Lord & Taylor Parent May Bid for Hudson’s Bay

Discussion
Jul 10, 2008

By George Anderson

NRDC Equity Partners, which owns Lord & Taylor and Fortunoff’s, may be getting ready to make a bid for Canada’s Hudson’s Bay Co. (HBC).

The two companies are not strangers to one another. NRDC currently owning a 20 percent stake in HBC along with a seat on its board of directors. HBC operates the Bay department store chain along with the Zeller’s discount chain, Home Outfitters home décor business and Fields, a discounter that operates stores in rural areas.

The currently circulating rumors are not new with NRDC having said to be interested in acquiring HBC in full since the former owner, Jerry Zucker, died in April. Mr. Zucker and NRDC president and chief executive Richard Baker were said to be close friends.

Mr. Baker has spoken about opportunities to expand the Lord & Taylor and Fortunoff banners beyond the U.S. into Canada and elsewhere. There is some thought that under NRDC ownership some of the Bay stores would be converted to Lord & Taylor locations.

“I don’t think you could find a better buyer for HBC,” Anthony Stokan, principal at Anthony Russell and Associates, a shopping center consultancy, told the Financial Post. “NRDC has done an incredible job of revitalizing a very tired, old-world brand that had been struggling for two or three decades and that [situation] mirrors what Mr. Zucker was trying to do with HBC. [NRDC] was extremely methodical about which locations to shutter and relocate and how to rebrand Lord & Taylor for a much younger customer. In order for the department store category to see any uplift in the coming years we will see a radical change such as this.”

Current HBC CEO Robert Johnston had no comment on the NRDC report.

An HBC spokesperson Hillary Marshall told the Financial Post, “Richard Baker and NRDC have been involved with HBC as minority owners and board members since 2006. Through their ownership of well-known properties such as Lord & Taylor and Fortunoff, they bring another layer of expertise to our organization.”

Discussion Questions: First, have you been surprised by the way NRDC has taken to retailing? Do you think it is in the business with Lord & Taylor, Fortunoff and whatever comes next for the long haul? Secondly, what do you think of an NRDC acquisition of Hudson’s Bay Co.? What do you think it would do with HBC?

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8 Comments on "Lord & Taylor Parent May Bid for Hudson’s Bay"


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John Crossman
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John Crossman
13 years 10 months ago

Just a general comment that I see this as a wise trend by retailers to take advantage of the current market conditions.

Craig Sundstrom
Guest
13 years 10 months ago

I’ve mixed feelings here: as much as I think NRDC deserves canonization for its work with L&T, not everything they try works (e.g. L’nT) and I fear that this would be primarily a real estate move that kills off HBC once and for all. Yeah, THAT’s what the world needs, another retail flag falling (especially one “only” 400+ years old).

Kevin Graff
Guest
13 years 10 months ago

Being from Canada, I’m intimately familiar with HBC and the department store scene here. The reign of Jerry Zucker has brought about a lot of good changes at the company, but quite frankly, not nearly enough to make them a true competitive threat in the marketplace. In most Canadian consumers’ minds, the department store landscape is viewed as being somewhat irrelevant and is not on their shopping radar. Specialty retailers and other big box players are doing it bigger, deeper, and certainly with more excitement.

NRDC may be the right choice to take the helm, but they’ll need to pull off a magic act to take an old tired brand and turn it into a destination that can capture the imagination (and wallets) of Canadian consumers.

Somebody (please, anybody!) come rescue Canadians from the department store doldrums!

Carol Spieckerman
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Carol Spieckerman
13 years 10 months ago

As I’ve noted in previous discussions, more and more companies are going to get into the brand marketing business, following the example of Iconix (and Cherokee before them). Let’s not talk about NexCen though in the interest of focusing on the positive aspects of the business model. NRDC is one of the anticipated followers and I see them as a worthy one.

Injecting NRDC’s acquired brands (Fortunoff) into Lord & Taylor’s boxes is a great two-for strategy that allows NRDC to control its brands’ destinies rather than relying on procuring outside retailer partnerships (ala Iconix’ Op with Wal-Mart and Cherokee’s Norma Kamali with Wal-Mart). Hudson’s Bay would provide an additional brand box for the company; one with unique geographic presence. I like what they’re doing.

Joseph Peter
Guest
Joseph Peter
13 years 10 months ago
From a visit to Canada a few week ago, I saw some really wonderful items at The Bay and some rather dull and inspiring merchandise as well. What my Canadian friends tell me is that Canada really needs a good mid to upper tier department store such as Lord & Taylor. Holt Renfrew, the main luxury department store in Canada is ridiculously expensive for the overall population. The Bay is more along the lines of a mid to lower tier department store (such as Bon Ton or Carson’s) with a few high end names thrown in at flagship downtown stores. Ironically, at some of the flagship former Eaton’s, now Sears stores (as compared to US Sears stores), I have seen merchandise by Polo Ralph Lauren, Tommy Bahama, DKNY, similar to what Lord & Taylor would carry. The Bay seems to lack the higher end names, except perhaps a dash of Tommy, Polo or Nautica at a few select locations. The Bay gives me the perception of a department store stuck in the middle 1980s and… Read more »
John McNamara
Guest
13 years 10 months ago

From what I’ve heard, Canadian customers are more frugal than their neighbo(u)rs south of the border. Walmart has long established itself there, so what’s taking Target so long?

Mark Lilien
Guest
13 years 10 months ago

Canadian shoppers aren’t US shoppers. They’re much younger, their income tax rates are much higher, and lately their currency is very strong. Lord & Taylor’s #1 competitor in Canada would be the upscale, well-run Sears. Hudson’s Bay does $7 billion a year, while Lord & Taylor does only $1.3 billion.

The US and Canada are 2 different markets and these organizations aren’t similar in size or operating methods. Each needs its own focus, not the least of which because Hudson’s Bay has 5 distinct divisions: The Bay, Zellers, Home Outfitters, Fields, and Designer Depot. This might be a very complicated merger, unless some of the divisions are sold off quickly.

William Passodelis
Guest
13 years 10 months ago

And AGAIN I agree with Mr. Lilien

HBC is an enormous organization and it will require a lot of expertise and attention — there are 5 divisions and multiple (price point) businesses.

I believe that Ms. Elfers can continue to rework and rejuvenate (the increasingly wonderful) Lord & Taylor — for which NRDC should be applauded and thanked — DAILY!! There will need to be equivalents for the various divisions of HBC or those divisions not wanted will need to be divested of — quickly — so focus can be placed on the retained divisions.

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