LXRandCo updates retail plan, to shutter 27 Europe stores
Montreal-based company LXRandCo is switching up its sales strategy by zeroing in on North America and streamlining its product offerings, the company announced on Wednesday.
Following a solid, yet rapid year of growth in 2017 including tripling its store count and expanding its product offerings, the omnichannel retailer, known for carrying branded vintage luxury handbags and accessories, is hitting the breaks and rethinking its strategy.
Effective immediately, LXRandCo said it is refocusing its physical retail network presence in the U.S. and Canada, and terminating its operations in Europe.
Throughout the remainder of 2018, LXRandCo plans to open 55 new locations in the U.S. and Canada, 45 with existing partners and 10 with new partner Belk. Meanwhile, it will close all of its 27 stores in Europe.
The change comes as the company’s European business was being negatively impacted by higher store costs than their North American counterparts including higher labour costs, costs due to increased regulatory and compliance requirements, and more.
"We believe there is more than enough opportunity to continue to rapidly scale the LXRandCo retail network for the foreseeable future in the U.S. and Canadian marketplace, where we know our market and understand our customer well, and where we will benefit from better gross margins and a more favourable infrastructure cost profile than in Europe," explained Steven Goldsmith, LXRandCo's new President and CEO, in a news statement.
The company said it will also be more selective in terms of retail partners and will, in fact, exit all of its 16 store locations with its retail partner Burlington in the U.S. as locations underperformed the company's expectations.
At the completion of these openings and closures, LXRandCo anticipates having a total of 146 retail locations with seven partners.
What’s more, the Canadian company is streamlining its product offerings and returning to its roots with an increased focus on branded vintage luxury women's handbags and accessories. The company will gradually phase out its men's accessories, fine jewelry, apparel and other offerings.
LXRandCo will also be increasing their focus on customers and embarking on a cost reduction plan.
"I have no doubt that LXRandCo's business represents a significant, long-term top-line growth opportunity. The company is on trend, provides value to its customers and retail partners, and has the capacity for sustainable margin expansion and strong cash flow generation. The successful execution of this renewed and more focused strategy will enable the Company to realize its true potential and drive long-term value for our shareholders," concluded Goldsmith.
In its last fiscal year, the omnichannel retailer reported net revenue of $37.1 million, up 69 percent, but still reported a net loss for the year.
It had initially planned to open as many as 300 stores by the end of 2018, but is now withdrawing previously provided guidance as a result of the new strategic plan.
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