Jun 9, 2017
Hudson's Bay details restructuring plans to tackle 'brutal' retail market
Jun 9, 2017
Canadian department store operator Hudson's Bay Co on Friday said it would streamline its structure across its various store chains to compete in what it called a "brutal" retail environment, while its shares plunged to record lows.
The company, also known as HBC, is the latest North American department store to announce major plans to address industry-wide turmoil. Intense competition in a saturated market and shifting shopping trends to online are punishing sales across the sector.
"We know we can do better and we are taking bold decisive action," said Chief Executive Gerald Storch in a conference call, adding that the streamlined structure would also help make any future acquisitions easier to integrate.
"Rather than chase the rapid industry trends, our transformation plan will reposition HBC to get ahead and stay ahead."
HBC, which operates Hudson's Bay, Lord & Taylor, Saks Fifth Avenue and other chains, plans to decrease its number of vendors, centralize store operations and move toward a "shared services" structure to standardize processes across department stores.
The shares tumbled C$1.08, or 11.2 percent, to C$8.55, and earlier touched a record low of C$8.44.
The company on Thursday had announced a major restructuring plan that included cutting 2,000 positions in North America, or about 3 percent of its more than 66,000 global employees, and reported a wider-than-expected quarterly loss.
On Thursday, U.S. department store operator Nordstrom Inc said that members of the Nordstrom family were exploring the possibility of taking the company private, which could enable the retailer to restructure its business more easily.
HBC said its restructuring was centered on North America, but that its team in Europe was also focused on managing costs.
Storch said employees in Europe were unionized and the agreement when it purchased the Kaufhof department store chain in 2015 included limits to job cuts in the first several years of operation.
Unlike some of its competitors, HBC has no plans to shutter stores as part of its overhaul and is planning to move ahead with growth plans, with Storch highlighting the company's Canadian operations as a "national jewel."
"There are not stores we can close to make our business better," said executive chairman Richard Baker, adding that the company was looking carefully at opening any stores it did not presently have commitments for.
Investors have also been waiting for the company to monetize its real estate portfolio. Baker reiterated the possibility it could sell additional equity in its joint venture assets, or potentially launch an initial public offering of one or both joint ventures.
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