MEC's sale to investment firm signals more tough times ahead for retailers - InfoNews

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MEC's sale to investment firm signals more tough times ahead for retailers

A Mountain Equipment Coop store is seen in Laval, Que., Tuesday, Sept. 15, 2020. The Los Angeles-based Kingswood Capital Management is buying the outdoor goods retailer through the Companies' Creditors Arrangement Act.
Image Credit: THE CANADIAN PRESS/Ryan Remiorz
September 15, 2020 - 1:04 PM

Retail analysts are cautioning that more Canadian stores could follow Mountain Equipment Co-op’s path toward restructuring in the coming months as the pandemic pushes an increasingly fractured retail market to the brink.

The Vancouver-based sports and outdoor recreation retailer announced Monday it had obtained creditor protection and would be sold to a U.S. private investment firm.

MEC is the latest in a line of struggling retailers to obtain court protection from creditors in recent months as COVID-19 accelerates a marketplace shift to online shopping.

Retailers have been battling increasing competition for years as more foreign brands open brick and mortar stores in Canada and the fight for e-commerce dollars intensifies.

Experts say the shutdown in the spring was the final straw for many companies.

Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, said the first retailers to seek creditor protection following the COVID-19 shutdown were "low-hanging fruit," but this latest case suggests others will follow.

“MEC is a little bit more surprising,” she said. “The environment right now is tough.”

This report by The Canadian Press was first published Sept. 15, 2020.

News from © The Canadian Press, 2020
The Canadian Press

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