The fixed costs of leasing for most of these companies is way too high, so CCAA is the only real escape hatch.
Reitmans (TSX: RET.A) finally pulled the trigger on CCAA today, probably to get out of their onerous leases.
My only comment about them is that their balance sheet is still in reasonably decent shape (they have a lot of cash, relatively speaking – $89 million at the beginning of February 2020) and little in the way of debt other than their lease obligations.
Finally, in what had to be the worst-timed substantial issuer bid in stock market history, on July 29, 2019 they repurchased $43.4 million in stock at $3 a piece. I’ll leave it to the readers to determine the rate of return on this after less than 10 months.
Sometimes it feels like buybacks is the worst thing any company can do.
My memory would suggest that more companies get it wrong than get it right (define this as “there are more companies that exist (or have existed) where the company’s treasury stock purchases to date are at a cost basis higher than their current market value”)