In another downsizing of its retail operations, the Hudson’s Bay Co. will shutter its Home Outfitters chain in Canada this year and will close up to 20 Saks Off 5th stores in the U.S.
Saks Off 5th, which operates 133 off-price stores, has been yielding poor results for several seasons, even though the off-price sector, led by T.J. Maxx, Ross Stores and Burlington, is among the strongest in the retail industry.
Industry sources attribute some of the difficulties at Saks Off 5th to changes in the pricing and the merchandising, which failed to resonate with customers.
HBC said it is performing “a fleet review” of the 133 Saks Off 5th chain. The review will be conducted through this year. No timing on the closings was given.
“Further streamlining our retail portfolio enables even greater focus on our businesses with the strongest growth opportunities. The divestiture of Gilt, rightsizing of Lord & Taylor, the recent merger of our European retail operations in Germany, and today’s announcement exemplify the bold strategic actions we are taking to set HBC up for long-term success,” said Helena Foulkes, HBC’s chief executive officer.
“We know this news is difficult for our associates. We are grateful for their ongoing efforts to serve our customers and we will work to find opportunities within HBC for impacted team members where possible,” added Foulkes.
Home Outfitters, which has 37 locations in Canada, is expected to close this year. HBC said the “vast majority” of markets where Home Outfitters has stores are served by the Hudson’s Bay department store division. HBC said Hudson’s Bay has “best-in-class home furnishings departments” and accepts Home Outfitters gift cards.
HBC said the review and rationalization of Saks Off 5th allows the company to focus on its best locations and saksoff5th.com.
Once completed, the closures are expected to be slightly favorable to adjusted earnings before interest, taxes, depreciation and amortization.
HBC has been weeding out weak stores and aggressively evaluating its real estate portfolio to monetize properties in order to reduce debt and support its best retail operations, Saks Fifth Avenue and Hudson Bay.
Two major closings occurred last month: the Lord & Taylor flagship on Fifth Avenue and the Saks Fifth Avenue women’s store in Brookfield Place in lower Manhattan. HBC also recently disclosed that a handful of Lord & Taylor branch locations would close.
In Europe, too, HBC has been streamlining. Last year, the company sold off both a majority interest in its European retail operations to Signa Holdings, which owns the Karstadt department store chain in Germany, and a 50 percent stake in its European real estate. The sale to Signa led to a merger of the Kaufhof and Karstadt department stores chains in Germany.
This month, HBC completed its sale of the Lord & Taylor flagship to WeWork for $850 million. WeWork plans to convert the site to a headquarters office and bring in new types of retail to the site on the lower levels. In addition, HBC is seeking to sell its Hudson’s Bay flagship property in Vancouver but will continue to operate the store.
In October, the company orchestrated a deal in Vancouver’s Oakridge Centre where HBC agreed to relocate its Hudson’s Bay store in the center, which is being redeveloped, for $151.5 million.
While some of HBC’s retail acquisitions have been questionable, the company has moved swiftly to dispose of operations that were draining the business. Two years after HBC bought The Gilt Groupe flash-sale web site, HBC sold it off to Rue La La last year. Three years after HBC entered Europe, the partnership with Signa was established, reducing HBC’s stake in retail and real estate on the Continent.