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New York, USA
Operating losses worsen as one of Canada’s leading leather apparel retailers files for insolvency to protect itself from creditors while searching for a buyer.
Danier Leather has announced that it has entered insolvency proceedings under Canada’s Bankruptcy and Insolvency Act that could lead to a sale of all or part of the company and possibly bankruptcy. The chain, which has 90 stores across Canada, needs to find a buyer or complete the insolvency process by the end of March 2016.
As reported previously by ILM, Danier Leather has been struggling financially and could close down its less performing retail units. Quarterly earnings at the end of November 2015 revealed the company's same-store sales had shrunk by 10%, while the amount the chain owed to its bankers had increased by 669% to more than CAD20 million (US$14 million).
"It is important to note that the company is not bankrupt; it has sufficient resources to fund its operations during the insolvency process and its stores will remain open for business during that time, subject to any restructuring steps that the company may take during the process," the company said in a statement.
In a letter to the company’s shareholders, Jeffrey Worstman, CEO, Danier Leather, pointed out that many Canadian retailers have failed to adapt to increased competition from e-commerce and that the situation has been further complicated by the weakening Canadian dollar.
The company expects to post further negative results in 2016 as operating losses worsen.
Source: CBC News