Hudson’s Bay Co. has some catching up to do.

This story first appeared in the June 20, 2013 issue of WWD. Subscribe Today.

That was apparent from Richard Baker, chief executive officer, who at the Toronto-based retailer’s annual shareholders’ meeting Wednesday, said the company must elevate productivity, noting that Hudson’s Bay, at $140 in sales per square foot, and Lord & Taylor, at $210 a square foot, lag the North American department store average of $240.

“It’s been five years since we began reinventing Hudson’s Bay and Lord & Taylor,” Baker said. “Our initial goal was to restore the tarnished brands. We have achieved that objective. Now the goal is establishing both as premier mid-tier department stores in North America.”

He spelled out strategies to reach the goal, citing continued renovations and “filling our stores with North American peer group global brands.” He said Hudson’s Bay can carry the same brands carried at Saks Fifth Avenue, Macy’s and Kohl’s, and that on the merchandising front, “the future opportunities at Hudson’s Bay are huge.” He’s been scouring the markets for partnerships with brands and retailers, similar to those established with Topshop, which has five locations inside Hudson’s Bay and will open five more this year, and with Kleinfeld, which in 2014 will open a 20,000-square-foot bridal salon inside Hudson’s Bay’s Queen Street flagship in Toronto. The $4 billion HBC sees spending $180 million annually on capital expenditures over the next five years, joining Macy’s, Nordstrom, Neiman Marcus and Belk in a widening field of retailers getting capital-intensive.

Speaking broadly, Baker said the company is adopting “a holistic” omnichannel approach and that the business must be regarded as more than just selling commodity items. “We believe we are in the entertainment business….Customers must be wowed by renovations, signage, lighting, visual merchandising and our service. Investment in stores is critical.” With omnichannel initiatives, Baker said he expects e-commerce to grow to about 10 percent of consolidated sales.

Baker briefly mentioned this week’s management shake-up, shifting Bonnie Brooks to vice chairman, in a low-profile advisory role, and elevating Liz Rodbell to president of the Hudson’s Bay and L&T divisions, succeeding Brooks. Baker cited the “tremendous work’ the two accomplished together, and projects for the future including Kleinfeld and Topshop.

He suggested renovations paid off at the Vancouver flagship. It generated a more than 25 percent sales gain last year, the highest gain of any location in the chain. The Topshops operating inside Hudson’s Bay, Baker added, represent a “significant productivity upgrade for the merchandise categories they displaced.”

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