The Hudson’s Bay Company has struck a deal to acquire US-based luxury retail chain Neiman Marcus, as first reported in the Wall Street Journal. The $2.65 billion deal involves Amazon becoming a minority shareholder in the newly formed Saks Global division, which will operate in the US while its Canadian Saks operations with three stores remain uncertain. It’s not known if Neiman Marcus could enter the Canadian market with the deal and it’s also not yet known what might happen, if anything, with HBC’s Hudson’s Bay department store chain in Canada.
Merger negotiations with Saks and Neimans have been ongoing for months according to the Wall Street Journal — Retail Insider was also being told last year that there were talks for HBC to take over Neiman Marcus under the direction of Governor Richard Baker, who was raising funds at the time. The deal to acquire Neiman Marcus could be approved by boards as soon as Wednesday evening, according to the Wall Street Journal article.
About US $2 billion was raised from existing investors for the deal, including Baker’s private equity firm NRDC Equity Partners, as well as Rhône Capital and the Abu Dhabi Investment Council. About US $1.15 billion in debt financing is being provided by Apollo Global Management.
Amazon will be a minority shareholder and will provide Saks Global with technology and logistical expertise along with Salesforce, also a new minority shareholder, which will work with the company on new AI initiatives.
Marc Metrick, currently head of e-commerce at Saks, will run the combined companies according to the Wall Street Journal. Saks Global will have about US $10 billion in annual sales, with distribution of some of the world’s top luxury brands.
The Hudson’s Bay Company acquired Saks Fifth Avenue in 2013 and made plans to open about 10 Saks stores in Canada. Saks opened its first Canadian store in downtown Toronto in February of 2016. A second Toronto store opened a week later at CF Sherway Gardens, and in February of 2018 Saks opened its third Canadian store at CF Chinook Centre in Calgary.
Saks had announced in 2016 that it would open a 220,000 square foot store in Montreal in the Hudson’s Bay building, and plans were subsequently shelved along with plans for a downtown Vancouver store. Saks could have entered the Edmonton and Ottawa markets as well before its expansion was halted.
The future of Saks’ three Canadian stores is currently uncertain — product is particularly sparse in the Calgary CF Chinook Centre and Toronto CF Sherway Gardens Saks locations which have also been downsized since their openings, while luxury brand concessions have exited the downtown Toronto flagship Saks store that is integrated into the downtown Hudson’s Bay building.
It’s not known if Neiman Marcus could enter the Canadian market as part of the announced deal — the Hudson’s Bay Company’s operations include offices in New York City, and so far there’s been no overt mention of an expansion of Neiman Marcus into Canada. However before the pandemic, sources told Retail Insider that there was a possibility of Neiman Marcus coming to Canada, including a store at Burrard and Georgia streets in downtown Vancouver in a new development.
Retail expert Liza Amlani of of Retail Strategy Group pointed out in a brief interview on Wednesday that now that Neiman Marcus has shifted its focus to top spenders, a Canadian expansion is less likely given our small population and the dominance of such retailers as Holt Renfrew, which stocks many of the same brands found at Neiman Marcus.
David Ian Gray, Principal at consultancy DIG360, said that Hudson Bay’s Canadian stores could suffer with the deal after already being neglected — over the past year, vendors have complained about not being paid while escalators have been down in many stores where music is also no longer being played.
“A bold move during some dog days in retail, this is an opportune investment to target those wealthy Americans protected from economic headwinds while gaining better buying clout with brands in the luxury space. That said, I still question the appeal of the department store model and, as a Canadian, I can only feel this further takes the leadership away from any creative play to keep Hudson Bay alive long term. While this deal is largely funded via partners, it will take time and attention of the combined senior team.”
Gray also noted the uniqueness of the overall deal including its Amazon and Salesforce partnerships.
“Notable is the equity involvement of Amazon and Salesforce. The former is interested in luxury and this will give it a passenger seat view. Amazon’s continued interest in stores is the best evidence to counter any lingering ‘death of retail’ sentiment. The Salesforce role reinforces my belief that modern retail is a technology play at the core,” Gray said.
Retail expert George Minakakis, Founder and CEO of Inception Retail Group, questioned the future of the department store in North America as well as prioritize of HBC as the company grows.
“Where do elephants go to die? In this case, the elephants are department stores. Many great brands have aged in place with little innovation and creativity to compel consumers to shop or be attracted to them. Unfortunately, they don’t stand the test of time. Survival now comes through consolidation, where supposed synergies, both financial and operational, need to be realized. However, that does not always work.”
“Hudson Bay is a classic example of being lost in the shuffle when too many retail brands are in a portfolio as complex as department stores with so many moving parts, and fashion and future aspirations were once the appeal. Not anymore. They now go where they will one day be forgotten and meet their end-brand game.”
Neiman Marcus filed for bankruptcy protection in 2020 during the pandemic, and closed some stores. Neiman Marcus currently operates 36 large-format stores, two Bergdorf Goodman stores in New York City (separate men’s and women’s) and five Last Call off-price stores. Saks Fifth Avenue operates 39 stores — in the US, eight malls have both a Saks and Neiman Marcus store, according to the article. Saks also has a separate e-commerce division that was created during the pandemic.
We’ll follow up on this story if there is any more news relevant to the Canadian market.
I’m thinking separating the Saks Fifth Avenue (& Off Fifth) side from the Canadian Hudson’s Bay banner might be a good thing.
Richard Baker is the new Robert Campeau.
Exactly.
