The Hudson’s Bay Company (HBC), chartered 2 May 1670, is the oldest incorporated joint-stock merchandising company in the English-speaking world. A fur trading business for much of its existence, HBC now owns and operates retail stores in Canada, the United States, and parts of Europe, including Belgium, The Netherlands, and Germany.
HBC’s portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with more than 480 stores and over 66,000 employees around the world.
HBC’s leading banners across North America and Europe include Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks OFF 5TH, Galeria Kaufhof, the largest department store group in Germany, and Belgium’s only department store group Galeria INNO.
HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.
Strategy:
That’s quite an understatement from Gerald Storch, CEO of retail institution Hudson’s Bay Company (HBC), as the firm announces 2000 layoffs as part of a bid to cut $350 million a year in operating costs by the end of fiscal 2018. This comes on top of a doubling of quarterly losses.
To rescue the retailer the company is planning on multi year transformation project to beef up it’s digital infrastructure.
That’s going to involve some organisational restructuring as well, with the firm’s Digital Technology Unit being rolled into the broader IT organisation to form a new HBC Technology Group. This is charged with integrating store technology with online platforms into a single center-of-excellence to address customer needs today and in the future.
Meanwhile digital marketing services will be integrated with a second newly-created marketing center of excellence, which will work with the company’s individual brands to develop all-channel marketing strategies to support each brand’s “distinct voice and methods and reach consumers across all touch points”.
Finally HBC Digital Operations functions will be rolled into HBC”s logistics and supply chain center of excellence. The plan is to increase efficiencies and leverage HBC’s scale to generate cost savings in digital, in addition to improving customer service.
Additionally, the company will decrease capital expenditure in future years which is expected to improve attractiveness of their balance sheet. The company has also set out to monetize their real estate portfolio which will improve their cash position substantially.
Management has talked about different options being considered to monetize the value of HBC’s real estate portfolio which has been a strong driver of the 8% share price reaction. Some of the options being considered are an IPO of HBS Global Properties and the RioCan JV, sale of properties, and securing financing against properties.
Cost reductions will play a major role in HBC’s strategic plans to remain competitive in this difficult retail environment. The company is looking to reduce costs by identifying efficiencies, streamlining existing processes, and optimizing instore operations/productivity. The company is currently completing a full review of its business to identify opportunities for further costs savings, beyond the original $75 million reduction in CapEx that was announced.
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