Canadian Chain Carpet Giant Going Out of Business

Toronto, Canada, Jan. 29, 2009--Canadian chain Carpet Giant has declared bankruptcy.

The 40-year-old chain of warehouse-style stores said it owes $5.2 million, an apparent victim of the downturn in the housing market.

In closing its 12 big-box stores in southern Ontario, Giant Carpet and Flooring Ltd. has put about 100 people out of work and left customers wondering what will happen to their unfilled orders.

While Canada isn't seeing anything like the massive wave of store closing that has hit the U.S. in recent weeks, Canadian retailers feel vulnerable, particularly in the home improvement industry.

The stimulative measures in this week's Canadian federal budget are helpful, the largest association of Canadian retailers said yesterday, but they won't be enough to stop some stores from closing.

"Are retailers in Canada facing a challenging year? Absolutely," said Peter Woolford of the Retail Council of Canada. "Will we see some retailers close? I have every confidence we will. But it's not the end of the world," said Woolford, vice-president of policy development and research for the retail council.

Ottawa said it will inject $35 billion into a slowing economy over the next two years through income tax cuts, higher jobless benefits and urban reconstruction, which the retail council said should help open consumers' wallets.

The federal budget also contained specific measures aimed at encouraging home renovation spending. But it may not be enough to reverse the growing trickle of retail failures.

Danbury Sales, the Toronto-based liquidation firm handling the sale of Giant Carpet's inventory, said home furnishing stores are particularly vulnerable because of the downturn in real estate values.

Even large, established companies like Home Depot Canada are cutting expansion plans and jobs. The retailer announced last week it was not going ahead with a new store in downtown Toronto, and also told the Star yesterday it had quietly cut 180 management jobs in November as sales slowed.

The Home Renovation Tax Credit, announced in this week's Canadian federal budget, allows homeowners to claim a 15 per cent tax credit on improvements worth between $1,000 and $10,000.