Why has HBC spent any money or effort into renovation and redevelopment of the Hudson’s Bay stores? That is the classic department store. The Zellers brand hasn’t had any new stock or any effort put in and Hudson’s Bay stores around Canada have little stock and are run completely into the ground. Wonder what the plan is for Hudson‘s Bay and Zellers? I noticed The Bay online has been rebranded at Hudson’s Bay now.
Consolidating HBC assets in the US into the new Saks Global and separating the Canadian operations, seems like a prequel to letting its Canadian operations die. It feels like they consider it dead weight and broke it off to free them to focus on the new Saks Global where HBC has been left out.
It could be that they’re considering unloading it. I’m hoping they sell off HBC to a Canadian suitor interested in running actual retail, not in bleeding it of its real estate assets like the current equity firm that owns it.
Richard Baker is the Eddie Lampart of HBC. He drove Zellers into ground. Drove Home Outfitters into the ground. Drove Lord & Taylor into the ground. Had a massive failure with Hudson’s Bay stores launch in the Netherlands. Is currently diving Hudson’s Bay/ The Bay Canadian stores into the ground. Saks is a failure in Canada. Plus he has some other German store he failed at running. Sad state to let a once great Canadian retailer die like this. If they reinvested some money in the Hudson’s Bay brand/stores they’d be a gold pile. Think of another retailer that has that much brand recognition/ respect in a county then Hudson’s Bay or even Zellers? It’s part of our countries identity.
I really felt that Home Outfitters (& the 3 Hudson’s Bay Home stores in Winnipeg) were not viable long term — just look at Bed, Bath and Beyond or Rooms+Spaces. They were not fully integrated into thebay.com — they couldn’t fulfill online orders from Home Outfitters stores nor could you buy online and pick up at a Home Outfitters store.
It’s so strange, Saks at Queen & Yonge has virtually nothing in it. The Bay @ Queen & Yonge is non-existent. Virtually no sales staff, not much merchandise except for cheap mass-produced lines you can get at H&M, the escalators are usually not working. Why would Hudson Bay buy Neiman’s, what are they going to do with Neiman’s? Also strange, why can’t Canadians buy online from Saks, Neiman’s & Bergdorf Goodman’s when a Canadian company owns those stores. Strange way of retailing. Holt’s now mostly rents out space in it’s stores to clothing manufacturers. Holt’s has very little to do with selling except to provide the buildings with the name Holt Renfrew on it.
Thought HBC was in financial trouble based off the poor state of Hudson’s Bay stores in Canada and lack of inventory. Maybe this is the start of HBC cutting the dead Canadian weight? Would be weird for Hudson’s Bay Company not to have a retail presence in Canada after 353 years in Canada. But they don’t seem interested in running Hudson’s Bay or Zellers. Would be nice if they spun the Canadian division and actually had someone running the show who was interested in running a retail operation.
My thoughts are separating Hudson’s Bay into its own division could be good? They need to do something drastic to revive Hudson’s Bay stores and maybe this is the last hope? Time will tell. The stores are so outdated and run down. Doesn’t seem like Zellers is a thought anymore for HBC?
Mr. Whyte and The Name are asking questions that occurred to me as well: I wonder what’s going to become of Hudson’s Bay’s Stores in Canada now. The article suggests that Amazon’s interest in the new entity is indicative of a continued commitment to retail at HBC, but those shiny, prestigious Saks and Neiman’s stores in the USA will overshadow their Canadian operations and dominate the attention of management. Mr. Baker and his team are already treating The Bay’s flagship downtown stores across Canada as an afterthought, and the plans for their heritage Montreal and Vancouver locations are still just plans. Why not just sell? Wasn’t that the intention ultimately? Do they even want to hold on to all the Saks and Neiman’s doors? As Ryan stated, Hudson’s Bay has a brand history that is, without hyperbole, interwoven with Canadian identity. But now those stores (and the point blankets) are about the only Canadian things left of the company. What a disappointing way to end.
we are a 25 year supplier but stopped shipping them last summer when their line of credit insurance with EDC was cancelled in May 2023.
They just took too long to pay (6 months) and then only after offering to pay everything if we would accept a 10% discount – we did and tried to negotiate shorter terms but ultimately decided not to ship them.
We still receive biweekly replenishment orders and cancel them. I am interested to know if any other suppliers are shipping and what their current experience has been?
The escalators in Windsor (Ontario) have been broken for almost a year. The store closed last week (and isn’t scheduled to reopen until next week) because the HVAC system failed and the store turned into a sauna in the SW Ontario heat. The parking lot is literally disintegrating. I’m reasonably sure the HVAC system was the one lifted up onto the roof by the Robert Simpson Company in 1974 when the store was built. Seeing the company lay down $2b for Neimans must really sting those people working for HBC in Canada. Genuinely depressing scenario — company is sitting on priceless real estate in mostly thriving shopping centres — I realize the segment is shrinking, but almost no natural competition left. Simons seems to be thriving. What a sad scenario.
If your assumptions about the age of the HVAC are true, Hudson’s Bay must be lucky that the original AC unit lasted almost 50 years. I’m planning on going out to check out the status of the Polo Park store here in Winnipeg within the next 2 weeks. Hopefully the AC & elevator is working when I visit because I use a rollator to assist with my mobility.
This is deja vu. Ie; Zellers and Target. Baker has no interest in retail. It’s all about the value of the real estate. Eventually the retail will fail but while this is happening the value of the real estate continues to grow.