Long-time Calgary-based retailer Swimco, a national swimwear company, has filed a Notice of Intention, under creditor’s protection, to restructure its operations as it responds to the devastating impact of the COVID-19 pandemic.
Lori Bacon, Owner and CEO of the retailer which opened its first retail store in Calgary in 1983, said the NOI gives the company up to 90 days to put a proposal together for the creditors.
“Here’s how we see our business. Here’s what we’re doing for leasing expenses, for staffing, for everything and provide them with a business plan of how we think we can be viable, profitable into the future,” she said.
“And also a payment plan for the amounts owing them. And they vote on that. Hopefully they see that there’s a way forward together and we carry on. We’re hopeful that by the end of September that we are through this process and have launched our Swimco version 2.0.
“We’re looking to be a smaller company. We’re at 20 (stores) and we envision staying there.”
Pre-COVID it had 25 stores in operation.
Bacon confirmed that the company has about $6.5 million in unsecured claims and that includes about $1.6 million in landlord rent.
Swimco reduced its head office by about half. The company had 45 staff in its corporate head office but now that has been reduced to about 20. Retail staff was at about 200 and today is sitting at about 120.
“Integral to this plan is renegotiations with landlords and getting our rent expenses in line with where we see sales will be for the next few years because they are going to be dramatically different,” explained Bacon.
The five stores to be closed include three in Ontario, one in Vancouver where a lease has not been renewed, and one other store is currently in lease negotiations.
Bacon said the COVID crisis came around spring break which meant no travel for people.
“With all stores being shut and still having your rent looming over you, you go in the hole pretty quick. At first, I think everyone was just in a state of shock. ‘For two weeks we’re going to close.’ But it readily became apparent that this was not a two-week thing. We laid everybody off temporarily. We closed the stores on Monday March 16 and we quickly laid off all our store people and most of our head office people and by the following week we had laid off everybody,” she said.
“And really you know, I have to give credit to my husband Dave who for lack of nothing to do he kept coming into the office and the only one in the building and then his financial assistant joined him and they just started modelling things. Like sort of what if, what if, what if. I needed some convincing that there was a way forward and we’ve been working with some retail advisors . . . just modelling things and then realizing that this was an option for us to file a Notice of Intention to restructure. It was our opportunity to get out of some leases that were prior to COVID not profitable and certainly wouldn’t be during COVID.
“It just allows us to stop for a moment, put something in front of our creditors and we’ve had such positive support from both our bank and our vendors. They want this to work and I’ve become convinced that we do have a way forward and that our relative small size gives us a lot of nimbleness in terms of product offering and how we operate. We’ve done this throughout our 45 years but this time it’s much faster. The required moving into another lane. The adjusting. The evolving. It’s just got to happen fast. That’s what we’re prepared to do and that’s what we’re working on. We’re fighting for it and holding hands with our vendors and our landlords and think we can get there and be profitable next year and then ahead where we really see things opening up which is in 2022.”
Swimco actually had its roots as a home-based, mail-order business started by Bacon’s mother Corinne Forseth a few years before the retailer opened its first location.