Aldo Group took more than two years to complete its restructuring as the company went into receivership Companies Creditors Establishment Act (CCAA) In May 2020, the Covid-19 pandemic was at the height of its first wave. David Bensadoun, CEO of Aldo Group, looked back on the two-year effort, which resulted in the elimination of 400 positions at its Montreal headquarters and the closing of about 270 company stores.
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I met David Bensadoun in the new and very inexpensive headquarters premises on Hodge Street in Saint-Laurent. “We pay 2.5 million a year in rent, against 10 million in the old one, which is a significant saving,” observes David Bensadown.
The new Aldo Group campus, owned by the Bensdown family, has 50% less square footage than the previous one, but the group has also reduced its workforce, growing from 1,250 to 850 people.
In fact, 280 people lost their jobs due to unfilled positions. But announcing these layoffs was the most painful episode of the restructuring. There are 80 employees with seniority of more than 10 years.
David Bensdown
Aldo Group thrived under CCAA protection for two years and two months, at the end of a long and complex process the company succeeded in reaching an agreement with 99.4% of its creditors, collecting more than 300 million in debt. Including Investment Quebec who granted him a loan of 40 million. Aldo repaid its creditors 6 cents on the dollar while paying a court-defined $3.3 million secured loan to Investment Quebec.
The company, which before COVID-19 operated 700 company stores in Canada and the United States and a network of 1,000 franchisees in 110 countries, today finds its presence with around 1,300 stores. In Canada, Aldo owns the Spring and Globo brands and stores, which have a total of 110 stores.
Photo by Marco Campanozzi, The Press
David Bensdown, CEO of Aldo Group
“We planned to close 300 corporate stores, but we struck a deal with some shopping center owners by paying rent based on our sales rather than a fixed rent. We ended up closing 267 corporate stores.
“Franchisees have taken over 15 of our stores in England and 6 in France. During the pandemic, our 1,000 franchise stores internationally were less affected by the health measures than our brands in North America, especially in Canada, where our stores in Ontario were closed for 220 days,” David Bensdown noted.
Review the model
However, David Bensadoun noted that Aldo Group’s difficult financial situation was well before the pandemic. COVID-19 has only accelerated the rebuilding process.
“We had problems implementing our SAP system [de gestion informatique] In addition to the costs of setting up our e-commerce platform, the costs have risen from 65 to 110 million.
“The new SAP system forced us to hand over the management of our own distribution center to a third party, a company that was the victim of hacking and lost our inventory, Maersk.
“Our operations have come to a standstill for a month. These issues cost us over 100 million in gross margins. We have also recently received significant financial compensation from Maersk”, stated the CEO of the Aldo Group.
In addition to operating a network of more than 400 Aldo stores in North America and affiliated with more than 1,000 franchise stores worldwide, Aldo offers 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 accounted for 53% of our revenue, our franchises, 20%, our wholesale operations, 17% and finally our online sales totaled 10%.
“We now aim to generate 25% equity revenue across our four operations. Before the pandemic, we recorded revenues of 1.25 billion US, today they are 850 million US and we expect them to return to 1 billion by 2025″, predicts David Bensadown.
The combined revenues of the Group and its franchisees are approximately 2.5 billion US.
“We are getting back into 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 franchises. We will return to certain urban markets like Houston, where we went from 5 to 3 stores, where we plan to open a store,” explained the CEO.
What did David Bensadown retain from the ordeal of the painful reconstruction he had just experienced?
Photo by Marco Campanozzi, The Press
David Bensdown, CEO of Aldo Group
It has changed our priorities. Before the pandemic, we kept profitable stores thinking that the situation was going to improve. There, we will have better priority, no more sacred cows. We keep our spirit and our values are important, but we operate in a sustainable way.
David Bensdown
A Quebec wrestling champion when he was in high school, a former football and rugby player at 6 feet 5 inches and weighing more than 250 pounds, the epidemic has been difficult to live with and has shaken him.
“Fashion is a tough business to start, but the pandemic has been tough on everyone. Five of Canada’s ten largest fashion retailers have put themselves on the defensive. Companies Creditors Establishment ActThe château has disappeared, but there, we think activity is picking up again”, observes the president of the Aldo Group optimistically but realistically.
