09/29/2014 11:29 EDT | Updated 11/29/2014 05:59 EST

Discount retailer XS Cargo to close out its 50 stores

Mississauga, Ont.-based retailer XS Cargo plans to close its 50 stores across Canada, a victim of cutthroat competition in the discount sector.

XS Cargo is liquidating its stock of housewares, fashion, health and beauty and outdoor products at 40 per cent off.

The announcement to close came after the retailer sought bankruptcy protection in July.

"Unfortunately, efforts to restructure the business did not result in an economically sustainable model, so the company determined that liquidation was the only option at this juncture," said Bradley Snyder, executive managing director of Tiger Capital Group, which was appointed by the company to run the going-out-of-business sale.

In July, XS Cargo had 650 employees, 195 of them full-time.

Founded in 1996, XS Cargo runs warehouse-like stores in eight provinces with stock bought from other distressed retailers or from bankruptcy sales.

But the battle for consumer dollars between U.S. discount retailers Wal-Mart and Target has taken a toll, the company said. Both are cutting prices to stay competitive.

It referred to Target’s entry into Canada in its bankruptcy filing.

"During the past six months or so, the group 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," it said in a statement.