Ssense’s
comeback efforts include moving a core part of its business to the United
States so American customers can avoid hefty tariffs.
·
Tariffs
contributed to Ssense crisis: US tariffs introduced last year played a
major role in pushing Montreal-based online fashion retailer Ssense
into financial distress and court-supervised restructuring.
·
US was
its biggest market:
Before the tariffs, nearly 60%
of Ssense customers were in the US.
After tariffs were introduced, the share fell to around 40%.
·
End of
$800 duty exemption: The
Trump administration removed the long-standing US duty-free exemption for
imported goods valued at $800
or less, increasing costs for American customers buying from Ssense.
·
Tariffs
hit sales sharply: CEO
Rami Atallah said tariffs were “by
far the largest” factor affecting the company’s performance.
·
Pre-existing
financial problems: Ssense was already struggling after the pandemic boom
ended, leaving it with excess
inventory and cash-flow pressures.
·
Restructuring
completed: Ssense emerged from Canada's equivalent of Chapter 11 after seeking
creditor protection about a year ago.
·
Company
value collapsed: Ssense had been valued at C$5 billion in 2021, when Sequoia Capital
invested in the company.
·
Creditors
suffered losses: Ssense owed lenders about C$179 million, while Quebec's government
investment fund had lent it C$21
million and has not recovered that amount so far.
·
US fulfillment centre planned: Ssense plans to
establish a large US fulfillment centre in the Northeast in Q1 2027,
while retaining its Montreal facility for customers outside the US.
·
Tariff-avoidance
strategy: By
importing products into the US at wholesale
values and then shipping domestically, Ssense
expects to substantially reduce the tariff burden.
·
Example
of savings: A $990 Jacquemus
cardigan could face about $97 in duties if shipped directly to a US
customer. If imported into the US warehouse at a hypothetical $300 wholesale
value, the duty could fall to around $30.
·
Ssense may absorb duties: The company says its goal is to absorb the lower tariff costs,
rather than passing them on to US customers.
·
Canadian
operations remain: Ssense will retain its Canadian headquarters and Montreal fulfillment
centre, continuing to serve non-US customers from Canada.
·
New
ownership after restructuring:
Founder Rami Atallah, his brothers and First
Avenue Advisory acquired most of Ssense's
assets for C$59 million in
cash, while assuming C$18
million in liabilities.
·
Business
restructuring: The
company is selling fewer
products, using AI
to streamline operations, and plans to launch its own clothing
line from late 2027.
·
Brand
relationships at risk:
Several fashion brands were owed money during the restructuring, although Ssense says it has lost very few supplier brands.
·
Intense
competition: Ssense faces competition from luxury retailers including Net-a-Porter, Mytheresa,
Nordstrom and Saks Global.
·
US
consumer spending weak:
Consumer Edge data showed US spending on Ssense
products fell nearly 60%
in the first half of 2026 from the same period in 2025,
although Ssense disputes the figures.
·
Profitability
target: Ssense expects to become profitable in the 12 months through March 2027.
Trump's
tariff policy is encouraging a Canadian company to move part of its
supply-chain operations into the United States. Ssense's
planned US warehouse is designed to lower tariff exposure by shifting customs
valuation and fulfillment closer to the American
consumer, illustrating how tariffs can influence corporate location and
supply-chain decisions.
As
Canadian companies brace for the impact of President Trump’s latest tariffs, a Montreal-based
business has been trying to recover from the levies he introduced last year.
Those
tariffs helped push Ssense, a trendy online clothes retailer,
into a financial meltdown that sent shock waves through much of the fashion world.
Ssense’s website sells everything from a $7,000 Chloé
dress to a $100 pair of Converse sneakers. It also lists products from lesser-known
designers, some of whom say the platform has been a crucial source of sales.
This
year, Ssense emerged from the Canadian equivalent of a
Chapter 11 reorganization and hopes to rebuild itself so that it can withstand trade
wars between the United States and Canada. In particular, the company aims to lessen
the burden of American tariffs by moving a core part of its operations to the United
States next year.
“It’s
a game changer,” Rami Atallah, the chief executive of Ssense
(pronounced “essence”), said of the planned move in an interview.
Mr.
Trump has often said companies that want to avoid tariffs can set up in the United
States. That Ssense and other Canadian companies are relocating
suggests that his trade policies are in some cases having their intended effect.
Mr.
Trump’s latest 50 percent tariffs on Canadian-made goods are expected to harm many
Canadian companies. But Janet Park, an Ssense spokeswoman,
said the company would not be much affected by the tariffs, because most of what
it sells is not made in Canada.
Still,
the tariffs Mr. Trump introduced last year weighed heavily on Ssense, which was struggling even before he took office. The
company had grown fast during the Covid-19 pandemic when people were shopping online
more, but when that came to an end, Ssense was stuck with
too much unsold inventory.
And
a landmark change in U.S. tariff policy helped force the company over the edge.
