HBC Sells Off $340-Million in Real Estate

The company that owns Hudson’s Bay says it completed real estate transactions in Canada and the U.S. resulting in a gain of around US$340 million. HBC LP, which also owns Saks Fifth Avenue and Saks OFF 5th, says in a statement that it’s the owner and developer of a North American real-estate portfolio totalling approximately US$7 billion.

HBC LP confirmed the transactions in an e-mail to The Globe and Mail. Canada’s oldest retailer is using the cash to pay significantly overdue invoices to vendors. “HBC is committed to its vendor partners, and to ensuring that we fulfill all financial obligations,” spokesperson Tiffany Bourre wrote in the statement, in response to questions from The Globe about the late payments. “Any delayed payments are due to HBC managing through the challenging environment that is impacting the wider retail industry, particularly in Canada.”

The historic retailer announced layoffs twice already in 2023 as it said the retail sector is navigating significant pressures. In 2018, when the company was still publicly traded, investors challenged it to sell some of its substantial real estate holdings.

In recent years, the company has introduced several initiatives such as a revamped loyalty program, partnerships with Forever 21 and MEC, and the revival of discount chain Zellers.

Earlier in 2023, the company shut two of its Alberta department stores, saying the decision reflected changes in the market as well as its vision for the future.

Source: Globe and Mail
Source: The Star
Source: Financial Post

Hudson’s Bay leadership shakeup to see return of Liz Rodbell as president and CEO

Liz Rodbell is back in charge at Hudson’s Bay — and analysts say she faces a tough time turning around Canada’s oldest retailer. Hudson’s Bay announced that it’s bringing back the company’s former top executive as president and CEO to replace Sophia Hwang-Judiesch, who stepped down on November 28.

The news comes just a week after the retailer’s parent company HBC announced it had raised $340 million (U.S.) by “monetizing” some of its real estate portfolio, amidst reports that the retailer and its U.S. sister company Saks Fifth Avenue had fallen behind on payments to suppliers. The retailer has also laid off roughly 500 employees this year as it seeks to cut costs.

Turning the ship around won’t be easy for Rodbell, said Lisa Hutcheson, managing director at retail consultancy J.C. Williams Group. “I think it’s a very tough job at the moment,” said Hutcheson.

During Rodbell’s previous tenure as president from 2013 to 2017, she made a big push to improve relations with suppliers and vendors, said Hutcheson and will need to do it again. “That will be her first task at hand — getting trust back, from the vendors and suppliers,” said Hutcheson. “Because with no inventory, you don’t have a business.”

Veteran retail analyst Bruce Winder agreed that fixing the company’s relationship with its suppliers is job No. 1 for Rodbell. “If the stories are true that they’ve been behind on payments, Hudson’s Bay may be in real trouble,” said Winder. “She’s got to convince vendors that the company will pay them on time,” adding that delayed payments to vendors is typically a clear sign of financial distress.

Winder said there are three typical outcomes when a retailer delays payments to its suppliers: They give the company tighter payment terms (such as cash on delivery), they charge the company more money, or they simply stop supplying their goods. “That could mean empty shelves, which becomes a doom loop,” said Winder.

The company has been struggling for a while, said Winder, as younger consumers choose to spend their money elsewhere. “It’s a good brand. I mean, it’s the oldest company in North America. But in my opinion, it appears to have lost relevance, especially to millennials and Gen-Z,” said Winder.

While Hudson’s Bay, like other retailers, was hit hard by COVID-related lockdowns, it also suffered because of the work from home trend, Hutcheson said. “Fashion took a beating in early COVID,” said Hutcheson. “So being a business that’s very focused on fashion that certainly has been a factor for them.”

While consumers still spend the majority of their money at bricks and mortar stores, companies have to earn that business, Hutcheson said. And she’s not convinced Hudson’s Bay has done that. “What kind of experience are they trying to offer? I don’t think they have a very clear strategy and message to the customer to differentiate to drive the customer back,” Hutcheson said.

In a press release, Rodbell said she was “absolutely thrilled” to be rejoining the company. “My focus, first and foremost, is on the customer,” said Rodbell “ensuring we have the most relevant assortment, strong brand partners, and an overall experience that is inspiring and relevant to our shoppers.”

Source: Globe and Mail
Source: The Star