NRDC Equity buys Hudson's Bay

[ErickMontreal]

NRDC Equity buys Hudson's Bay

 

MARINA STRAUSS

 

Globe and Mail Update

 

July 16, 2008 at 1:32 PM EDT

 

Upscale U.S. department store chain Lord & Taylor is about set up shop in Canada.

 

The company that owns Lord & Taylor bought Hudson's Bay Co. on Wednesday and will convert up to 15 of its key Bay department stores to the U.S. retailer's name.

 

The move marries the two oldest department store retailers in North America, and will create an $8-billion (U.S.) merchandising powerhouse for the new buyer, NRDC Equity Partners of Purchase, N.Y. It will combine HBC's Bay, Zellers, Home Outfitters and Fields chains with NRDC's Lord & Taylor and Fortunoff, the jewellery and home decor chain.

 

“By acquiring Hudson's Bay Co. along with previous acquisitions Lord & Taylor and Fortunoff, we will have an unprecedented opportunity to recreate the retail landscape in North America,” said Richard Baker, chief executive officer of NRDC. The newly expanded holding company will be called Hudson's Bay Trading Co.

 

“Enormous potential exists by upgrading the offerings at both the Bay and Zellers and by bringing Lord & Taylor, Fortunoff and CDS into the mix.” CDS, or Creative Design Studios, produces fashion lines.

 

The deal, for an undisclosed amount, comes just three months after the death of Jerry Zucker, the South Carolina businessman who acquired HBC in early 2006 for $1.1-billion and took it private.

 

Mr. Zucker began to make changes at the chains, moving the Bay more upscale and adding new brands to the mix, while renovating Zellers stores and expanding Fields. Last summer, he appointed his chief lieutenant, Robert Johnston, as president of HBC. He was promoted to chief executive officer in April and succeeded Mr. Zucker on his death.

 

Now Mr. Baker, who becomes the 38th governor, or chairman, of HBC, is investing $500-million into the combined new company and is set to put his own stamp on the retailer. Mr. Baker is already familiar with HBC, having sat on its board of directors since 2006. NRDC owns what is believed to be about 20 per cent of HBC.

 

He said in a statement he plans to convert the Bay's most high-profile 10 to 15 stores to Lord & Taylor. It's a high-end U.S. fashion department store chain that was bought by Mr. Baker's holding company in 2006 and has since enjoyed a turnaround under his watch. It has also moved to more high-end fashions after closing some of its weaker outlets, leaving it with 47 stores. HBC has about 580 outlets in all.

 

Lord & Taylor will serve to fill a gap in the Canadian retail landscape between the Bay and the carriage trade Holt Renfrew, Mr. Baker said.

 

He wants to put greater focus on branded apparel at discounter Zellers, he said. He plans to improve its customer service and, in the future, roll out new 125,000-square-foot prototype stores.

 

He will also bring Fortunoff to Canada, both as standalone stores and within the Bay. And he wants to expand NRDC's Creative Design Studios, selling its branded collections throughout North America and internationally. Its brands include Peter Som's eponymous collection as well as the Kate

 

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