History of Hudson’s Bay Corporation

Hudson’s Bay, the oldest corporation in North America. Founded in 1670, what started as a fur trading business, grew into a high end fashion retail conglomerate with multiple stores across Canada, US and Europe. HBC controls and operates multiple other retail companies like:

• Home Outfitters - Sacks Of Fifth
• Lord & Taylor - Gilt (Sold very recently)
• Galeria Kaufhof (German Retailer)

Timeline: HBC was bought by an American businessman Richard Baker in 2006 for $1.1 billion In 2008 NRDC Equity Partners, a private American investment fund acquired HBC Hudson Bay is currently operating under CEO Helena Foulkes, a Harvard graduate and has previously served as the Vice President of CVS Pharmacy. It’s currently headquartered in Toronto, Ontario and operates 480 stores worldwide. It focuses mainly on selling high end designer apparel such as Polo Ralph Lauren, Tommy Hilfiger, Calvin Klein, Guess, Coach etc. They also sell home appliances, housewares, jewelry and cosmetics (depending on the location of the store). Retail sector is a very competitive area with alot of companies trying to make it big, but a few succeed. Some of HBC’s main competitors are Neiman Marcus, Nordstrom and Macy's and Sears (not operating anymore). HBC mainly operates in Canada, US and Europe with most of its sales in US, Europe and Canada respectively. HBC is aggressively looking to expand in different markets and geographical regions, especially in Europe.

Hudson's Bay offers 100s of high end fashion brands but one of the most famous brand that sells really well is Polo Ralph Lauren. Polo Ralph Laurens price usually ranges anywhere from $70 to $300+ and to keeps its brand value and image Polo is almost all the time excluding from most sales in store and a very few of them get marked down. Polo has their own separate section in the store with their branded logo and their own furniture, for example; they have special wooden hangers and their own racks to keep their brand value and exclusivity. Value Package, revolves around three aspects of a business: Features, Benefit and Function. These help company officials determine where they are lacking and where they excel at.

Function: HBC functions as a retailer of clothes, housewares, jewelry and cosmetics. They do an excellent job at what they do by providing retail stores in most big cities and an online site that provides shipping all across Canada.

Features: Most HBC stores have a very pleasant and upscale decor especially during seasonal sales i.e: Christmas, most stores have a marketing team come in and decorate the store accordingly. Another one of its most attractive features is HBC rewards card and HBC Capital One Mastercard, customers can collect points on every dollar spent in store, and when you collect 2000 points you can redeem $10 gift card. Being a reward/mastercard member customers also get exclusive access to sales ahead of time and gift cards in the mail. Features like these build a loyal customer base that keep coming back to shop due to the features HBC offers.

Benefit: Due to HBCs long history rooted in the Canadian culture most of its customers feel proud of the fact that they shop at HBC, and contribute to one of the oldest companies in North America. HBC does an amazing job at keeping its reputation as a high end retail store by providing exclusive brand names and excellent customer service to its customers, not only do they provide high end brands but they provide good quality goods which is also one of the reasons why people shop at HBC.

Being a large scale retail store it has to keep up with the change in trends. HBC has to offer exciting new lineups in order for them to keep their current customers and stay in business. HBC updates their inventory and clothing line up every year, by adding new brands or by adding a new clothing lineup. For example, this year’s new line up is called “The Fall 50 - New brands, New Trends, New Items” this particular lineup includes top 50 trendy items that The Hudson's Bay is selling, which keeps up with the trends and the season. Another very “Canadian” clothing line up is their official Olympic line as they are the official partner for the Canadian Olympic team which helps build onto its deep Canadian roots and help to retain its image of Canada's oldest company.

HBC recent financial statements show that they are having financial trouble especially in the last 2 years. Total sales/revenue for the year end 2014 was $5.223B, in 2015 the revenue grew 56.40% to $8.169B, in 2016 it sales grew 36.4 % to $11.162B, in 2017 it grew almost 30% to $14.455B and in 2018, the sales declined 0.73% to $14.349B. HBC grew exponentially in sales in the years 2014, 2015, 2016 and 2017 but their growth in sales came to an end in 2018. Excellent track record in growth of sales does not always mean higher profits, in fact in 2017 HBC made a net loss of $516 million and in 2018 it made a net loss of $581 million but has been profitable before that. The surge in HBC sales growth between 2015 till 2017 can be linked to the fact that one of its direct competitors Sears was going out of business and closing their stores this allowed HBC to capture fair degree of sales meant for Sears. This meant that HBC was one of the very few high end retail giants operating in Canada as one of their main competitor left the market, sales increased due to that as well. Profit is the most important figure or an aspect of a business, which determines whether the business is doing well financially or not unfortunately for HBC the last 2 years they have sustained heavy losses. The retail sector in general has seen a decline in market since most consumers can simply order their clothes etc. from their couch and they will arrive at you footsteps so decline in sales in the general market has negatively affected HBC’s revenue for the past year. The commerce department USA estimates that the overall retail sector is at an 11 month low (as of early 2018).

Retail Apocalypse is a term given to this overall decline in the retail sector. A Lot of the losses is mostly due to the fact that their operating expenses blowing out of proportion. A lot of investors are buying stores with little to no retail experience, in locations with scarce buyers, and in rundown malls. One of the main reasons why investor are still willing to invest and put money into HBC is due to its enormous portfolio of precious real estate, it is estimated that their real estate is worth around $6.4 billion, instead of investors and chain owners focusing on sales and improving its financial performance, investors are pressurizing to monetize its real estate assets and put them to better use. Another reason why its losing money is the fact that it is struggling to keep its overseas operation profitable as they miscalculated this opportunity. One of their German retailer Galeria Kaufhof which was acquired for $3.2 Billion in 2015, ever since its acquisition, their sales per store have fallen notably. In fact HBC got a bid from Sigma holdings (Austrian real estate company) to buy the German retailer Kaufhof but HBC board declined because it was undervaluing the business. HBC also acquired Guilt, an online retailer for $250 million but ever since acquiring, it struggle to pay off the initial investment as it wasn't worth it and simply wasn’t fitting in HBC’s portfolio , so as an effort to help HBC cut cost and save it from its struggling financial trouble it sold Gilt. HBC ventured out into a new geographical location but unfortunately it wasn't as lucrative of an expansion as they thought.

As much of a history Hudson's Bay has, unfortunately due to shift in technology and popularity in e-commerce retail sector in general are struggling to compete in this market. HBC has a very solid track record but when a business this large sustains this large amount of losses it is very tough to turn things around and make it profitable, although it's not impossible as they just incurred losses in the past 2 years, it's still early and if done properly it can turn things around. In an effort to turn around HBC into a profitable business its laid off more than 2000 employees, have significantly cut back on its admin costs and shutting down struggling stores and is planning to sell some of its real estate assets. A long term partnership/collaboration with HBC would be a risky venture since its uncertain whether or not they can turn things around, but buying or selling something from HBC at this point would be an excellent idea since they are looking to get rid of assets etc. so it would possibly be sold under market value since HBC are looking to liquidate some of their assets.

Today, HBC is one of the world’s fastest growing department store groups. And from the points blanket to its iconic Olympic mitts, it has drawn on its history and Canadian heritage to build a retail brand, said Maureen Atkinson of J.C. Williams Group, a global retail adviser.