Job reductions sweeping through the U.S.’ retail landscape have snowballed into Canada.
This story first appeared in the February 5, 2009 issue of WWD. Subscribe Today.
The Toronto-based Hudson’s Bay Trading Co. said Wednesday it is eliminating 1,000 positions, or 5 percent of its workforce, in an attempt to offset declining business conditions and position itself for a better future.
The cuts are happening “across the whole company, in areas that won’t impact selling service,” Jeffrey Sherman, chief executive officer, told WWD.
Store positions as well as administrative positions in the newly created Shared Services Group are being eliminated. The retailer expects to save $150 million annually beginning this year through the personnel cuts and other expense reductions related to such areas as travel, marketing, charitable contributions and supplies.
Individuals affected by this round of cuts will all be gone from the company by the end of the week, Sherman said.
Also this week, Macy’s Inc. said it would slash 7,000 jobs and Liz Claiborne Inc. cut 725 positions. Last month, Saks Fifth Avenue announced 1,100 layoffs, Target Corp. 700, and Neiman Marcus Inc. 375. Lord & Taylor, which along with Hudson’s Bay is owned by NRDC Equity Partners, eliminated 290 jobs in two waves since October.
Last year, NRDC paid more than $1.1 billion for Hudson’s Bay, which operates 94 The Bay department stores, 280 Zellers discount units, 61 Home Outfitters and 161 Fields stores. Hudson’s Bay is North America’s oldest retail brand, founded in 1670. The group also owns Creative Design Studios in the U.S.
Separately, NRDC owns Fortunoff, which is expected to go bankrupt.
In January, Hudson’s Bay said it was centralizing the back office functions of its divisions under a Shared Services Group designed to provide finance, IT, supply chain and logistics and central operations to all banners and businesses. The process led to other layoffs.
While business conditions did spark Hudson’s Bay’s job cuts, according to Sherman, “The general state of retailing in Canada is not nearly as challenged as it is in the U.S. Year-to-year declines are nowhere near what they are in the U.S. Basically, [our] business in Canada is running flat. The anticipation is business getting slightly worse. We are trying to position ourselves for that.”
He said depending on how much the Canadian economy worsens, there could be additional cuts. However, no store closings are planned, he added.
In addition to workforce streamlining and centralization, Hudson’s Bay, following its purchase by NRDC, hired new management to run divisions as well as Sherman to head up the entire operation. More recently, NRDC pumped $70 million into Hudson’s Bay.
“This is all about streamlining, getting focused on core customers, separating the banners and eliminating the distractions,” Sherman said. Unfortunately, in that process of these exercises, Sherman added, it was necessary to review which individuals were expendable.