For
years, U.S. consumers did not pay duties on purchases valued at $800 or less from
overseas retailers like Ssense. But last year, the Trump
administration got rid of that exemption, and American shoppers had to start paying
tariffs for those goods.
“In
terms of the impact on our performance, the tariffs were by far the largest,” Mr.
Atallah said.
When
buying items on Ssense’s website, American customers typically
have to pay the tariffs when they check out. The sudden existence of the new, additional
charges hurt the company’s sales in the United States, its biggest market. Before
the tariffs, nearly 60 percent of Ssense’s customers were
in the United States, but that dropped to 40 percent after the levies were introduced,
according to restructuring documents.
Running
out of cash, Ssense sought protection from its creditors
a year ago and entered a court-supervised restructuring. Its implosion was a stunning
comedown.
Ssense, which Mr. Atallah founded over two decades
ago with his two brothers, Palestinian immigrants from Syria, had become a global
destination for shoppers looking for the latest fashions. The company was valued
at 5 billion Canadian dollars in 2021, when Sequoia Capital, a prominent Silicon
Valley venture capital firm, became an investor.
Quebec’s
government investment fund has so far not recovered any of the 21 million Canadian
dollars it lent the company, a spokesman for the fund said. Other lenders, whom
the company owed 179 million Canadian dollars, declined to comment on how much they
got back in the restructuring.
Most
of Ssense’s inventory is imported from around the world
to its warehouse in Montreal. From there, items are shipped to the United States
and other countries.
Under
its tariff workaround plan, Ssense intends to set up a
big fulfillment center in the
United States. Items from around the world will be housed there, and then sent to
American customers.
To
understand how having an American warehouse helps Ssense’s
business, consider a cardigan made by Jacquemus, a French designer, priced at $990
on the company’s website. A customer from the United States would have to pay $97
in duties for that cardigan, or around 10 percent of the retail price. But if the
cardigan were imported to a U.S. warehouse at a hypothetical wholesale price of
$300, its tariff is likely to be around $30, a much lower duty.
And
Ssense’s customers may not pay any U.S. tariffs themselves.
Ms. Park, the spokeswoman, said it was Ssense’s “goal”
to absorb the cost of the lower duties on items imported to the U.S. warehouse.
The
company expects to open its warehouse in the United States in the first quarter
of next year, somewhere in Northeast, she said. Another company, from the logistics
sector, would run the facility, Ms. Park said, adding that Ssense
could not yet estimate how many jobs might be created at the warehouse. Ssense will keep a fulfillment center in Montreal, from which it will ship to customers outside
the United States. Its headquarters will remain in Canada.
After
the Supreme Court declared one of Mr. Trump’s main tariffs illegal this year, some
companies have gotten tariff refunds. Ms. Park said Ssense
had applied for refunds but had yet to receive any. She did not say whether the
company would pass on money collected under the tariffs to customers who had paid
duties.
Mr.
Atallah, his brothers and a Canadian investment firm, First Avenue Advisory, bought
most of Ssense’s assets in the restructuring, to form
the new Ssense. They paid 59 million Canadian dollars
in cash, while assuming liabilities of 18 million Canadian dollars, according to
restructuring documents.
Ms.
Park declined to say whether the Atallahs or First Avenue
has a controlling stake in the company. First Avenue did not respond to a request
for comment.
To
try to increase its chance of success, Ssense is now selling
fewer items than it did, which reduces its need for cash, and it is using artificial
intelligence to streamline some of its operations, company executives said. It is
also planning to sell its own line of clothing, starting at the end of next year,
Ms. Park said.
It
must win back the trust of the fashion brands that supply it with clothes and accessories.
Many of them were owed money when Ssense went into restructuring
and have not recouped anything. Mr. Atallah said Ssense
had lost almost no brands in the ordeal.
Ssense owed Simone Rocha, the London-based fashion
label, over 200,000 euros, according to restructuring documents. A spokesman for
Simone Rocha acknowledged the debt but added, “We believe in the future of their
business and the strength of our longstanding relationship.”
And
the corner of the retail world that Ssense operates in
is brutally competitive. Other multi-line luxury retailers — companies that sell
items made by many different designers — include online shops Net-a-Porter and Mytheresa and department store brands like Nordstrom and Saks
Global, which recently emerged from bankruptcy under a new name.
“The
multi-line space basically has seen more and more competition pretty much every
year,” said Steve Dennis, president of SageBerry Consulting,
which advises retail and consumer businesses.
In
the first half of this year, spending by U.S. consumers on Ssense’s
products was down nearly 60 percent from the same period in 2025, according to data
on credit and debit card spending analyzed by Consumer
Edge. Over the same period, sales at Net-a-Porter were flat and those of Mytheresa rose 29 percent, Consumer Edge said.
Ms.
Park said Consumer Edge’s figures did not “line up with” Ssense’s
numbers. She added that the company expected to be profitable in the 12 months through
March 2027.
Mr.
Atallah said: “We still believe in the company. We believe it has tremendous potential.”