David Bensadoun, CEO of the Aldo Group | Rebuilding a shoe empire

It will have taken more than two years for the Aldo Group to complete its restructuring since the company placed itself under the protection of the Law on the regulation of corporate creditors (CCAA) in May 2020, at the height of the first wave of the COVID-19 pandemic. Aldo Group CEO David Bensadoun looks back on those two difficult years that resulted in the elimination of 400 jobs at the company’s Montreal headquarters and the closure of nearly 270 stores.

Posted at 6:00 am

Jean Philippe Decarie

Jean Philippe Decarie
The press

I met David Bensadoun at the premises of the new and much cheaper headquarters on Hodge Street in Saint-Laurent. “We’re paying 2.5 million rents a year, down from 10 million in the old days, which is a very significant saving,” observes David Bensadoun.

Aldo Group’s new campus, owned by the Bensadoun family, is 50% smaller than the previous one, but the group has also reduced its workforce, which has increased from 1,250 to 850 people.

In fact, 280 people lost their jobs because there were vacancies that were not filled. But having to announce these layoffs was the most painful episode of the restructuring. There were 80 employees with more than 10 years of service.

David Bensadoun

The Aldo Group has developed under the protection of the CCAA for two years and two months, a long and complex process at the end of which the company managed to reach an agreement with 99.4% of its creditors, covering debts of more than have amassed 300 million. including Investissement Québec, which had given him a loan of 40 million. Aldo repaid his creditors 6 cents on the dollar while also paying a $3.3 million court-ordered secured debt to Investissement Quebec.

The company, which operated a network of 700 owned stores in Canada and the United States and 1,000 franchisees in 110 countries prior to COVID-19, now has approximately 1,300 stores. In Canada, Aldo also owns the Spring and Globo brands and stores, totaling 110 stores.


PHOTO MARCO CAMPANOZZI, THE PRESS

David Bensadoun, CEO of the Aldo Group

“We had planned to close 300 corporate stores but managed to reach an agreement with some mall owners by paying rent based on our sales instead of a fixed rent. In the end we closed 267 corporate stores.

“Our 15 stores in England and 6 in France have been taken over by franchisees. During the pandemic, our 1,000 international franchised stores have been less affected by health measures than our brands in North America, particularly in Canada where our Ontario stores have been closed for 220 days,” notes David Bensadoun.

Check the model

However, David Bensadoun acknowledges that the difficult financial situation of the Aldo Group was already prevalent well before the pandemic. COVID-19 has only accelerated the restructuring process.

“We had problems implementing our SAP system [de gestion informatique] whose cost has increased from 65 to 110 million, in addition to the cost of setting up our e-commerce platform.

“The new SAP system forced us to hand over the management of our own distribution center to a third party, the Maersk company, which was hacked and lost our inventory.

“Our operations were frozen for a month. These problems have cost us 100 million gross profits. We also recently received significant financial compensation from Maersk,” specifies the CEO of the Aldo Group.

In addition to operating its network of more than 400 Aldo stores in North America and working with more than 1,000 franchised stores around the world, Aldo serves more than 3,000 points of sale as wholesalers for chains such as The Bay, Nordstrom or Macy’s.

“Before the pandemic, our in-store sales represented 53% of our revenue, those to our franchisees 20%, our wholesale activities 17% and finally our online sales totaled 10%.

“We now aim to achieve equal 25% revenue for each of our four activities. Before the pandemic, we had sales of $1.25 billion, today it’s $850 million and we expect to get back to $1 billion by 2025,” predicts David Bensadoun.

The combined value of the Group’s and its franchisees’ revenues is approximately $2.5 billion.

“We’re getting back into growth mode, but with realistic ambitions. We plan to open 150 new stores over the next five years, including 50 corporate stores and about 100 franchise stores. We will return to certain urban markets like Houston where we have gone from 5 stores to 3 where we plan to open a store,” explains the CEO.

What remains of the ordeal of painful restructuring that David Bensadoun has just endured?


PHOTO MARCO CAMPANOZZI, THE PRESS

David Bensadoun, CEO of the Aldo Group

It changed our sense of priorities. Before the pandemic, we kept unprofitable stores because we thought we would correct the situation. We will prioritize better there, there will be no more sacred cows. We have kept our soul and our values ​​are important, but we will operate sustainably.

David Bensadoun

For this 6ft 5in, over 250lb behemoth who was a Quebec wrestling champion in high school, a former soccer and rugby player, the pandemic has been hard to take and has rocked him.

“Fashion is a difficult business to start with, but the pandemic has been tough for everyone. Five of the ten largest fashion retailers in Canada have placed themselves under the protection of the Law on the regulation of company creditorsThe château has disappeared, but we can feel that activity is picking up again there,” observes the President of the Aldo Group, optimistically but realistically.

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