Hudson's Bay sells Lord & Taylor for $ 100 million to the clothing rental subscription service Le Tote.
The deal announced Wednesday will allow the department store chain to continue operations. The New York flagship store on Fifth Avenue and other stores closed earlier this year.
Hudson's Bay Will Receive $ 99.5 Million ($ 75 Million) in Cash and $ 33.2 Million ($ 25 Million) Secured Notes Upon Settlement paid) is payable in cash after two years. Hudson's Bay will also receive a stake in Le Tote, two seats on the board and certain minority shareholder rights.
HBC shares rose 1.5% on the Toronto Stock Exchange.
"We are pleased to have reached an agreement with Le Tote to create a new model for Lord + Taylor that combines fashion leasing subscriptions with traditional retail," said Helena Foulkes, CEO of Hudson's Bay. "Following a thorough exploration of strategic alternatives, Le Tote's leadership and innovative approach is the best way for Lord + Taylor, its loyal customers and dedicated employees, and for HBC, this transaction builds on our previous bold actions and enables us to continue on the basics to concentrate." Our biggest opportunities are Saks Fifth Avenue and Hudson's Bay. "
Under the terms of the agreement, Le Tote will acquire the brand and intellectual property of Lord & Taylor and operate 38 stores, its digital channels and its inventory.
The Company Also From 2021
Over the past two years For years, Hudson's Bay has taken a series of steps to disband the president-assembled empire, Richard Baker, through deals including the sale of Gilt's Flash outlets and the European department store Galeria Kaufhof, Hudson's Bay met in 2017 with Work Property Advisors and Rhone Capital, the flagship of the Lord & Taylor building in New York Later she left the property completely.
Baker, together with a group of shareholders that together own 57% of the company, including Rhone Capital and WeWork Property Advisors, filed an offer earlier this year to take the company privately.  The fact that Le Tote, which was founded as a start-up in 2012, was able to grab the long-standing department store chain, speaks for how far department stores have fallen. Lord & Taylor's presence dropped from 50 to 45 department stores a year ago on 2 February.
Department stores as a sector struggled to increase sales, as falling pedestrian traffic in shopping centers hurts chains. Earlier this month, the luxury chain Barneys New York filed for bankruptcy, and J.C. Penney announced that it is working with restructuring advisors to reduce its debt.
Le Tote lets subscribers rent clothing for $ 79 a month. The deal is also a sign that Le Tote is looking for physical stores to strengthen its presence and pay more attention to consumers.
Hudson's Bay and the joint venture in which it is involved, HBS Global Properties, retain ownership of all property and leased property from Lord & Taylor as part of the deal. Hudson's Bay expects to pay an annual cash rent of approximately $ 77 million ($ 58 million) for these properties after deducting distributions during the first three years of the agreement.
Le Tote is still in the financing phase For the deal, the companies said. If it is not possible to receive a promised financing within 45 days of signing, Hudson's Bay has the right to terminate the contract.
For fiscal year 2018, Lord & Taylor generated $ 1.4 billion, or approximately 14%, of Hudson's Bay's retail sales of $ 9.4 billion. Hudson's Bay has a market value of $ 1.8 billion ($ 1.35 billion).
The company claimed to retain PJ Solomon as financial advisor for the consideration of the sale of Lord & Taylor.
Retailers like Gap's Banana Republic and Urban Outfitters have recently gotten into the rental of clothing. According to a report by data analyst firm GlobalData, the rental subscription market was estimated at around $ 1 billion in 2018 and is expected to grow at more than 20% per year, reaching $ 2.5 billion by 2023.