Le Château files for creditor protection, will close all stores
After six decades, Canadian retailer Le Château is going out of business.
The Montreal-based fashion chain announced on Friday that under the Companies Creditors Arrangement Act (CCAA) it will begin liquidating assets and will permanently close its 123 locations across the country.
“Management and the board of directors of the company have come to the very difficult decision that the company can no longer continue its operations as a going concern after having used its best efforts over the preceding months, with the assistance of professional advisors, to refinance or sell the company to a third party that would continue operating the business,” the company said in a news statement.
The release also stated that the ongoing Covid-19 pandemic has seriously hurt consumer demand for Le Château's holiday party and occasion wear, the core of its offering, and has ultimately diminished its ability to pursue its activities.
Le Chateau intends to remain fully operational during liquidation, but eventual store closures will lead to the loss of some 1,400 jobs, including its 500 head office employees, and 900 retail store employees.
It is expected that Gordon Brothers Canada ULC and Merchant Retail Solutions ULC will be appointed as the company's consultants to implement the liquidation and that PricewaterhouseCooper Inc. will be appointed to monitor the company in CCAA proceedings.
Le Château has been experiencing sale declines for many years. Despite a store optimization program that saw the closure of many locations to allow the company to return to profitability, Le Château was not successful in approving its margins.
In its most recent quarter, sales fell from $49.7 million last year to $14.7 million in 2020, down over 70 percent. In the first half of the year, the company lost $13 million, or 43 cents per share, compared to a loss of $11.1 million, or 37 cents per share, in 2019.
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