By  on January 16, 2009

The Hudson’s Bay Trading Co. is centralizing, in a sweeping effort at both its U.S. and Canada retail operations to cuts costs and operate more efficiently in the difficult business climate.

The finance, IT, supply chain, logistics and store operations units at HBTC’s retail divisions — The Bay, Zellers, Home Outfitters and Fields in Canada, and Lord & Taylor and Creative Design Studios in the U.S. — have been centralized into a new Shared Services Group, based in Toronto and a few locations in the U.S.

With the streamlining, Jeffrey Sherman has become president and chief executive officer of HBTC and will oversee all of the Canadian and U.S. banners. He was previously president and ceo of just Hudson’s Bay, which includes only the Canadian divisions.

Also, Don Watros has been named chief operating officer of the Shared Services Group to head up the new organization. Watros will report to Sherman, as do the heads of all the divisions. Watros was previously chief administrative officer of HBTC.

HBTC is owned by NRDC Equity Partners. NRDC also owns Fortunoff, but Fortunoff has not been integrated into HBTC. However, NRDC officials have previously disclosed plans to create Fortunoff jewelry and home shops inside Lord & Taylor stores.

Both Hudson’s Bay and Fortunoff were purchased by NRDC within the last year. Lord & Taylor was purchased in 2006.

With business exceedingly tough, HBTC last week invested$70 million into its Canadian retail operations and $60 million into Lord & Taylor. Sherman said the equity investments could be used to pay down debt and for operations. The company said that after the pay down of L&T’s existing debt and a re-locking of the interest rate, L&T will save $70 million in interest payments going forward.

On Friday at Lord & Taylor, 170 people were let go. Someof the layoffs stemmed from the centralization. More cuts are possible.

At Lord & Taylor, sources said the job cuts were across the board and in addition to the store’s 120 layoffs last October.

Combined, the 290 positions represent about 3.5 percent of the chain’s total workforce of 9,000.

Further layoffs from the centralization are “to be determined,” Sherman said.

Sherman told WWD that the centralization “will enable us to reposition Hudson’s Bay Co. and Lord & Taylor into a leading integrated North American retail enterprise. Aligning all of the banners and businesses across North America ensures that we are better positioned to address the current retail environment, leverage our scale as a major North American retailer, and set up HBTC for long-term success.”

He said Shared Services has hundreds of employees, but he added that he had no information on how many jobs are being eliminated at the division level or how much money HBTC hopes to save as a result of the centralization.

Retailers with separate store divisions typically form central units providing back-office functions. HBTC’s Shared Services is not unlike how the former May Department Stores Co. operated. The Neiman Marcus Inc. also has centralized certain operations at its Dallas headquarters.

There were several other senior appointments at Shared Services including two senior vice presidents for finance in Canada and the U.S., respectively, Mike Culhane and Chris Sim.

Among the other appointments: Dan Smith, chief information officer for the U.S. and Canada; Gary MacDonald, senior vice president, supply chain, logistics, central operations, real estate for Canada; Bill Tracy, executive vice president, supply chain & logistics in the U.S.; Parker Vaughey, vice president of strategic planning and Internet, and Bob Kolida, executive vice president of human resources for Canada and the U.S.

Among those departing is senior vice president and chief financial officer Steve Richardson.

In the midst of the deepening recession, job cuts have become standard procedure at many retail companies. Just last week, Neiman’s announced 375 job cuts, representing about 3 percent of its workforce.

Even more dramatic was the announcement Thursday at Saks Fifth Avenue that 1,100 jobs at stores and headquarters, or 9 percent of its workforce, were being eliminated.

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