Hudson’s Bay Co. wants to be the next stock market darling.
The retailer, which owns Lord & Taylor, The Bay and Home Outfitters, has filed for an initial public offering on the Toronto Stock Exchange that could value the group at 2.2 billion to 2.6 billion Canadian dollars, or up to $2.55 billion. The IPO is expected to come in six to eight weeks and could raise a combined 400 million Canadian dollars, or $392.2 million, for the company and its architect, the real-estate-player-turned-retailer Richard Baker, sources said.
The company’s registration statement was made public Wednesday and while it did not detail how many shares HBC might float, in the past Baker has said it could be up to 20 percent of the retailer.
The registration statement showed a department store that is being reinvented, but still growing and buttressed financially by significant real estate assets.
HBC has been a company on the move under Baker, replacing brands, bringing in Topshop to its flagship chain and moving to triple its private-label presence. The stock sale would boost the profile of Canadian retailing, restate the case for department store stocks, give the company money to continue to improve its operations and help Baker’s NRDC Equity Partners profit from its investments in Lord & Taylor and The Bay, which were acquired in 2006 and 2008, respectively.
All together, HBC has 207 doors in the U.S. and Canada. The firm logged net earnings of 1.45 billion Canadian dollars, or $1.4 billion, for the fiscal year ended Jan. 28. Normalized earnings before interest, taxes, depreciation and amortization totaled 312.9 million Canadian dollars, or $310 million, and sales tallied 3.85 billion Canadian dollars, or $3.8 billion.
Over the last two fiscal years, sales per square foot rose 20 percent at Lord & Taylor to $210, while sales per square foot at The Bay increased 9 percent to 133 Canadian dollars, or $131.80. Over the next three to five years, the retailer expects Lord & Taylor’s sales per square foot to grow to $240 to $250, as The Bay’s sales per square foot grow to 170 to 180 Canadian dollars, or as high as $176.48.
Historical dollar figures are given at the average exchange rate for the period to which they refer.
The registration filing highlights the company’s real estate assets. That’s no surprise since Baker, who is governor and chief executive officer, was initially attracted to both Lord & Taylor and The Bay’s real estate.
Baker caught the retail bug after buying the two chains and consolidated them earlier this year under the control of president Bonnie Brooks. Only some details of executive compensation were included in the filing, but Baker’s salary for 2012 is given as 600,000 Canadian dollars, or $588,264. Brooks’ pay this year includes a salary of 1 million Canadian dollars, incentive pay of 1 million Canadian dollars, a pension valued at 643,820 Canadian dollars and other compensation of 2.7 million Canadian dollars — a total of $5.2 million.
The company is positioning itself at the upper part of the midtier. It has revamped its merchandising to carry more modern fashions. And Lord & Taylor, which is the more upscale of the two chains, is seen as an expansion vehicle.
“We have a valuable real estate portfolio which is strategically located in core retail locations across Canada and the eastern and mid-western United States,” the company said in the filing. “The company owns or ground leases more than 11 million square feet of prime retail space, including flagships in Toronto, Vancouver, Calgary, Montreal, New York, Westchester and on Long Island.”
HBC said this real estate gave it more flexibility and financing options.
“Given the relative scarcity of comparable prime retail properties in Canada and the eastern United States, we believe our real estate portfolio provides us with a sustainable competitive advantage and acts as a significant barrier to entry in these markets,” the filing said.
RBC Capital Markets, BMO Capital Markets, CIBC and Bank of America Merrill Lynch are underwriting the offering.
Canadian retailing has come into the spotlight lately. Target Corp. is making its entrée, after Baker sold the discounter the leases for HBC’s Zellers chain for $1.84 billion. Nordstrom is also entering the market in 2014 with a Calgary store.
“My personal philosophy to beauty is paying attention to oneself. I love to be outdoors, lots of fresh air, trying to take care of yourself as best you can. I always notice that comes through,” says Felicity Jones, the global face of @shiseido-owned @cledepeaubeauteus, which launches today. Head to WWD.com to read more about the actress’ love for beauty and how she prepared for her new role in “The Basis of Sex,” playing the young Ruth Bader Ginsburg. #wwdbeauty (📷: @dandoperalski)
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews