TORONTO - Shoe distributor Sherson Group Inc., which operates Nine West retail stores in Canada, has filed for bankruptcy protection as it faces a weaker loonie and stiff competition.
Court documents filed with the Ontario Superior Court say the Toronto-based company owes $32.2 million to more than 60 different suppliers, lenders and other businesses.
Included on the list is $4.7 million owed to the Bank of Montreal for certain loans and $19.1 million to Nine West Group Inc., the New York-based company which licences its name to Sherson Group.
The documents also say BDC Capital, a subsidiary of the Business Development Bank of Canada, is owed $3 million.
Sherson has been dealing with a number of factors that have put it in a difficult financial position, said Gilles Benchaya, a partner at the Richter Advisory Group, which is the trustee for the restructuring process.
"The company has faced rising foreign exchange costs, a very competitive retail market and has some underperforming stores," he said.
But he added that Sherson Group "has every intention to put together a restructuring proposal to its creditors to maintain operations."
While the company is moving forward with its filing, it's too early to know how it will affect Nine West stores or the company's overall operations, said Benchaya.
"The company is reviewing its lease portfolio right now," he said. "It hasn't made any determination on the quantum of stores that would be potentially closed."
The move comes as the Canada's retail industry undergoes seismic shifts in competition, with longtime domestic retailers like Jacob, Bikini Village, Mexx Canada and Smart Set facing severe financial problems or bankruptcy.
Earlier this year, discount retailer Target Corp. exited Canada while retailers are facing an extra squeeze from the emergence of high-end U.S. department store Nordstrom and plans to open Saks Fifth Avenue stores and Saks Off Fifth discount outlets.
Women's shoes have been a major focus in the push for department stores like Hudson's Bay Co. (TSX:HBC) to build its business in the face of more competition from online retailers.
Sherson Group operates at least 48 Nine West locations in Canada and a wholesale operation, Benchaya said, while it also owns Canadian licences for brands like Anne Klein, Bandolino, Charles David, Easy Spirit and Enzo Angiolini.
The company's website says about 500 employees work across its wholesale and retail operations.
Sherson Group has 30 days of protection from its creditors from the initial filing made June 29, though it could request a 45-day extension from the courts.
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