Jan. 7, 2025 "Comark to Close Cleo and Ricki’s Chains Amid Challenges": Today I found this article by Maya Johnson on Retail Insider:
Comark Holdings Inc., the Vancouver-based parent company of Bootlegger Clothing Inc., Cleo Fashions Inc., and Ricki’s Fashions Inc., has filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA).
The move signals turbulence in the Canadian retail landscape, as the company announces plans to shutter its Cleo and Ricki’s brands entirely and downsize Bootlegger in an effort to find a buyer.
The company, which operates 221 stores across eight Canadian provinces, employs more than 2,000 people, including retail and head office staff.
Comark’s decision to wind down operations for Cleo and Ricki’s comes after years of financial strain, exacerbated by the COVID-19 pandemic, a ransomware attack, and intensifying competition from ultra low-cost fashion retailers.
A Sobering Decision for Survival
“After careful consideration of all reasonably available options, the company has determined that it is in the best interests of its stakeholders to wind down its Ricki’s and Cleo operations and to close all retail store locations under those banners,” Comark said in a statement.
The company’s struggles have been mounting for years.
The pandemic led to prolonged store closures,
while a 2021 ransomware attack disrupted operations at a critical holiday sales period, resulting in an $8.2 million revenue loss.
Additionally, global supply chain issues caused inventory delays that forced heavy markdowns, further straining profit margins.
Comark’s challenges reflect broader trends, where mid-tier retailers are being squeezed between high-end brands and aggressive low-cost players like Shein and Temu, according to the company in a statement.
While Cleo and Ricki’s will be entirely liquidated,
Comark hopes to salvage Bootlegger by downsizing its store footprint and seeking a buyer for the remaining business.
The casual clothing retailer, which has been a staple in Canadian malls since the 1970s, has faced a 15% year-over-year decline in sales.
The closure of Cleo and Ricki’s, combined with downsizing at Bootlegger, could lead to as many as 200 vacant retail locations across Canada. This wave of vacancies will ripple through shopping malls, suburban plazas, and power centres where these stores are typically located.
A Legacy of Fashion Retail in Canada
Founded in 1976, Comark has played a prominent role in Canadian fashion retail. Its banners, including Cleo and Ricki’s, catered to working women seeking professional and casual attire. Bootlegger, meanwhile, became a go-to destination for casual denim and activewear.
However,
the rise of e-commerce,
evolving consumer preferences,
and a post-pandemic shift to hybrid work have upended demand for traditional officewear—a category that Cleo and Ricki’s heavily relied on.
Financial Pressures Come to a Head
Comark’s financial difficulties are well-documented.
In 2024, the company reported a 19% decline in sales
and a $21 million operating loss for the first nine months of the year.
Total liabilities now exceed $168 million, including $61 million in accounts payable and $44 million owed to merchandise vendors.
The company’s largest creditor, CIBC, has issued demand notices, declaring all outstanding balances under its credit facilities immediately due. Vendors, landlords, and service providers have also initiated legal claims, seeking overdue payments.
A Perfect Storm of Challenges
Several factors contributed to Comark’s downfall:
- Pandemic Disruptions: Extended store closures during key shopping periods led to steep losses in revenue.
- Cyberattack: The 2021 ransomware attack halted operations for weeks, crippling inventory management and e-commerce.
- Supply Chain Woes: Seasonal merchandise arrived late, forcing markdowns and eroding profit margins.
- Competition: Ultra low-cost retailers disrupted the market, drawing budget-conscious consumers away from mid-tier brands.
What’s Next for Employees and Stakeholders?
Feb. 16, 2025 "Ransomware, disease and 'ultra low-cost retailers': Why 3 iconic Canadian clothing stores went broke": Today I found this article by Jason Proctor on CBC:
For three weeks in November and December 2021, iconic Canadian clothing chains Bootlegger, Cleo and Ricki's found themselves paralyzed — staring down the barrel of the "critical holiday season" but prevented by ransomware from moving inventory.
The attack occurred on Nov. 23, but the businesses weren't able to regain access to their internal systems until Dec. 13
— a lag time that forced the 221 affected stores to mount heavy promotions
in order to offload the substantial portion of seasonal clothing caught up in the delay.
According to court documents filed as part of insolvency proceedings by Winnipeg-based Comark Holdings
— the company which owns all three retailers
— the "brick and mortar stores lost approximately $8.2 million in revenue due to the cyber incident alone."
