TORONTO (Reuters) - Clothier Reitmans Canada Ltd RETa.TO said on Tuesday it will shut down its Smart Set banner over the next 12 to 18 months to try to boost profits in a market squeezed by new competition from foreign retailers.
Reitmans runs close to 800 apparel stores under banners such as RW & CO, Penningtons, Addition Elle, Thyme Maternity and Reitmans. It said it is refocusing its sales efforts by converting some 76 Smart Set stores, which have been focused on fashion for young women, to other company banners, while permanently closing 31 Smart Set locations.
The Montreal-based retailer has been facing stiff competition from U.S. and other foreign retailers that have expanded into the Canadian market.
Shares in Reitmans have nearly halved in value in the last two years even though it has shut dozens of stores and won the backing of well-known contrarian investor Prem Watsa, whose firm, Fairfax Financial Holdings (FFH.TO), announced late in 2013 that it had acquired a 13.8 percent stake in the retailer.
Reitmans said despite some improvements in the performance of the Smart Set banner, management has determined that the best way to improve its operating results is to refocus its sales and merchandising efforts.
The Smart Set banner accounts for 10 percent of Reitmans' total annual sales, amounting to about C$96 million ($85 million) for the 12 months ended Feb. 1, 2014.
The company will book a C$2.2 million after-tax charge tied to the store closures in its third-quarter results, which will be reported next week.
Reitmans shares were down 2 Canadian cents at C$6.13 in early trading on the Toronto Stock Exchange on Tuesday.
Reporting by Euan Rocha Editing by W Simon and Peter Galloway