Hudson’s Bay Company, Canada’s venerable department store chain and the oldest corporation in North America, will begin to liquidate its entire business next week.
The Toronto-based company said Saturday that it filed documents with the Ontario Superior Court of Justice indicating that it was only able to secure limited debtor-in-possession financing, necessitating the liquidation of the entire business. The company said it made “exhaustive efforts to secure sufficient financing” to keep operating, but was unable to.
“A store-by-store liquidation process will begin as soon as next week,” the company said Saturday.
While the liquidation appears inevitable, Hudson’s Bay is holding out some hope for a last-minute rescue. In its statement Saturday, the company said it “remains hopeful that key stakeholders, particularly its landlord partners, will engage to explore a viable alternative restructuring path that could preserve jobs, tenancy in retail locations, and a company with deep historic significance before it is too late. This alternative would necessitate significant capital and immediate and substantial cooperation from landlords and other critical partners.”
The Hudson’s Bay flagship in Toronto.
Jaclyn Locke
The closure of Hudson’s Bay, given that it operates 80 stores across Canada – including some huge downtown locations in Toronto, Vancouver and Montreal – would dramatically alter the country’s retail landscape and put thousands of people out of work. Hudson’s Bay employs 9,364 people.
The company also operates TheBay.com, as well as three Saks Fifth Avenue stores and 13 Saks Off 5th stores in Canada through a licensing agreement. The Saks Fifth Avenue and Saks Off 5th stores in Canada are also expected to be liquidated.
“Our team has worked incredibly hard to identify a viable path forward, and our resolve is strengthened by the overwhelming support from customers and associates who have shared heartfelt stories about Hudson’s Bay and what our stores have meant to them, their families, and their communities across the generations,” Liz Rodbell, president and chief executive officer of Hudson’s Bay, said in a statement. “These powerful experiences remind us why we must continue to pursue every possible opportunity to secure the necessary support from key landlords and other stakeholders to save The Bay.”
During the liquidation process, Hudson’s Bay and its licensed Canadian Saks Fifth Avenue and Saks Off 5th stores will remain open to serve customers in stores and, for a limited time, online at TheBay.com. The company will share additional details regarding impacted locations, closure timelines, and customer accommodations, including final sales events. Once the liquidation sales begin, all sales will be final, the company indicated.
The liquidation plans, while dramatic, are not surprising since last week HBC disclosed that it was restructuring and was granted protection from its creditors by a Canadian court.
Hudson’s Bay Co. is led by Richard Baker. While his track record running and turning around retail operations isn’t the best, his business has profited through divestitures, including some lucrative retail real estate selloffs.
In June 2006, HBC purchased Lord & Taylor from Federated Department Stores for $1.2 billion and in 2019 sold the Lord & Taylor flagship on Fifth Avenue to WeWork for $850 million, and later sold the remaining Lord & Taylor business to Le Tote. But Le Tote soon took Lord & Taylor into bankruptcy.
In 1978, HBC acquired the Zellers department store chain in Canada, and 33 years later sold off the Zeller leaseholds to Target.
HBC in 2016 bought Kaufhof in Germany for 2.6 billion euros and sold it to René Benko’s Vienna-based Signa Group for 3.8 billion euros in 2019, leading to the merger of Kaufhof and Signa’s Karstadt retail business, forming Galeria Karstadt Kaufhof (Signa later dramatically collapsed after taking on too much debt as it attempted to build a Europeanwide department store chain). Subsequently, NRDC Equity Partners, the private investment firm controlled by Baker and his family, acquired Galeria when it was bankrupt.
In another unsuccessful retail venture, NRDC acquired Fortunoff, the jewelry and home furnishings chain, in 2008 but liquidated it in 2009 after it went bankrupt. The Fortunoff family bought the business back that year.
Baker is executive chairman of Saks Global, comprised of Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman. Saks has for months been unable to pay its bills, but last month Saks Global unveiled a new payment plan that includes 90-day terms, and eventually making good on past due bills. HBC acquired Saks Fifth Avenue in 2013, though as of December, with the formation of Saks Global through the $2.7 billion deal by Saks to buy the Neiman Marcus Group, Saks is no longer part of HBC.
