Canadian department-store operator Hudson’s Bay is downsizing its US Lord & Taylor network as it focuses on its more successful Saks Fifth Avenue business.
Perhaps the biggest step in the plan was an announcement last week it would shutter its Lord & Taylor flagship on New York’s Fifth Avenue after earlier selling the building to shared-workspace startup WeWork. When the sale was agreed last year, Hudson’s Bay said it planned to operate a smaller store on the site, but that plan has now been cancelled by CEO Helena Foulkes, who took on the role four months ago with a mandate to turn around the troubled company’s bottom line. She also announced the sale of online flash-sale business Gilt Groupe last week, little more than two years after acquiring it for US$250 million.
The Lord & Taylor business was brought under the control of Hudson’s Bay in 2012, by their then shared parent NRDC Equity Partners. The purchase of Saks Fifth Avenue followed in mid-2013, along with Germany’s Galeria Kaufhof.
Two Lord & Taylor stores were closed in the first quarter of this year and up to 10 more face closure before the end of next year, which would leave it with just 38.
Last month, Reuters reported Hudson’s Bay had engaged a consultant to develop a strategy for rescuing or selling the business.
It’s not just Lord & Taylor which is causing problems for Hudson’s Bay. While first-quarter comp sales fell 0.7 per cent for the US chain, its namesake brand in Canada reported a 0.6 per cent decline and there were larger declines in its European operations.
Those figures are in stark contrast to the Saks Fifth Avenue division, a more upmarket shopping destination. Comp sales rose 6 per cent, marking the 31st consecutive quarter of growth, dragging total group sales growth to a meagre 1 per cent.
But Hudson’s Bay’s group-wide losses soared 47 per cent year-on-year to US$314 million.
Foulkes said last week that the company will “take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities”.
One such opportunity is Lord & Taylor’s digital flagship on Walmart.com, a move some analysts have derided.
“Walmart’s shoppers have little in common with Lord and Taylor’s shoppers,” Nick Egelanian, president of retail development consulting firm SiteWorks International, told Retail Dive last autumn. “Lord and Taylor shoppers are unlikely to trust the Walmart brand, and the department store industry is a dying business in any case.”