Lord & Taylor’s Potential Sale Reflects Struggle Facing More Iconic US Retailers
Canadian Parent Hudson’s Bay Considers Options As It Looks to Alter Retail Portfolio
BY JENNIFER WATERS (via CoStar Group)
Hudson’s Bay Co. is putting the iconic Lord & Taylor retail stores up for sale. Photo: iStock.
Big changes could be coming for Lord & Taylor, one of the oldest department store chains in the United States.
Canadian owner Hudson’s Bay Co. is testing the waters for a sale or merger of the 193-year-old retailer only months after it shut its flagship New York City store and sold the property to We Co., parent of coworking giant WeWork. These days, any sale of all or part of a chain of brick-and-mortar stores could mean store closings, property sales, rebranding or other fundamental changes, thanks to the popularity of shopping online that’s luring away buyers.
The move comes amid titanic shifts for the retail industry, which has been battered by a broad consumer shift in spending from in-store to online and from legacy retailers to boutique and emerging shops and brands.
That has shattered retail sales for well-known merchants ranging from Sears Holdings to Payless ShoeSource to Toys R Us and hundreds in between that have gone dark the past four years. Already this year, 6,150 stores have closed, easily outpacing the 5,864 stores that closed all of last year, according to Coresight Research, an industry tracker.
In an announcement, HBC, which is also the owner of Saks Fifth Avenue and Hudson’s Bay stores, said it hired investment bank PJ Solomon to help determine next steps for once-storied Lord & Taylor.
The move is part of a “strategy to focus on its greatest opportunities,” according to the Brampton, Ontario-based department-store conglomerate, which has taken a number of steps in recent months to substantially pare operations.
It also follows weak quarterly results released last month by HBC and the February announcement that it was closing up to 20 Saks Off Fifth stores and giving up the Home Outfitters housewares chain in Canada. HBC, which says it’s the oldest company in North America – at 340 years – owns more than 342 stores around the world, 45 of which are Lord & Taylor, according to the company’s annual report.
In February, HBC said its fourth-quarter sales tumbled 5.5% to $2.16 billion U.S. dollars as sales at stores open longer than year, a key industry metric, slid 1.4%. Comparable digital sales climbed 8.7%. HBC said Lord & Taylor’s 2018 annual revenues rang up at $1.04 billion.
HBC’s Chief Executive Helen Foulkes referred to the potential sale as “another example of how we are exploring options to position HBC for long-term success,” according to a statement.
“Over the last year, we’ve taken bold actions and made fundamental fixes that have resulted in a far stronger, more capable HBC, having returned to positive operating cash flow, increased profitability and strengthened the balance sheet,” she said.
Lord & Taylor has struggled in recent years as HBC has tried to rework its image amid the quickly changing real estate landscape. Once known as an upscale apparel shop for well-heeled shoppers, Lord & Taylor’s prices were lowered as HBC struggled to fit it into its formats that range from luxury to premium department stores to off-price fashion shopping destinations. HBC bought the company in 2012.
Last year, it closed a number of stores in major cities ahead of this year’s sale of its iconic New York flagship to We Co. for $850 million. That sale was an effort to unlock real estate value and unload a $400 million mortgage on the 11-story building.
HBC had said it would keep some retail operations in the building but shifted gears ahead of the closing. It still owns a minority stake in the 658,000-square-foot building valued at $125 million.