Frank and Oak closing doors a dire sign for Canadian retail sector: analyst

Apparel retailer Frank and Oak says it is closing nine stores across B.C., Quebec, and Ontario by May 7.

Court documents show the Montreal-based company has 150 employees, but when asked about how many will lose their jobs as a result of the closures, a spokesperson said she did not have that information yet.

Adding, once liquidation begins, all sales will be final, but the retailer’s e-commerce business will continue to operate.

The legal process for all this began in December, when it filed a notice of intention, which helps companies restructure and avoid bankruptcy while providing creditors with some compensation.

As part of that process, Frank and Oak has said it is facing financial difficulties because COVID-19 weighed on the profitability of new stores, and supply chain issues, including conflict in Gaza, delayed shipments of inventory.

Retail analyst Bruce Winder says this shows how challenging the retail sector is right now.

“There are a number of independents and smaller stores who are struggling and have quietly shut down. You look at what’s happening with Hudson’s Bay, etc.; it’s a pretty tough time to be in retail. Retail is a tough business by nature, but unless you’re at the very top of your game in terms of your value proposition, it can be a nightmare.”

He tells 1130 NewsRadio the trade war and tariffs are stressing everyone out.

“If this doesn’t end soon, you’re going to see massive amount of inflation make its way to Canada, which is going to cause further companies to go bankrupt,” explains Winder, who suspects that could happen over the next few months.

Winder explains customers are hesitant to spend right now, and that’s hurting business.

“Consumers are opting out of discretionary items. They’re buying essentials where they have to. If you’re selling sort of discretionary items and you’re mid-price point to maybe a little bit high-, you’re struggling right now as well.”

Frank and Oak began searching for an investor or buyer in mid-January. Court filings say the company saw “robust” interest from potential suitors in the first phase of the process, but Frank and Oak has yet to announce any successful bidders.

–With files from Emma Crawford and The Canadian Press