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Hudson's Bay Shuttering 10 Lord & Taylor Stores Including Manhattan Flagship, Sells Off Gilt

Dept. Store Owner Streamlining Business After C$400M Quarterly Loss, Shifting Focus to Saks Fifth Avenue Brand, Expanding Online Presence
June 5, 2018
Lord & Taylor will be exiting its flagship store at 424 Fifth Ave. in Manhattan as part of a business streamlining.

Toronto-based Hudson's Bay Co. announced plans to close 10 Lord & Taylor stores, including its flagship store in Manhattan, in a bid to return the retailer to profitability.

The retailer outlined the closings as it posted a C$400 million loss ($308 million) for its first quarter. It did not identify what other stores would be shuttered beyond its Fifth Avenue location.

In addition, HBC confirmed it is selling Gilt, an e-commerce brand it acquired less than two years ago, to online fashion retailer Rue La La in a transaction that is expected to close during the second quarter of HBC's 2018 financial year.

According to HBC, Gilt generated less than 4% of the company's total sales in fiscal 2017, but a sale is expected to generate $10 million to $15 million in improved earnings an annualized basis.

Hudson's Bay Chief Executive Helena Foulkes, who joined the firm in February after the abrupt departure last November of her predecessor, Jerry Storch, said in a statement, "Over the last month, we have worked rapidly to put in place a leadership team focused on driving business results, streamlining our processes and fostering a culture of accountability. We are also taking action to reposition Lord & Taylor for improved results and increased profitability."

Referring to newly installed Lord & Taylor President Vanessa LeFebvre, who previously oversaw strategy and merchandising for the subscription retailer's women's business Stitch Fix before joining HBC last month, Foulkes said, "With a new leader dedicated to evolving our experience and merchandise assortment to best meet customer expectations and shopping preferences, we will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities."

After evaluating best-use scenarios for its New York City Fifth Avenue location, the company decided to bring the curtain down on its long tenure at this location after selling the building last fall to WeWork for $850 million. At the time of the sale, HBC planned to leaseback about a quarter of the space for its Lord & Taylor store there.

The retailer said the store closures and the sale of Gilt will allow HBC to concentrate more on its strongest retail brand, Saks Fifth Avenue, which saw comparable store sales increase 6% in the quarter.

"Results in North America were encouraging, highlighted by better performance across the group and comparable sales growth of 6% at Saks," added Richard Baker, HBC's governor and executive chairman, in the company's earnings release. "Our decision to divest Gilt will allow us to focus our time and resources on the businesses with the greatest potential to drive operating performance."

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