Headwinds for clothing retailers
Chief executive officer Shamsh Kassam's affidavit provides a detailed window into the array of problems which forced Comark into creditor protection:
the ransomware attack,
the lingering impact of COVID,
conflict in the Middle East
and the rise of so-called "ultra-low-cost retailers."
An Ontario Superior Court judge has given the green light in recent weeks to deals that will see Ricki's and Cleo sold to Canadian retail billionaire Doug Putman — owner of Toys R' Us and Northern Reflections — and Bootlegger likely going to Warehouse One clothing.
But Canada's retail clothing and accessories industry — which generated $3.6 billion in 2024
— still faces the same headwinds that left Comark $61 million in debt.
"The competitive retail and, in particular, retail apparel industry in Canada has undergone significant changes in the past decade," writes Kassam, who is based in Vancouver.
"As a result of these changes, many Canadian retailers, including apparel retailers ... have filed for protection ... including
Reitmans,
Aldo,
Aeropostale,
American Apparel,
Mexx,
Forever XXI,
Target Canada,
Express,
Sears Canada,
Nordstrom Canada
and Ted Baker Canada,"
Deep Canadian roots
The court documents spell out the history of all three stores, which have been part of the Canadian retail landscape for decades.
Ricki's was founded in 1939 in Brandon and sells mostly tops, sweaters, pants, dresses, blouses, blazers, outerwear, denim and accessories.
Cleo's predecessor, Irene Hill, was founded in 1958.
"The Cleo brand provides work wear and casual clothing for women over the age of 48," Kassam writes. "Cleo is the largest retailer of women's petite merchandise in Canada."
Bootlegger was founded in B.C. in 1971 — "a retailer of denim, other casual apparel and accessories for men and women between the ages of 35 and 55."
Despite the deep Canadian roots, a report filed by Comark's court-appointed monitor says
82 per cent of private label merchandise made for the retailers "is sourced from foreign manufacturers, located primarily in China and Bangladesh."
Those supply chains would also come to play a role in Comark's fortunes.
"Unfortunately,
international conflict in the Red Sea,
protests at certain of the vendors' factories in Bangladesh,
and rail and port strikes in 2024
all caused additional delays
and resulted in further strained vendor relationships
and lost sales," Kassam writes.
"This, in turn, placed increased financial pressure on the ... businesses."
'Consumer needs have changed'
The latest court proceedings are not Comark's first experience with insolvency. The company was forced into creditor protection in 2020 as a result of COVID lockdowns
— re-emerging after a sale to an entity controlled by its principal shareholder "poised for success."
But Kassam writes that even after the sale, further lockdowns in 2020 meant Bootlegger, Cleo and Ricki's lost out on Black Friday and Christmas sales.
Delays in supply chains caused by the pandemic
also factored into the sales schedule,
delivering seasonal items "outside of their targeted time frame,"
which in turn led to product markdowns.
"Consumer needs have also changed as the COVID-19 pandemic led to
increased remote work
and a decreased need for workwear clothing,
which previously made up a sizeable portion of the [companies'] businesses," Kassam writes.
The ransomware attack sent a shockwave through the business —
shuttering retail stores and an e-commerce platform for two days
and freezing inventory in the weeks that followed.
"The effects of the Cyber Incident extended far beyond this time period," Kassam writes.
"All of the companies' internal processes and systems, including [their] history and critical path, were lost or compromised through the Cyber Incident and,
as these systems were not recovered,
they had to be rebuilt."
The court documents say the very nature of the competition has also changed drastically in the past four years.
"Namely, a difficult economic environment combined with the introduction and consumer uptake of certain ultra-low-cost fashion retailers, including Shein and Temu, have placed significant financial pressure on traditional fashion retailers," Kassam's affidavit reads.
As of December 2024, Ricki's, Cleo and Bootlegger had approximately 2,056 hourly and salaried employees across Canada. The court proceedings do not say what the future holds for them.
https://www.cbc.ca/news/canada/british-columbia/bootlegger-comark-insolvency-covid-1.7459717
They went broke because they were trying to sell inferior products at too high a price, so you were not getting value for your money.
Don't worry. They'll all be reopening soon, under a different name, after stiffing their suppliers and leaving mountains of unpaid bills behind.
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