In a sign of the fragile, crowded retail landscape, a cross-country discount chain has succumbed to its difficulties and is closing all its stores.
XS Cargo Co. of Mississauga, Ont. this weekend started to liquidate all of its 50 stores after filing for protection from creditors in the summer with the goal of restructuring and emerging as a going concern.
On July 30 the company filed a notice that said it would restructure itself under Canada’s Companies Creditors Arrangement Act. The company reported that it owed $7.4-million to its unsecured creditors. However, its restructuring efforts over the summer failed.
XS Cargo Co. focuses on selling a range of furniture, electronics, appliances, apparel, house wares, sporting goods and health and beauty products.
However, there’s been an entry of U.S. discount chains, such as Wal-Mart Stores Inc. and Costco Wholesale Corp., that have been opening numerous new stores and offering more and more products which are competing directly with Canadian businesses and stealing their business.
With Target’s recent arrival in Canada, XS Cargo has also suffered and has been pressured to price more competitively.
According to a report filed in Ontario Superior Court two months ago:
“During the past six months, [XS Cargo] experienced a downturn in sales due to the emergence of a large well-known American discount retailer who entered the Canadian market along with increased competition from well-established traditional retailers who have significantly increased their tactical promotional activities.”
“Both of these factors contributed to difficulties in the [retailer] executing its turnaround strategy.”
On September 15 an agreement was made between XS Cargo and Boston-based Tiger Capital Group LLC to liquidate its stores. On September 19 the deal was approved.
The company’s final liquidation sale has been robust. Bradley Snyder, executive managing director at Tiger Capital, said:
“We do have merchandise coming in every day. We are urging customers to come in for great opportunities because we don’t think the sale term will last very long.”