Goodwill is in the midst of a "very challenging time," forcing the closure of 16 stores, 10 donation centres and two offices in southern Ontario over a "cash flow crisis," a Goodwill executive says.
The outlets in Toronto, Mississauga, Brampton, Newmarket, Barrie, Orillia and Brockville will remain shuttered "until further notice," Keiko Nakamura, CEO of Goodwill Industries of Toronto, Eastern, Central and Northern Ontario, told reporters Monday.
About 450 unionized employees are affected by the closures. Dozens arrived for work Sunday, only to find they were locked out with no explanation.
"I recognize this has all happened very suddenly," Nakamura said. "I am examining all possible situations — I'm trying to exhaust them.
"I have a duty as the CEO for this organization to ensure I do the diligence in the best interest of this organization," she said when pressed on whether she would resign.
Union meeting Sunday evening
On Sunday night, Nakamura met with representatives of the Canadian Airport Workers Union, which represents the Goodwill workers.
"We have continued the dialogue today," she said. "The union was encouraged that Goodwill will continue working with stakeholders and various levels of government to find a solution."
In a statement, the union said it is appealing to government and community stakeholders to find funding to reopen the stores immediately, adding it received no advance notice of the closure.
"The 450 workers are now suddenly without jobs, which is devastating on its own. But Goodwill stores also help a lot of low-income people with community programming and affordable shopping," wrote Artan Milaj, vice-president of the union.
"We need to get these stores open and our members back on the job."
Business model with 'low margins'
Nakamura said Goodwill does not own any of its locations and incurs high rental costs as a result.
After taking the reins in 2011, Nakamura said the organization started consolidating its real estate and remodelling its business operations to reduce overhead costs and was able to gain momentum and show signs of progress.
Between December and March each year, Goodwill "suffers from negative cash flow," Nakamura said, leaving the remainder of the year to try to recuperate.
As a result, across the organization, employees operate on reduced work weeks. The organization also sees a decline in donations, which affects its sales, she said.
"Both of these factors simultaneously impact our cash flow," Nakamura said. "We worked hard to make this a viable operation for the current locations impacted."
Nakamura said Goodwill's retail operations bring in 85 per cent of its revenue.
"We are faced with a business model with very low margins," she said. "With increasing competition in the retail space, we are not immune to factors impacting our cash flow."
Other Goodwill locations in Ontario, including Hamilton, St. Catharines, Sarnia and London, are not affected, because they are operated by different boards.
Goodwill's Ottawa outlet closed just before the end of 2015 after management said it had become unprofitable.
Goodwill receives an annual subsidy from the federal and provincial governments totalling $4 million.