Dive Brief:
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Hudson’s Bay Co., a Canadian department store whose history stretches to the fur trading days of the 17th century, filed for the equivalent of bankruptcy protection Friday. The Trump administration’s tariff policy and a tough post-pandemic consumer environment have contributed to its struggles, the company said.
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The retailer, which operates 80 Hudson’s Bay, three Saks Fifth Avenue and 13 Saks Off 5th stores in Canada, faces “an urgent liquidity crisis,” with liabilities above the threshold for protection, according to filings with the Ontario Superior Court of Justice. It’s unable to pay suppliers and “will be unable to fund payroll within a matter of days.” About 9,400 people work at the three banners, per court filings.
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On Friday the court approved 16 million Canadian dollars (about $11 million as of press time) in debtor-in-possession financing from lenders including Restore Capital, an affiliate of Hilco Global. The company said it will be seeking additional financing to fund operations during the proceedings.
Dive Insight:
Hudson’s Bay Co. will emerge from this process a smaller retailer. The company told the court last week that its DIP financing will go toward “conducting an orderly liquidation of certain retail stores” and restructuring the business to operate “a core number of locations.”
In a press release Friday, Hudson’s Bay said the Canadian Saks Fifth Avenue and Canadian Saks Off 5th stores will continue to operate.
“It is hard not to have a sense of melancholy when considering the Application before me,” Judge Peter Osborne wrote in a ruling Monday. “Hudson’s Bay is the oldest company in North America and a very prominent Canadian department store. It was founded in 1670. Now, approximately 355 years later, it is insolvent and seeks protection from its creditors.”
Earlier this year, the company tried to refinance some or all of its credit facilities to improve liquidity, but the potential lenders were ultimately unwilling.
In the year ended Jan. 31, Hudson Bay’s net loss was about CA$329.7 million, with EBITDA of roughly negative CA$67.9 million, according to another filing. As of then, its total net assets were worth about CA$3.7 billion and total liabilities were about CA$3.2 billion.
The distress of the brick-and-mortar operations won’t surprise the observers who warned that HBC’s move in 2021 to split up the online and offline operations of Hudson’s Bay would be detrimental to its physical stores. The retailer quietly undid that move a year later, and in 2024 confirmed layoffs.
However, an HBC spokesperson last year said that the store and e-commerce businesses at Saks Fifth Avenue and Saks Off 5th in the U.S. continue to operate separately. Those maneuvers had been enabled by hundreds of millions in private equity investments. Following the flurry of separations, activist investors pushed Macy’s and Kohl’s to consider similar moves, with Macy’s exploring it but ultimately rejecting the idea.
Friday’s filing doesn’t involve Saks Global, which was formed in December when HBC acquired Neiman Marcus and Bergdorf Goodman for $2.7 billion. That transaction contributed to Hudson’s Bay’s woes by diverting cash to Saks Global, which for months has struggled to pay vendors and recently announced layoffs.
