May 7, 2020
Aldo Group, a Montreal, Quebec-based Canadian retailer that owns and operates a worldwide chain of shoe and accessories stores under the names Aldo, Globo and Call it Spring, obtained protection under the CCAA on May 7, owing approximately $100.0 million to Southwest, an affiliated company, and $40.0 million to Investissement Quebec. Founded in 1972, the company has grown to become a global leader in footwear and fashion accessories. It has sold over 46 million pairs of shoes and has stores in over 100 countries. The last few years, however, have not been profitable. For the 12 months ended February 1, 2020, Aldo Canada posted a net loss from operations of approximately $74.8 million and Aldo US posted a net loss from operations of approximately $52.8 million. In an effort to improve its financial performance, the group initiated a large-scale transformation plan in late 2019 that included a plan to reduce its brick and mortar reliance and a switch to an asset based lending structure to increase its working capital. The COVID-19 crisis, however, has foiled the company's transformation. Sales have decreased dramatically due to the government-mandated store closures. The pandemic also affected the Group's normal procurement schedules, resulting in its spring merchandise being unsold and delaying the delivery of fall merchandise ordered from suppliers in Asia. Currently, the Group's credit facility is fully drawn and its current prospects do not allow for additional loans without substantial operational changes. While under creditor protection, the company intends to terminate various leases while considering various restructuring alternatives. EY was appointed monitor. PwC is financial advisor for secured creditor BMO. Counsel is Davies for the Group, McCarthy Tétrault for EY, and Fasken for Investissement Quebec.