Hudson’s Bay Co. Wholesales Private Label Brands

Strategy enables retailer to leverage supplier costs and widen margins by ordering in larger quantities.

A view of Black Brown 1826 men’s wear collection designed by Joseph Abboud at Lord & Taylor at Westchester's Ridge Hill mall.
Appeared In
Special Issue
Men'sWeek issue 05/03/2012

The Hudson’s Bay Co. has opened up distribution of its private brands to other retailers.

This story first appeared in the May 3, 2012 issue of WWD.  Subscribe Today.

It’s most noticeable at Belk Inc., which about a month ago began selling in 60 doors the Black Brown 1826 men’s wear collection designed by Joseph Abboud and developed by Hudson’s Bay Co. The five-year-old collection continues to be sold at the Lord & Taylor and The Bay divisions of Hudson’s Bay Co.

While private brands will become less proprietary, the strategy enables Hudson’s Bay to build revenues via wholesaling and leverage supplier costs and widen margins by ordering in larger quantities. The company is revving up product development to expand the range on its Lord & Taylor line, which so far is primarily sweaters, and the HBC Collection, which offers products bearing Hudson’s Bay’s coat of arms and signature stripes.

Currently, private brands represent less than 10 percent of Hudson’s Bay’s total volume of $4 billion. “We see the potential to triple in size,” said Bonnie Brooks, president of Hudson’s Bay Co. The plan is to sell the private brands to stores in different regions and that don’t compete with each other, to maintain an air of exclusivity.

Macy’s also wholesales its private brands and HBC previously operated a unit called Creative Design Services, which closed two years ago but had a mission to invest in new American designers, orchestrate the proprietary brand strategy and wholesale the collections as well.

At Belk, “We’ve been selling traditional men’s wear really well, but felt that in modern men’s wear, we had some white space to fill,” said John Thomas, executive vice president of private brands at the Charlotte, N.C.-based chain. “Black Brown is a good fit for us. It’s approachable American sportswear with a modern sensibility. It’s not too urban or out there for us.”

Thomas said that Belk and Lord & Taylor both utilize Li & Fung as an agent for private brand development. “That’s kind of how the conversation started,” to bring Black Brown to Belk.

Thomas also said there’s been a good collaboration with Hudson’s Bay. “They have done a lot of work with us to create a color palette and offerings that relate specifically to our Southern customer.” Belk, he added, gives Black Brown 1826 “significant” floor space, from 500 to 2,000 square feet depending on the size of the store, in the better priced men’s zone and next to contemporary denim. It’s typically displayed near Calvin Klein, Nautica and Polo.

Belk sells another label exclusively called Sophie Max, created in conjunction with Leon Max. “Private and exclusive brands are the largest and the fastest growing segment of our business,” said Thomas. “We are really continuing to push and grow private and exclusive brands. It’s approximately 30 percent of our total.” Belk has new private brands in the works for 2013, in ready-to-wear and men’s wear.

“There’s been a lot of interest in the market about Black Brown,” said Abboud. “Originally, the intent was to conceive a designer collection that was exclusive to Lord & Taylor, with always the idea of building a brand. There’s a DNA to it. It’s a modern American collection. With any collection I’ve done, I break down the parameters of traditional and try to be more forward but still very wearable.”

The name Black Brown 1826 refers to year Lord & Taylor was founded, and stems from a visit by David Lippman, who has created image campaigns for Lord & Taylor, to Abboud’s office in Bedford, N.Y., where everything is black and brown. “He came away inspired by that, and came up with a beautiful graphic,” Abboud said.

Sources said Black Brown last year generated $60 million in retail sales and is projected to grow to $150 million to $200 million in three years. Abboud declined to confirm the numbers. The brand is best known for cashmere sweaters, priced under $200, though the sweaters with higher grade cashmere are in the $300 range. Shirts are priced $49 to $59 shirt, and suits range from $300 to $500, though in the top Black Label tier, are priced up to $699. Black Brown represents Lord & Taylor’s largest suit business. Recently, the brand has expanded into washed denim, golf, and some footwear.

“The collection is really lifestyle now,” Abboud said. “It’s everything from formalwear to T-shirts. Sweaters have always been our huge signature.…Black Brown has an international feel to it. It’s not as traditional as Tommy or Polo Ralph Lauren. We could sell it to a European retailer, perhaps a U.K. chain.

“Who knows? Black Brown could potentially have its own retail stores.”