MONTREAL – Fashion retailer Mexx has declared bankruptcy, becoming the latest fashion retailer forced to liquidate its stock.
The Dutch-based company said it plans to submit a proposal to creditors in Canada under the Bankruptcy and Insolvency Act.
The company has 315 stores around the world, including about 95 in Canada, that will remain open throughout the process.
The decision comes about a week after Reitmans (TSX:RET.A) pulled the plug on its Smart Set brand, and follows the decision by Jacob in October to abandon restructuring efforts and close its 92 stores across the country.
There has also been an gradual influx of American fashion retailers in Canada.
While Target and Marshalls are two of the more notable newcomers, other big foreign brands such as H&M and Banana Republic have increased market share by driving down prices. Mid-priced retailers such as Ann Taylor, Loft and J. Crew have also moved into the country after building reputations with cross-border shoppers.
Meanwhile, high-end department stores Nordstrom and Saks are moving in to compete against Holt Renfrew.
Retail analyst Terry Henderson of J.C. Williams Group believes Mexx will likely survive in some form because they are a worldwide brand that may be acquired or undergo a “massive cleanup.”
Beleaguered companies have complained about deep discounting in Canada that has driven prices down sharply. Henderson said consumers will reap the benefits as stores slash prices through January.
“They are going to be trying to liquidate these inventories with even deeper discounts so it’s going to be an even bloodier pricing war,” he said in an interview.
Henderson said Maxx’s demise was telegraphed in February when it suddenly shut its online operations. It announced the decision in a stark black notice on its website.
The most vulnerable companies have been mass market retailers that have failed to clearly develop a niche and have little to no e-commerce business, said Brynn Winegard, a marketing analyst at Winegard and Company.
“You cannot afford to be a middle man with no online presence and singularly in bricks and mortor,” she said. “They’re in every mall and they’re …not focused on finding a new niche.”
Mexx was purchased by Liz Claiborne in 2001 and sold off 10 years later to U.S.–based private equity firm The Gores Group.
The company was founded in the 1970s by fashion designer Rattan Chadha and a series of business partners that supplied department and wholesale stores in the Netherlands. The Mexx name took off in 1986 with the merger of brand names — Moustache, Emanuelle and XX for kiss, kiss.
At its peak, Mexx grew to more than 800 stores in 55 countries, employing more than 6,000 people.
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