Le Château turnaround plan includes 40 store closures

Montreal fashion retailer tries to catch up in the growing ecommerce space

Le Chateau exterior YorkdaleFashion retailer Le Château plans to close another 40 stores across Canada over the next three years as part of ongoing efforts to turn around its money-losing operations.

The Montreal-based company has been shuddering underperforming stores and renovating others as it “recalibrates” its retail network in the face of growing ecommerce.

It closed 11 stores in the last year to reach 211 locations and plans to shudder another 14 stores in 2016.

By early 2019, Le Château expects to shrink its retail network to about 900,000 square feet or 171 stores, the smallest size since 2007 and a 30% reduction since it began closing stores in 2012.

The chain said most of the additional closures would be in fashion big box and discount outlet malls.

Le Château said it was adjusting to an evolution of consumer shopping habits towards online shopping.

“In light of this evolution, the high concentration of stores in large urban markets — a successful model in the pre-digital world — is no longer required,” it said in a news release Friday that included last year’s financial results.

The chain lost $35.7 million for the 12 months ended Jan. 31. That compared with a loss of $38.7 million a year earlier.

Sales decreased 5.3% to $236.9 million, as same-store sales slipped 1.9%. The company didn’t disclose total ecommerce sales, but said they grew 34.8%.

In the fourth quarter, the net loss was $6.9 million, a more than 40% improvement over the previous year, as store closures reduced sales 7.5% to $65.2 million. In the first quarter ended April 9, sales were down 3.7%.

The company renovated five urban stores last year and launched a marketing campaign to raise brand awareness, which boosted women’s wear and footwear sales.

Industry analyst Jean Rickli of J.C. Williams Group said Le Château had been slow in closing stores and embracing ecommerce.

“They’re struggling,” he said in an interview. “I think they are starting to get it now, but we find it’s late.”


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