Two housewares chains owned by a prominent Canadian retailing family have filed for protection from their creditors for the second time in four years amid heated competition in the home-décor field and shifting consumer tastes.
Bombay and Bowring, owned by a member of the Benitah family that also runs Fairweather, International Clothiers and other chains, has filed a notice with the Office of the Superintendent of Bankruptcy of their intention to make a proposal to restructure their $50.4-million of debt. It means the chains, which have about 100 stores between them in malls across the country, are insolvent and can no longer pay their bills.
Bombay and Bowring struggled to catch up with fast-changing shopping trends and a more crowded field including emerging e-commerce players such as U.S. specialist Wayfair Inc. and Amazon.com Inc., the 800-pound gorilla.
“Bombay and Bowring are old business models that hadn’t kept up,” said Maureen Atkinson, senior partner at retail consultancy J. C. Williams Group. “Nobody really wanted to shop there.”
Bombay and Bowring had difficulty responding quickly enough to consumers who were shifting their shopping online and seeking items for smaller homes or condominiums with more modern styling, she said. And they faced a growing array of home-goods players entering this market, she said,
And while a strong housing market has supported an expanding home goods retail industry, the housing sector is softening which tends to dampen sales growth among housewares retailers, she said.
The Oct. 25 filing, under a numbered company, comes as U.S. home improvement giant Lowe’s Cos. Inc. this week said it is shutting 27 of its stores, mostly under the Rona banner, as well as two offices and two plants, in an overcrowded market and a cooling housing sector.
Sales at furniture and home décor stores slipped 0.2 per cent in August -- and 0.1 per cent for the three months ended in August -- to $18.6-billion according to Statistics Canada.
Bombay and Bowring along with a third home-decor chain, Benix -- which no long operates -- got court protection from their creditors in 2014. It had $86.6-million of debt, almost half of it owed to companies tied to brothers Isaac and Fred Benitah as secured creditors, filings at the time said. They closed about a third of their stores.
Fred Benitah, who runs Bombay and Bowring, did not respond to a voice-mail message. The chains' insolvency trustee, Richter Advisory Group, did not respond to numerous phone and email messages.
In the latest proceedings, Bombay and Bowring have filed a “notice of intention to make a proposal” under the Bankruptcy and Insolvency Act. A source familiar with the situation said the insolvent retailers are considering whether to close all or some of their stores.
Landlords face the prospect of another retail departure after having been hit with a flood of store closings and bankruptcies over the past few years. But property owners said they were optimistic they would be able to replace Bowring and Bombay with stronger tenants if stores shut down.
Eva Lannon, a spokeswoman for Cadillac Fairview, one of the country’s largest shopping centre landlords, said it has three of each of Bombay and Bowring in its properties. “It’s never easy to see valued tenants leave our malls,” she said. “The reality is that the retail landscape is highly competitive.”
Mitchell Goldhar, executive chairman of landlord SmartCentres Real Estate Income Trust, said its malls have 21 Bombay and Bowring stores whose rents generally are below market values. He said SmartCentres can replace the Bombay and Bowring outlets with newer concepts, such as cannabis dispensaries, which can generate higher rents, more shopper traffic and better overall returns. “From a landlord’s perspective, it’s an opportunity.”
Isaac Benitah has grappled with other creditor protection filings over the past few years tied to fashion chains including International Clothiers, Les Ailes de la Mode and Designer Depot. They emerged from the proceedings with fewer stores. He gained a public profile in 2013 when he won a settlement with U.S. discounter Target Corp. over ownership rights to the Target name in Canada. Target launched 133 stores here starting that year but failed in 2015, shuttering the Canadian chain.