Canadian high-end fashion retailer SSENSE revealed that it will seek bankruptcy protection after it was severely affected by recent US tariff policy shifts and increasing financial pressures.
The Montreal-headquartered company, which is widely known as a worldwide center for high-end designer fashion, said eliminating the de minimis exemption on shipments to the US created an instant liquidity crisis.
The exemption previously enabled packages under $800 to be imported duty-free into the US, a practice often utilized by e-commerce retailers such as SSENSE to cater to American customers. The exemption was cancelled last month through an executive order by former President Donald Trump.
In an email to employees, CEO Rami Atallah stated the retailer was “surprised” by the move, which heavily interrupted its US business. Coupled with tightened liquidity and pressure from lenders trying to sell the company without its consent, Atallah stated the retailer had no other option but to go into protection in Canada’s Companies’ Creditors Arrangement Act (CCAA).
“These adjustments triggered an instant liquidity crisis no temporary solution could fix,” Atallah said, while reassuring employees that wages and benefits will still be paid during the restructuring process.
An SSENSE spokesperson confirmed the company will proceed “business as usual” under CCAA protection, emphasizing that it is confident in the long-term health of its business. The filing will enable the company to maintain control of its assets and restructure while preventing a forced sale threatened by its lenders.
Established by Atallah and his brothers in 2003, SSENSE has become Canada’s most well-known international fashion platform, with approximately 1,200 employees globally. Sequoia Capital, an American venture capital company, valued the firm at $4 billion in 2021.
Analysts explain the move as a reflection of the challenging situation for high-end retailers. Consumer spending has been dulled by inflation, and tariffs have added to difficulties for firms that are extremely dependent on cross-border e-commerce.
“SSENSE’s announcement is important because it indicates how exposed even big, noticeable fashion companies are to such tariff movements,” said Toronto fashion consultant Huma Aslam.
Charles de Brabant, McGill University’s Bensadoun School of Retail Management executive director, added that luxury sales were already decelerating and referred to the combination of tariffs and inflation as a “double whammy” for retailers.
SSENSE is not the only one experiencing troubles. Other firms have also raised alarms about the removal of the de minimis rule. US fashion conglomerate Tapestry, owner of Coach, cautioned investors of a $160 million profit blow, while smaller Canadian retailers such as Province of Canada suspended shipments to the US entirely.
Under US Customs, close to 1.4 billion packages valued at $64 billion reached America duty-free last year via the exemption. Without it, companies have to pay tariffs by origin or fixed charges ranging between $80 and $200 per shipment.
For SSENSE, the change comes at a crucial time as the company tries to restructure and retain its ground in the international luxury retail market.
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