It’s the end of a difficult week for Aldo Group — and 270 employees are being laid off at the corporate headquarters in Montreal today as the company begins its restructuring process.
“It’s a very tough day,” said CEO David Bensadoun during a phone call with FN. “We had 1,150 employees yesterday, and on Monday we will have 880.”
The company on Thursday announced that it has sought and obtained an initial order pursuant to the Companies’ Creditors Arrangement Act from the Superior Court of Québec. Aldo said it has “voluntarily” filed for “similar protection” in the United States — Chapter 15 bankruptcy — and is preparing to do the same in Switzerland.
Bensadoun said Aldo made the move after two financing deals fell through when the coronavirus pandemic took hold in March. “That triggered some deep soul searching by our leadership. We looked at many options going forward,” he said.
Watch on FN
The CEO emphasized that the company’s transformation project to improve the business, launched last year, had been going well. As part of the restructuring, the team plans to accelerate that strategy, which includes diversifying operations so the company relies less on brick-and-mortar retail.
The ultimate goal is to have four key segments each contribute a quarter of the business: stores, e-commerce, franchising and wholesale. (Right now, brick-and-mortar retail accounts for about 50%, while the other categories make up up the other half.)
“My role is to stabilize the team and show them the vision we have for the future,” Bensadoun said.
Aldo started reopening some of its stores in the U.S. and Canada today — and has been working to better bridge physical and digital operations during the crisis as e-commerce fuels the business. “We’ve always been a company that did the majority of our fulfillment from stores. At a time when some distribution centers haven’t been open, we’ve benefited from that,” he said.
To keep product flowing, the company has been able to allocate a single employee to each of the stores it is able to access while the locations are closed. (Retail staff was paid for two weeks; now most of them are on furlough.)
While Aldo is looking forward to reopening stores, Bensadoun is realistic about the recovery process. (About 90% of Aldo’s stores are in outlet centers or enclosed malls.)
“I think it’s going to take time for people to get into a new routine. We’re not expecting a boom – we’re expecting a smooth climb,” Bensadoun said, noting that all other parts of the business, including e-commerce, wholesale and the supply chain are all fully functioning.
Digital is a huge priority for Aldo, like every other company, going forward.
“When we started 48 years ago, we were only about brick-and-mortar. How things have changed,” he noted. “The last 10 years have been a slow rise of e-commerce. Now in one year, it will probably be double the rate of growth [we had been seeing.] We believe the future will be digitally dominant and [wholesale] drop-ship dependent.”