Mexx Canada Company has filed for bankruptcy protection, joining a growing list of retailers in Canada sinking under the weight of intense competition and a sluggish economic recovery.
“It’s looking at its alternatives right now,” said Gilles Benchaya, a trustee in bankruptcy at Richter Consulting.
Mexx operates 95 stores in Canada, including 36 stores in Ontario. It employs 1,700 people.
Mexx has 30 days to file a proposal for restructuring, and can apply for a 45-day extension, said Benchaya. During the 30-day period, it is protected from actions by creditors.
The proposal was filed on Wednesday. The Dutch fashion chain has also filed for bankruptcy in Amsterdam.
The bankruptcy comes on the heels of news in November that Reitmans (Canada) Ltd. is dropping the Smart Set banner, closing 31 stores and converting 76 others to different company banners over the next 12 to 18 months.
Montreal’s Boutique Jacob Inc., with 92 stores, filed for bankruptcy in May.
Other chains struggling in the new competitive environment include Target, which launched in Canada in 2013 and Sears Canada.
The competitive landscape in Canada has changed dramatically in the past ten years, with new entrants and more locations.
While Target and Marshalls are two of the more notable newcomers, other big foreign brands such as H&M and Banana Republic have increased market share by driving down prices. Mid-priced retailers such as Ann Taylor, Loft and J. Crew have also moved into the country after building reputations with cross-border shoppers.
Winners so far in the retail war include banners under Canadian Tire Corp., Amazon.ca and Walmart, which reported a strong performance in Canada in the last quarter, .
“Are we going to see more corrections? A lot of tenants are probably sitting on too big a footprint. They’re going to have to become more efficient,” said Don Gregor, chief operating officer, Aurora Realty Consultants, who predicted a correction in the Canadian retail market.
“I think that into 2015, we’ll probably see another four or five companies, maybe one company every quarter, there is a lot of pressure on companies right now. Lease rates are high and marginal retailers will continue to struggle.”
Retail analyst Wendy Evans said Mexx was under additional pressure because the economic recovery in Europe, where the chain is based, has not been as robust as the recovery in Canada and the U.S.
Mexx was purchased by Liz Claiborne in 2001 and sold off 10 years later to U.S.–based private equity firm The Gores Group.
The company was founded in the 1970s by fashion designer Rattan Chadha and a series of business partners that supplied department and wholesale stores in the Netherlands. The Mexx name took off in 1986 with the merger of brand names — Moustache, Emanuelle and XX for kiss, kiss.
At its peak, Mexx grew to more than 800 stores in 55 countries, employing more than 6,000 people
- With files from The Toronto Star’s wire services