HBAYF - Hudson's Bay Is Paying Le Tote to Take Lord & Taylor
Earlier this year, Hudson's Bay (OTC: HBAYF) announced that it was considering strategic alternatives for its long-suffering Lord & Taylor brand. Even the best-run U.S. department stores have struggled in the face of the ongoing retail apocalypse, and Lord & Taylor hasn't been one of the best-run chains in the sector. It's clear that it would be extremely challenging to revitalize the brand, and Hudson's Bay wants to focus on operating its two best businesses: Saks Fifth Avenue and its namesake chain.
On Wednesday, Hudson's Bay announced that it had agreed to sell Lord & Taylor to Le Tote, a start-up that operates a fashion-rental subscription service. However, while Le Tote is paying for the struggling department store brand, Hudson's Bay has agreed to cover the rent for most of its stores for the next three years. In effect, this means that Hudson's Bay is paying a steep price just to get rid of Lord & Taylor.
Over the past few years, Hudson's Bay has closed several Lord & Taylor stores in a bid to improve its profitability and cash in on some of its real estate value. Most notably, Lord & Taylor closed its Manhattan flagship store in early January after selling a majority stake in the building to an affiliate of WeWork at a princely valuation of $850 million.