Hudson’s Bay Co., based in Toronto, has completed the sale of Lord & Taylor to Le Tote Inc., the San Francisco-based fashion rental subscription service, for 99.5 million Canadian dollars ($75 million U.S.) in cash and a secured promissory note for 32.2 million Canadian dollars ($25 million U.S.) payable in cash after two years, subject to customary adjustments.
HBC now holds an equity stake of approximately 25 percent in Le Tote, and a right to designate two members to Le Tote’s board.
Le Tote has acquired the Lord & Taylor brand and related intellectual property, as well as assumed operations of 38 stores, Lord & Taylor digital channels and the associated inventory. In addition, Le Tote has hired the vast majority of Lord & Taylor’s associates.
HBC will maintain economic responsibility for the rent payments owed by Lord & Taylor at the 38 locations operated by Le Tote for the initial three years post-closing.
Net of HBC’s distributions from HBS Global Properties, HBC expects to continue to be liable for about $77 million in Lord & Taylor’s total cash rent on an annual basis.
Beginning in 2021 HBC and Le Tote will have options to reassess the Lord & Taylor store network, which may include HBC recapturing select locations to determine their highest and best use, including potential redevelopment into mixed-use properties, which is an inherently complex, capital intensive, long-term project. For any recaptured or returned stores, HBC retains long-term rent responsibility, risk and costs for redevelopment.
HBC’s leading businesses in North America include Saks Fifth Avenue, Hudson’s Bay and Saks Off 5th.
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