said.
“Aldo is the latest retailer to file for bankruptcy protection since measures to fight the pandemic put much of the world into lockdown. Luxury retailer Neiman Marcus Group Inc. filed for bankruptcy in Texas on Thursday, and preppy apparel chain J. Crew Group Inc. filed for Chapter 11 protection in Virginia on Monday with plans to hand control to its lenders,” reported businessoffashion.com.
The company “has struggled in recent years to maintain relevance in a world of increasing acceptance of casual footwear. Bensadoun said in a 2018 interview that the company was competing with makers of athletic wear as more workplaces embrace casual attire,” the publication added.
The statement continued, “It is no secret that the retail industry has experienced rapid and significant change over the last several years. We were making strong progress with the transformation of our business to tackle these challenges.” Bensadoun, added: “Throughout the process, Aldo expects to carry on business while it develops and implements a comprehensive restructuring plan across the organization. With our deep fashion footwear heritage, experienced leadership team, extensive omnichannel capabilities and loyal customer base, we firmly believe that we will emerge from the restructuring process and from the challenges posed by the Covid-19 pandemic. We will come out stronger and well-positioned to continue leading the way in fashion retail.”