No one can argue with the reality of the recession. When the pandemic hit, several businesses tumbled and fell.

While it is true that some of the company closures and contractions were COVID-recession induced, it’s not the case for all of them.
Some companies had already started showing signs of decline as early as 2019.

Here is a list of 10 companies that have seen a downward slope since 2019.

Crescent Point Energy

Crescent point energy is an oil and gas company headquartered in Calgary. The company was once the golden boy of dividend outlays in the energy sector. It started the year 2019 on a precarious note with a focus on disposing of non-core assets, debt reduction, and capital allocation stringency; all of which are clear signals of firefighting.

By Q3 of 2019, net losses were more than $300 Million. With the drop in oil prices, the company failed to raise sufficient revenue to cover its operations and performance proved to be poor.

Granted the focus on cost and Capex reduction may have given the company a lifeline and a good cash position. The company, however, faces a bleak future if oil does not recover.

CannTrust Holdings

CannTrust Holdings is a cannabis producer operating in Fenwick and Vaughan, Ontario. The company met with regulatory challenges in 2019 which completely halted its operations.

It was found on the wrong side of the law in the way it was growing and storing cannabis. The company’s license was suspended and the better part of 2019 was spent trying to remedy the situation.

For a company that spent half the year with no revenue at all, the pandemic put a cap on any chance for the company to try and get back on its feet. It has since applied for creditor protection in March 2020 and is working with regulators for reinstatement of its operating licenses.

Reitmans

The retail giant which specializes in ladies’ clothing has seen better days in its journey of close to a century. In 2018, Reitman’s operated over 600 store locations. There were more than 7000 people under its employ. Its major brands included; Reitmans, Penningtons, Addition Elle, RW & Co., and Thyme Maternity

Telltale signs of the company slowing down including store closures and cash flow issues had already become noticeable in 2019.

With more than 42 outlets closing in 2019. In this age where customers prefer a faster-easier-at-a-doorstep kind of shopping, the traditional business model could not cut it.

The COVID pandemic was a final nail in the coffin for the old retailing giant and it has now filed for creditor protection.
The company says that it intends to restructure and come out of bankruptcy a leaner organization with an increased focus on its eCommerce store.

LaSenza

Lasenza is a fashion retailer specializing in women’s intimates and lingerie which opened its doors in 1990.

The lingerie store is on the brink of legal trouble and possible insolvency as creditors are breathing down its neck. At the fore is US garment maker MGF Sourcing which is claiming $42 million for goods sold to them.

In 2019 the company reported a decline in sales of close to $40 million at around the time they were sold by lingerie giant Victoria Secrets. They started piling up the debt from then on and it seems they have dug themselves into a hole.

With the pandemic and the online shopping craze, eventual collapse is a possibility.

SAIL

The sporting and outdoor goods retailer, under the SAIL and Sportium brands, has filed for bankruptcy protection as a way to restructure and redirect their business to the online platform.
While COVID may have accelerated the closure of SAIL, its financial troubles have been mounting since 2019.

Competition from other sporting brands such as Decathlon and Mountain Equipment Coop proved to be a challenge for the company, which struggled financially.

It failed to manage its cash flow position and accumulated $100 million in debt. With revenue levels around $300 million, this level of debt was clearly unsustainable.

It remains to be seen whether the Sporting outfit will weather the storm in the online space.

Melcor Developments

The real estate and asset management company operating out of Alberta had a bad year in 2019.

The falling oil prices had a major impact on the pockets of their target market resulting in fewer developments. Subsequently, lower revenues were recorded and net income declined.

Bombardier

The appeal of Bombardier over the years has been its protected status. It was one of those companies which had fairly easy access to taxpayers’ dollars in bailout money.

Its balance sheet, on the other hand, had an alarming debt position which continued into 2019.

Though it took steps to clip off its wings selling off non-core assets the $9 billion in debt remained a shadow over its head.

In the 2019 reporting season, the company posted a fiscal year loss of $1.6 billion. With the transport division of the company considered the best in the company these losses were an indicator of a doomed company.

What’s more, the train division was sold to French company Alstom at the beginning of 2020 leaving private jets as its only revenue stream. To make matters worse, its credit rating by major rating agencies S&P and Fitch was lowered to junk level.

The company is in an unenviable position, it remains to be seen in the aftermath of Corona whether it will sink or swim.

Hexo Corp

2019 revealed a loss-making position caused by increased R&D as well as scaling operations. It appeared in the news for a lot of wrong reasons including revenue charges, facility closures, and even a change of auditors.

The company seems to have been bitten by the grow-too-big-too-soon bug which caused major layoffs as its top line could not cater to the employee-related costs.

Northern Silica Corporation

Northern Silica Corporation is a group of companies focused on frac sand and silica products headquartered in Calgary Alberta. From the beginning of 2019, there was already trouble in paradise as frac sand demand lowered significantly as well as the price.

This left the company struggling to sustain revenue. To sustain operations, they resorted to leveraging the balance sheet. But as with most things, too much of anything is bad for you.

The result of the debt pile-up was severe Illiquidity with a debt of close to $90 million against an asset base of $66 million. The company was granted bankruptcy in June 2020. The hopes for the companies reopening lie in their being able to develop new products to find new income streams. They are currently looking into making glass used for solar panels.

Aldo

Shoe chain store Aldo has blamed the pressure of COVID-19 as it sought creditor protection in 2020. While indeed corona was the final push, the company showed symptoms of underlying conditions even in 2019.

With a loss of $74 million for the fiscal year on the backdrop of $1.2 billion in revenue, the cost structure proved unsustainable.

A sizable chunk of the expenses was related to financing costs which is why the company sought to restructure its financing to a more asset-based lending structure but COVID-19 would have none of that.

Another challenge that the business faced in 2019 in the lowering consumer uptake of brick and mortar shopping coupled with the higher costs of premium space rentals. The company says it will use this restructuring period to realign strategy with the eCommerce drive.