Three well-known Canadian clothing chains — Bootlegger, Cleo, and Ricki’s — found themselves paralyzed for weeks in November and December 2021, facing the crucial holiday season while a ransomware attack froze their systems and inventory.
The cyberattack hit on November 23, but it wasn’t until December 13 that the businesses could regain access to their internal systems. During this time, the 221 affected stores scrambled to offload seasonal merchandise through heavy promotions.
Court documents filed as part of insolvency proceedings by Comark Holdings, which owns all three retailers, revealed that the ransomware attack alone resulted in a loss of approximately $8.2 million in revenue.
CEO Shamsh Kassam’s affidavit sheds light on the various challenges that led to Comark’s decision to seek creditor protection: the ransomware attack, the ongoing impact of COVID-19, Middle Eastern conflicts, and the rise of ultra-low-cost retailers.
Recently, an Ontario Superior Court judge approved deals for Ricki’s and Cleo to be sold to retail mogul Doug Putman — who also owns Toys R Us and Northern Reflections — while Bootlegger is likely headed to Warehouse One clothing.
Despite these efforts, Canada’s retail apparel industry, which generated $3.6 billion in 2024, still faces significant hurdles, as evidenced by Comark’s $61 million debt.
Kassam notes that the competitive landscape for Canadian retailers, particularly in the apparel sector, has undergone massive shifts in the past decade. Many retailers, such as Reitmans, Aldo, Aeropostale, and Sears Canada, have already filed for protection in recent years.
Court documents provide an overview of the long history of the affected stores, which have been staples of Canadian retail for decades. Ricki’s, founded in 1939, focuses on offering tops, dresses, blouses, and accessories. Cleo, which began as Irene Hill in 1958, is Canada’s largest retailer of women’s petite clothing. Bootlegger, established in 1971, specializes in denim and casual apparel for men and women aged 35 to 55.
Despite their deep Canadian roots, Comark’s court-appointed monitor reported that 82% of private label merchandise for these stores was sourced from foreign manufacturers, primarily in China and Bangladesh. Supply chain disruptions played a key role in the company’s financial struggles.
Kassam points to a series of global issues, including international conflicts, protests in Bangladesh, and rail and port strikes in 2024, all of which contributed to further delays, strained vendor relationships, and lost sales, putting additional financial pressure on the company.
This isn’t Comark’s first brush with insolvency. In 2020, the company entered creditor protection due to COVID-related lockdowns and was later sold to a new entity controlled by its principal shareholder. However, additional lockdowns caused the company to miss Black Friday and Christmas sales, while delays in supply chains meant seasonal products were delivered late and had to be marked down.
Kassam further highlights how consumer habits changed due to the pandemic, particularly with the rise of remote work and a decline in the need for workwear, which had previously made up a significant portion of the companies’ sales.
The ransomware attack had a profound impact, shutting down physical stores and e-commerce platforms for two days and freezing inventory for weeks.
“The effects of the Cyber Incident extended far beyond this time period,” Kassam wrote. “All of the companies’ internal processes and systems, including [their] history and critical path, were lost or compromised and had to be rebuilt.”
Court documents also note that the competitive environment for traditional fashion retailers has evolved dramatically, with the rise of ultra-low-cost fashion brands like Shein and Temu, which have intensified financial pressures.
As of December 2024, Ricki’s, Cleo, and Bootlegger employed around 2,056 people across Canada. The future of these employees remains uncertain as the court proceedings continue.
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