Lack of store investment, underlying issues led Hudson’s Bay to ‘slow death’: experts

TORONTO — Analysts say the planned liquidation of Hudson’s Bay will leave a hole in the country’s retail landscape, as Canada’s oldest company prepares to wind down in the coming months unless it can find a last-minute solution.

Retail experts attribute a combination of missteps that led to Friday night’s announcement from Hudson’s Bay, which said it would begin liquidating its entire business as soon as next week, pending court approval.

The department store chain that dates back to 1670 and now spans 80 stores said it has been forced toward a full liquidation because “exhaustive” efforts haven’t turned up the financing it needs to keep at least some of its empire alive.

A closure of the entire business, which is planned pending a court appearance set for Monday, would mean job losses for 9,364 employees the company has in Canada across its Hudson’s Bay stores, as well as three Saks Fifth Avenue stores and 13 Saks Off 5th locations it owns through a licensing agreement.

The liquidation process would wrap up in June.

“It’s really, really sad, because of how many people are going to be impacted because of this,” said Liza Amlani, co-founder of the Retail Strategy Group.

“It is an iconic brand. It’s important to Canadians, and there will be a gap in the market if The Bay completely disappears.”

But Amlani said the writing had been on the wall for some time.

She said customers likely noticed the lack of investment by Hudson’s Bay into its physical stores, where it wasn’t uncommon to find non-functioning escalators that went unrepaired for long periods of time. Amlani also pointed to several stores in the Vancouver area that temporarily closed last summer related to problems with air-conditioning systems.

She said another problem the company ran into in recent years was that its stores’ hours didn’t always align with that of the malls where they are located.

“Considering a department store’s original function is to be an anchor store — a gateway to the mall, let’s say — the fact that the store hours were different, and that has continued to today, that is absolutely an issue,” said Amlani.

“In tourist destinations like the Eaton Centre, for example, if the store is closed and the mall is open, that is a problem. That is something that the customer will notice and then they’ll tell other customers.”

Though the situation looks bleak, the company said it remains optimistic it can drum up capital and find a solution with key stakeholders, particularly its landlord partners, to avoid a full shutdown.

“Our team has worked incredibly hard to identify a viable path forward, and our resolve is strengthened by the overwhelming support from customers and associates who have shared heartfelt stories about Hudson’s Bay and what our stores have meant to them, their families, and their communities across the generations,” said Hudson’s Bay president and CEO Liz Rodbell in a statement on Friday night.

While the company’s coast-to-coast footprint and its 17th century fur trade origins have made it a quintessential part of the fabric of Canada, it has been led by Americans for several decades.

American real estate kingpin Richard Baker’s National Realty and Development Corp. Equity Partners bought Hudson’s Bay in 2008 from the widow of late South Carolina businessman Jerry Zucker for $1.1 billion.

That marked “the point at which the company began its slow death,” said Joanne McNeish, an associate professor at Toronto Metropolitan University specializing in marketing.

“Investment firms are like house flippers … A house flipper rarely deals with the underlying business issues,” she said in an email.

“Investment companies don’t allow the management team to run businesses. Rather they take their profit, sell on the problems to the next company or break up the company to sell off its assets.”

Baker took the company public in 2012 and then turned it private again with a takeover bid that had to be boosted twice to earn shareholder approval in the weeks before Canada was hit with COVID-19 pandemic lockdowns.

Shareholders were difficult to appease in part because Baker presided over HBC while its stock was dropping — but many thought the company still carried immense value in its real estate.

“If we look at the Bay, I speculate that the management team has not been allowed to make the financial and effort investments in running the business for success for the past 17 years,” said McNeish.

“The result is a stagnation in the presentation of the company, and limited the changes that might have allowed the company to continue to be a strong competitor in the retail landscape.”

In documents filed with the Ontario Superior Court of Justice on Friday, Hudson’s Bay said it plans to sell off its assets over the coming months, pending court approval, which could include an auction process if it receives multiple qualified bids.

The company said a store-by-store liquidation is necessary because it has only secured “limited” debtor-in-possession financing — a form of capital companies can seek for restructuring purposes after they make creditor protection filings.

It said that “without an immediate liquidation across retail stores, it is not expected” that Hudson’s Bay would be able to repay its obligations under the financing it did secure.

Given the company’s “limited liquidity,” it wants to conclude the liquidation process by June 15, Jennifer Bewley, the chief financial officer for Hudson’s Bay’s parent company, said in an affidavit filed in court Friday.

The company’s plea for help comes roughly a week after it laid bare its financial struggles in a creditor protection application. The documents said it was facing financial struggles because of subdued consumer spending, trade tensions between the U.S. and Canada, and post-pandemic drops in downtown store traffic.

The filings show the company owes more than $950 million to 26 pages’ worth of listed creditors: landlords, suppliers and other partners, including fashion heavyweights Ralph Lauren, Chanel, Columbia Sportswear, Diesel and Estee Lauder.

On Saturday, the union representing approximately 320 workers at the company’s Windsor, Kitchener and Sherwood Gardens stores, and its Toronto e-commerce warehouse, called on Hudson’s Bay “to uphold its legal obligations to workers” and provide “clear communication” about potential store closures, layoffs and severance protections.

“HBC must act in good faith by ensuring workers receive the wages, benefits, and severance they are entitled to under their collective agreements,” Unifor national president Lana Payne said in a statement.

“Workers’ livelihoods are on the line — they’re rightfully concerned and deserve full transparency from HBC.”

A full liquidation in Canada would also leave anchor tenant spaces in malls and prestige real estate in high-traffic shopping districts in need of filling. The sites Hudson’s Bay operates in often contain several floors and make up significantly more square footage than other retailer businesses.

The bulk of the company’s stores are in Ontario, where it has 32 locations and more than half of its employees work. B.C. hosts 16, Alberta and Quebec each have 13 and Manitoba, Nova Scotia and Saskatchewan have two per province.

This report by The Canadian Press was first published March 15, 2025.

Tara Deschamps and Sammy Hudes, The Canadian Press