HBC explores Lord & Taylor sale
The company said the review of the business was part of its plan to consider options to ensure HBC’s long-term success.
Other possibilities that the Toronto-based retail group is considering for the Lord & Taylor brand include transforming it into a joint venture or a merging it into another company.
“Over the last year, we’ve taken bold actions and made fundamental fixes that have resulted in a far stronger, more capable HBC, having returned to positive operating cash flow, increased profitability and strengthened the balance sheet,” said Helena Foulkes, who became HBC’s chief executive officer in February of last year.
Department stores have struggled in North America in recent years as customers have increasingly opted to shop online, a transformation that has negatively affected HBC, whose brands also include Hudson’s Bay and Saks Off Fifth.
In the fourth quarter of fiscal 2018, sales continued to decline at Lord & Taylor, which has been struggling for a number of years. Quarterly comparable sales at Lord & Taylor, Hudson's Bay and Home Outfitters collectively decreased 5.2%.
Ultimately the brand generated annual revenues of CAN $1.4 billion, or US$1.04 billion, in fiscal 2018, while total revenues at HBC came to CAN$9.38 billion (US$6.97 billion), reflecting a decrease of 1.2% compared to the prior year.
The retailer's net loss from continuing operations also widened to CAN$631 million (US$469 million) during the twelve-month period.
The company has been leading a turnaround effort to improve its cash flow and reposition itself for growth, which has included the shuttering of underperforming stores. Last year the company announced that it planned to shutter up to 10 of Lord & Taylor’s 48 stores in 2019.
Five of these closures have already been carried out, including the sale of the brand’s historic Fifth Avenue flagship to WeWork, in January, after 104 years of operations – a transaction valued at CAN$1.1 billion (US$850 million).
Strategic measures implemented by HBC in 2018 included selling off unprofitable brand Gilt, and divesting a majority interest in its European operations via a joint venture with Germany’s Signa Holding, merging HBC Europe with Signa’s Karstadt Warenhaus GmbH.
HBC will be working with PJ Solomon as its financial advisor as it considers its options for Lord & Taylor.
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