It will have taken the Aldo Group more than two years to complete its restructuring since the company was placed under the protection of the Business Creditors Agreement Law (CCAA) in May 2020, at the height of the first wave of the COVID-19 pandemic. David Bensadoun, CEO of Aldo Group, looks back on these two difficult years that resulted in the cut of 400 positions at its Montreal headquarters and the closure of nearly 270 company stores.
Posted at 6:00 am
It was on the premises of the new and much cheaper head office on Hodge Street in Saint-Laurent that I met David Bensadoun. “We pay 2.5 million rent a year, compared to 10 million for the old ones, it is a very important saving”, observes David Bensadoun.
The new campus of the Aldo Group, which belongs to the Bensadoun family, has 50% fewer square meters than the previous one, but the group has also reduced its workforce, which has gone from 1,250 to 850 people.
In fact, 280 people lost their jobs because there were positions that were not filled. But it was the most painful episode of the restructuring to have to announce these layoffs. There were 80 employees with more than 10 years of seniority.
The Aldo Group evolved for two years and two months under the CCAA, a long and complex process at the end of which the company managed to reach an agreement with 99.4% of its creditors who accumulated a debt of more than 300 million , including Investissement Québec, which had granted him a loan of 40 million. Aldo paid 6 cents on the dollar of the debt to his creditors while paying a court-defined secured debt of $3.3 million to Investissement Quebec.
The company, which before COVID-19 operated a network of 700 own stores in Canada and the United States and 1,000 franchisees in 110 countries, today has some 1,300 stores. In Canada, Aldo also owns the Spring and Globo brands and stores, totaling 110 stores.
“We had planned to close 300 corporate stores, but we managed to reach an agreement with some mall owners by paying rent based on our sales instead of a fixed rent. We ended up closing 267 corporate stores.
“The 15 stores we had in England and the 6 in France were taken over by franchisees. During the pandemic, our 1,000 franchised stores internationally were less affected by sanitary measures than our brands in North America, particularly in Canada, where our stores in Ontario were closed for 220 days,” says David Bensadoun.
check the model
David Bensadoun acknowledges, however, that the difficult financial situation of the Aldo Group was already prevalent long before the pandemic. COVID-19 only accelerated the restructuring process.
“We had problems implementing our SAP system [de gestion informatique] whose costs have gone from 65 to 110 million, in addition to the start-up costs of our electronic commerce platform.
“The new SAP system forced us to hand over the management of our own distribution center to a third party, the Maersk company, which was the victim of a hack and lost our inventory.
“Our operations were frozen for a month. These problems cost us 100 million gross margins. We also recently received an important financial compensation from Maersk”, specifies the CEO of the Aldo Group.
In addition to operating its network of more than 400 Aldo stores in North America and being associated with more than 1,000 franchised stores worldwide, Aldo serves more than 3,000 points of sale as a wholesaler for chains such as The Bay, Nordstrom or Macy’s.
“Before the pandemic, our sales in our stores represented 53% of our income, those of our franchisees 20%, our wholesale activities 17% and finally our online sales added up to 10%.
“Now our goal is to generate equal income of 25% for each of our four activities. Before the pandemic we registered revenues of 1,250 million dollars, today it is 850 million dollars and we hope to return to 1,000 million by 2025”, anticipates David Bensadoun.
The combined revenue value of the Group and its franchisees is around US$2.5 billion.
“We are going back to growth mode, but with realistic ambitions. We plan to open 150 new stores in the next five years, including 50 corporate stores and around 100 franchise stores. We will return to certain urban markets like Houston, where we have gone from 5 to 3 stores, where we plan to open a store”, explains the CEO.
What does David Bensadoun retain from the ordeal of the painful restructuring that he has just experienced?
It changed our sense of priorities. Before the pandemic, we kept unprofitable stores thinking that we were going to correct the situation. There we will prioritize better, there will be no more sacred cows. We have kept our soul and our values are important, but we will manage sustainably.
For the 6-foot-5, 250-plus-pound colossus, who was a Quebec wrestling champion in high school and a former soccer and rugby player, the pandemic has been hard to live with and rocked.
“Fashion is a tough business to start, but the pandemic has been tough on everyone. Five of the ten largest fashion retailers in Canada have been placed under the protection of the Business Creditors Agreement LawThe Château has disappeared, but there we feel that activity is picking up”, observes the president of the Aldo Group optimistically but realistically.
#David #Bensadoun #CEO #Aldo #Group #Rebuilding #shoe #empire