Lord & Taylor to be sold to Le Tote
While some stores are partnering with or launching their own rental subscription services, Lord & Taylor, America’s oldest department store, is being bought by one.
San Francisco-based Le Tote, founded in 2012 and focused on fashion, agreed to acquire Lord & Taylor for $100 million from owner Hudson’s Bay Company (HBC).
Underscoring challenges facing Lord & Taylor and the department store sector, HBC, which acquired Lord & Taylor in 2012, agreed to cover $58 million in annual rent on Lord & Taylor’s stores that are leased for “at least” the next three years. HBC will receive an equity stake in Le Tote, two seats on its board and certain rights as a minority shareholder.
Le Tote expects to keep Lord & Taylor’s remaining 38 stores open and continue to employ most of the staff. Beginning in 2021, however, HBC can reassess the use of Lord & Taylor locations and recapture certain stores to determine their best use.
“Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord & Taylor, its loyal customers and dedicated associates,” said HBC CEO Helena Foulkes.
Lord & Taylor, with sales of $1.1 billion in 2018, has lost money since 2016. In May, HBC said it was exploring a sale.
Similar to models like Stitch Fix, Le Tote members receive a monthly “Tote” of personalized items, from which they can keep what they like and return the rest.
Le Tote’s officials told CNBC and the San Francisco Chronicle that the company will add rental options and other categories to stores to better balance Lord & Taylor’s strengths in dresses and shoes.
Bolder moves in the future include a focus on smaller stores (10,000 to 20,000 square feet versus the current average of 120,000) and using the proprietary technology and infrastructure from Le Tote’s rental business to better customize Lord & Taylor’s offerings by region and to the individual customer.
Brett Northart, co-founder and president of Le Tote, told CNBC, “The customers have spoken, and people are looking for smaller, more personalized locations — that’s something we do well at Le Tote.”
- HBC and Le Tote Enter Into Agreement for Acquisition of Lord + Taylor – HBC/Le Tote
- Le Tote
- Hudson’s Bay to sell Lord & Taylor for $100 million to clothing rental service Le Tote – CNBC
- Le Tote online retailer buys venerable Lord & Taylor for $100 million – San Francisco Chronicle
DISCUSSION QUESTIONS: Does a fashion rental subscription service have any advantage in bringing advanced personalization techniques to the department store model? What suggestions would you have for merging the department store and rental models?