Winnipeg-based retailer to liquidate all Warehouse One, Bootlegger stores

Winnipeg-based vesture retail merchant storage warehouse ace is moving to pay off all of its 128 stores, including Bootlegger.

The company began proceedings in Manitoba under the Companies’ Creditors Arrangement Act, saying it was insolvent and could no longer pay staff or rent unless it got court protection.

Director and officer Shamsh Kassam said in an affidavit that the company faced an "acute liquidity crisis," with a decline in foot traffic and increased competition from cheap fast fashion and online retailers putting pressure on the once-profitable jean store founded — and still headquartered — in Winnipeg in 1977.

Warehouse One "is unable to satisfy its near-term obligations as they become due," the affidavit said.

The company has 982 employees, including 232 in Manitoba, where it has 16 stores. All staff are non-unionized and 403 are full-time, says a pre-filing report by monitor Alvarez & Marsal Canada Inc.

The stores are in eight provinces and the Yukon, mostly in shopping malls or spaces leased from a third-party landlord, except for the one in Kenora, Ont.

Kassam said about a third of the company's retail footprint is in "small-town Canada," which represented about 40 per cent of its total sales.

Those small-town sales had declined by more than 10 per cent year-over-year because of an aging and shrinking customer base and increased e-commerce penetration, he said.

Doug Stephens, founder of Retail Prophet, a Toronto-based consultancy and research firm, said the Warehouse One situation reflects the situation consumers are facing in the current economic climate.

"With inflation being what it is, with growing job insecurity in the country … consumers are very cautious and they are spending in a way that you would expect cautious consumers to spend," he said.

"We're seeing a real flight to off-price [stores that sell brand-name merchandise at lower prices]. Off-price has been growing quite strongly."

“What has really been missing is the mid-tier of the market, and that is, generally speaking, where we find a lot of mall-based retailers. Consumers are just really looking past that now," he said.

Revenues for Value Village, Winners and Marshalls and online stores like Poshmark have been growing robustly over the last couple of years, Stephens said. Luxury shopping is also still holding its own at the other end of the spectrum.

"We saw a fallout certainly in the department store channel. They were some of the early victims. Now that is starting to spread."

As a result, what used to be considered A-level malls, with good real estate for retail, have become B-level malls, with fewer name brands and more space fillers.

That means people in smaller communities need to travel farther to find those shops or go online.

"Every time another one of these mid-tier retailers succumbs, that's just more area for growth for a business like Amazon," Stephens said.

That's the situation facing Amanda Wesselink in Quesnel, B.C., who frequented Warehouse One for Christmas gifts, birthday gifts and clothing for herself and her husband.

"We don't have much options here. That's pretty much our only spot for reasonable clothing in town," she said.

"And it's sad for the workers, too, because they're a bunch of great ladies there and helpful. It's more jobs gone."

There are a couple other clothing stores in Quesnel, but one is out of her price range and the other doesn't offer a variety like Warehouse One does.

"So it'll be online shopping, which is difficult, because you can't try things on," she said. The other option is a 90-minute drive to Prince George.

Warehouse One posted a net loss of about $15 million in its last fiscal year, Kassam's affidavit said, having recorded a $6.5-million loss the year before.

The 2025 purchase of the casual apparel brand Bootlegger also factored into the company's financial woes, Kassam said. The acquisition led to a 50 per cent cost increase year-over-year that almost entirely offset revenue gains from the Bootlegger stores.

The company owed more than $33 million to owners and other affiliates that loaned it money, as well as about $7 million to a senior lender as of April 28, the pre-filing report says.

It also owed another $7 million to unsecured creditors, mostly to merchandise vendors, and had about $900,000 in outstanding gift card obligations.

A request to honour those gifts cards until May 13 was granted by the Manitoba Court of King's Bench as part of the application.

Warehouse One also has a centralized warehouse and distribution centre in Winnipeg, leased from an affiliate of majority shareholder WHO Industries Inc.

WHO Industries got Warehouse One's assets out of receivership in 2002. The company had been profitable from then up until the start of the COVID-19 pandemic, Kassam said in his affidavit.

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