Hudson’s Bay, Canada’s oldest retailer, intends to apply for creditor protection and restructure its business.
The department store company, dating back to 1670, announced its move on Friday evening, saying it was facing “significant” pressures, including modest consumer spending, trade tensions between the US and Canada, and a decline in the affected areas in downtown stores’ traffic.
“It’s extremely difficult, but this is the step we need to ensure that despite the challenges across the sector that have been forced to strengthen our foundation and other retailers to withdraw from the market, we will remain an important part of Canada’s retail industry.”
“Now, more than ever, it’s important that Canadian businesses are set up to be protected and successful.”
As part of the filing, Hudson Bay, which went to Ontario Superior Court on Friday, said it was exploring several strategic options to strengthen its business, saying it would not make a commitment but is committed to keeping its work as long as possible.
While this process could lead to the sale or closure of the business, it appears that Hudson’s Bay is intended to avoid these possibilities and keep many of its vast retail footprint alive.
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The company has 80 Hudson Bay locations selling everything from apparel to household items, cosmetics and furniture.
Through the licensing agreement, he owns three Saks Fifth Avenue Stores and 13 Saks from 13 Saks.
Saks Global owns the Saks location and the stores of Neiman Marcus and Bergdorf Goodman, and is not related to creditor protection applications created by the US on Friday as it continued to intimidate Canada with additional tariffs.
Rodbell said that the previous US provocation had already hurt Hudson Bay. The company was negotiating to bring more liquidity to potential investors and businesses, but the possible deal ended as the threat and final implementation “created critical market uncertainty.”
She expects Friday’s commitment intended to raise Friday’s debtors from US-based investment management company Restore Capital and other lenders, helping Hudson’s Bay get basked in the chaos. The company said it hopes to secure additional funding in the coming days.
The company has spent the past few years in deteriorating conditions as it has closed several stores and performed several layoffs.
In adjusting previous cuts, it was necessary to cite “challenging headwinds,” cutting labor at Vancouver’s Oak Ridge Park shopping centre and redeveloping the store.
A court filing on Friday showed that its financial issues were running deep.
In an affidavit filed in court, Jennifer Bailey, chief financial officer of Hudson Bay’s parent company, said the business is struggling to pay landlords, service providers and vendors, and must postpone certain payments for months.
Bewley said the company is a few days away from not meeting its payroll obligations if it does not receive further funds. It has 9,364 employees, the court filing said.
“Without the benefit of court protection, we would not be able to pay rent at our Hudson Bay stores, which would result in a rapid escalating series of events and lease the default,” she added.
In the months leading up to filing, Hudson Bay’s regression was evident throughout the department store floor.
The Crown Jewel location in Queen Street West, Toronto, accidentally filled food counters and display cases with an increase in Zeller’s products, rather than modifying the wings.
More recently, Nescafe, a provider of fine food and coffee from grocery store Psatelli, has emptied more stores where escalators often break and many departments often seem to be gging TLC.
Last year, Hudson’s Bay made some tweaks to the product mix, bringing target kids brand Cat & Jack to take women’s wedding banners Ann Taylor and Loft to Canada. However, some people felt that the change was not working.
Liza Amrani, co-founder of the Retail Strategy Group, told the Canadian press last summer.
“There was no one. There was an excessive markdown of the product, rails, rails, and you can see that the purchasing team (or planning team) doesn’t know what Canadian customers are looking for.”
Amrani’s comments came when Hudson’s Bay’s parent company experienced a faint hope last summer as Neiman Marcus and its Bergdorf Goodman banner purchased for US$2.65 billion.
The plan was to combine high-end department stores with Saks Fifth Avenue and Saks Off 5th Chains with a new entity called Saks Global.
As part of the deal, e-commerce Goliathe Amazon and software giant Salesforce were expected to become investors in Saks Global.
Neiman Marcus staff were fired last week as the company prepared to consolidate US office space and cut down on the banner’s Dallas flagship.
Meanwhile, Simons, the nearest Canadian competitor, is in growth mode with a $75 million expansion plan. The 185-year-old store chain of rooms, converted to dry goods stores, will open its location later this year at Yorkdale and Eaton Centre Malls in Toronto, where Hudson Bay has long been anchor tenants.
The architect behind most of Hudson Bay’s modern history is Richard Baker of the American real estate, who bought Hudson’s Bay for $1.1 billion in 2008 from the widow of South Carolina businessman Jerry Zucker.
Baker was made public in 2012 only to reverse the course through a buyback bid that shareholders had to sweeten twice before accepting it in early 2020 ahead of the Covid-19 pandemic lockdown.
Leading to the privatization vote, Baker faced criticism for declining HBC’s stock at the helm and not using the company’s real estate, including some respected locations in busy shopping districts.
After privatization was approved, he acknowledged that there was work to be done and said it would start with a new website in Hudson Bay.
“It will require a long-term perspective to fully unlock the possibilities of HBC at the intersection of patient capital and real estate and retail,” he said in March 2020.
The company “sought an aggressive e-commerce expansion strategy” that cost $130 million and involves 500 jobs between 2021 and 2022, according to court documents.
By 2023, Hudson Bay is in a cost-cutting mode, revealing a $100 million savings by reducing both the workforce and the marketing budget.
They also tried to sell valuable lease rights, reinvest their revenues in retail, coordinate product assortment and promotions, and stage turnarounds.
The move improved the company’s total margin, but sales fell by more than 30% year-on-year, the document says.
