For three weeks in November and December 2021, the iconic smuggler of the Canadian chains of Canadian, Cleo and Ricki clothes were paralyzed, looking at the barrel of the “critical holiday season”, but they prevent the ransomware from moving the inventory .
The attack occurred on November 23, but companies could not recover access to their internal systems until December 13, a delay time that forced the 221 stores affected to mount large promotions to download the substantial portion of seasonal clothing caught in the delay.
According to the judicial documents presented as part of the insolvency procedures by Comark Holdings, based in Winnipeg, the company that owns the three retailers, the “brick and mortar stores lost approximately $ 8.2 million in revenue due to the cyber incident only”.
Old for clothing retailers
The Affidavit of Executive Director Shamsh Kassam provides a detailed window on the variety of problems that forced region to the protection of the creditor: the ransomware attack, the persistent impact of COVID, conflict in the Middle East and the emergence of the so -called “Ultra Low retailer cost-low “.
A judge of the Superior Court of Ontario has given green light in recent weeks One Clothing.
But the Retaorist Clothing and Accessories of Canada, which generated $ 3.6 billion in 2024, still faces the same winds against that it left the region $ 61 million in debt.
“The competitive retail industry and, in particular, the retail clothing industry in Canada has undergone significant changes in the last decade,” writes Kassam, based in Vancouver.
“As a result of these changes, many Canadian retailers, including clothing retailers … have requested protection … Included Reitmans, Aldo, Aeropostale, American Apparel, Mexx, Forever XXI, Target Canada, Express, Sears Canada, Canada, Canada, Canada, and Ted Baker Canada “,
Deep Canadian roots
The court documents explain the history of the three stores, which have been part of the Canadian retail panorama for decades.
Ricki’s was founded in 1939 in Brandon and sells mainly tops, sweaters, pants, dresses, blouses, blazers, exterior clothing, denim and accessories. The predecessor of Cleo, Irene Hill, was founded in 1958.
“The Cleo brand offers work and casual clothing for women over 48,” writes Kassam. “Cleo is the largest retailer of small goods of women in Canada.”
Bootlegger was founded in BC in 1971: “A Denim retailer, other casual clothing and accessories for men and women between the ages of 35 and 55 years.”
Despite the deep Canadian roots, a report presented by the monitor designated by the Comark Court says that 82 percent of the private label merchandise made for retailers “comes from foreign manufacturers, located mainly in China and Bangladesh.”
These supply chains would also play a role in the fortune of Comark.
“Unfortunately, the international conflict in the Red Sea, the protests in certain of the supplier factories in Bangladesh, and the railway and port attacks in 2024 caused additional delays and resulted in new relations of suppliers and lost sales,” writes Kassam .
“This, in turn, put greater financial pressure on … business.”
‘Consumer needs have changed’
The latest judicial procedures are not the first experience of region with insolvency. The company was forced to the protection of creditors in 2020 as a result of the COVID blocks, resurfaceing after a sale to an entity controlled by its main shareholder “ready for success.”
But Kassam writes that even after sale, more blockages in 2020 meant that smuggler, Cleo and Ricki lost black Friday and Christmas sales.
Delays in supply chains caused by the pandemic were also considered in the sales schedule, delivering seasonal items “outside its target framework”, which in turn led to product marks.
“The needs of consumers have also changed since the Covid-19 pandemic led to greater remote work and a decrease in the need for work clothing, which previously constituted a considerable part of the [companies’] Business, “writes Kassam.
The ransomware attack sent a shock wave through the business: closing retail stores and an electronic commerce platform for two days and the freezing inventory in the following weeks.
“The effects of the cyber incident extended far beyond this period of time,” writes Kassam.
“All internal processes and systems of companies, including [their] The history and the critical path, were lost or committed through the cyber incident and, as these systems did not recover, they had to be rebuilt. “
Court’s documents say that the nature of the competition has also changed dramatically in the last four years.
“That is, a difficult economic environment combined with the introduction and absorption of the consumer of certain fashion retailers of ultra low cost, including Shein and Temu, have exerted significant financial pressure on traditional fashion retailers,” says the affidavit of Kassam.
As of December 2024, Ricki, Cleo and Bootlegger had approximately 2,056 employees per hour and wage earners throughout Canada. Judicial procedures do not say what the future holds.
