The Toronto-based Hudson’s Bay Company (HBC), known for owning Saks Fifth Avenue, has finalized the sale of its Lord + Taylor brand to fashion subscription service Le Tote for a total of $100 million. The agreement, unveiled back in August, involves an initial payment of $75 million in cash, with an additional $25 million scheduled for payment in two years, pending customary adjustments. As part of the deal, HBC has secured a 25% stake in Le Tote and the right to nominate two board members.
Apart from the acquisition, HBC has committed to continue paying rent for the 38 existing Lord + Taylor stores for the next three years. Post that period, a joint review with Le Tote will be conducted to potentially repurpose some locations. Rakesh Tondon, CEO of Le Tote, has outlined plans to blend the two entities by introducing Le Tote’s diverse shopping options like buy, rent, and subscribe choices to Lord + Taylor customers. This merger will result in an additional 500 brands accessible on the Le Tote platform, branching out into new product categories like shoes and cosmetics. Furthermore, Le Tote intends to set up rental drop-off sites at Lord + Taylor stores, akin to Rent the Runway’s collaboration with Nordstrom.
The decision to offload Lord + Taylor forms part of HBC’s overarching strategy to navigate an evolving retail environment. This divestment aligns with prior actions, including the upcoming closure of HBC’s Netherlands operations by the year-end. Concurrently, HBC is in the midst of a privatization process following approval from a consortium of stakeholders. With a reported net loss of C$462 million in the second quarter ending August 3, 2019, from continuing operations against revenues of C$1.85 billion, HBC is taking conscious steps to foster growth and adjust to the changing market dynamics.
For those interested in learning more about this deal, you can check out the official announcement from Hudson’s Bay Company here. Additionally, those curious about the impact of fashion industry mergers can find useful insights here.
