U.S. fashion chain Express to shut all 17 stores in Canada

American-based clothing chain Express plans to close all 17 of its stores in Canada and discontinue its Canadian operations.

Clothing chain's stores in Canada are in Ontario, B.C. and Alberta

Express has 650 locations in the U.S., Canada and Puerto Rico, but will close all 17 of its Canadian stores starting this month. (Mark Kauzlarich/Bloomberg)

American-based clothing chain Express plans to close all 17 of its stores in Canada and discontinue its Canadian operations.

The Ohio-based chain sells men's and women's clothing and currently has 650 stores in the U.S., Canada and Puerto Rico. It had more than $2 billion US in sales last year.

The chain announced Thursday that it will close all of its Canadian locations as part of a restructuring, and has filed for protection from its creditors under the Companies' Creditors Arrangement Act — Canada's version of Chapter 11 bankruptcy proceedings in the U.S.

All in, the Canadian locations employ 340 people at its stores in Ontario, British Columbia and Alberta. The chain set up shop north of the border in 2011 and at the time said it planned to expand to as many as 50 stores.

But "the challenging Canadian retail environment, coupled with unfavourable exchange rates, prevented us from meeting the expectations we had when we entered the market in 2011," CEO David Kornberg said in a release.

In court filings, the company estimates it has lost $56 million US in Canada since it launched.

The chain says it has "unsustainable operating costs" including being on the hook for $120 million in locked-in leases that aren't set to expire for another five to seven years, on average. Those costs "will only worsen in time as rents escalate," Express said.

The company says it sold $34 million US worth of clothes in Canada last year, but failed to make any money, as the Canadian stores contributed a net loss of about $6 million US to the parent company's books this year alone.

The company says it expects to accrue costs of up to $34 million US related to closing its Canadian stores, although about half of that will be offset by tax writeoffs.

Store closing sales will begin later this month at all Express outlets in Canada. The chain says it will continue to offer salaries and benefits to all of its 340 employees in Canada until June 15 at least, and possibly longer.

The chain reckons its customers in Canada have about $400,000 worth of outstanding gift cards, which Express plans to honour through its liquidation process.

A series of retailers in Canada have fallen on tough times in recent months, including BCBG, Aeropostale, Payless, American Apparel and Tip Top Tailors — all of which cited dwindling sales in the face of increased online competition as a reason for their woes.