Hudson’s Bay is likely to ask mall owners and other landlords for concessions that could include waiving the rent on stores for a period of time, sources say.MARK BLINCH/Reuters
Canada’s oldest retailer is working on a restructuring plan that could keep roughly 40 of its 80 Hudson’s Bay stores open, if the company can secure financial assistance from its landlords.
Hudson’s Bay is likely to ask mall owners and other landlords for concessions that could include waiving the rent on stores for a period of time and financial contributions from those landlords to keep locations open, according to two sources familiar with the matter, who asked not to be named because they were not authorized to speak publicly.
Facing a liquidity crisis that left the retailer unable to pay its bills, Hudson’s Bay was granted court protection from its creditors on Friday so that it can come up with a plan to restructure the business.
The money-losing company had already fallen months behind on rent and payments to its vendors before it commenced the proceedings under the Companies’ Creditors Arrangement Act (CCAA). After recent talks to secure additional financing for the business fell apart, Hudson’s Bay was in danger of running out of cash and being unable to pay its own employees within days, according to documents filed with the Ontario Superior Court of Justice late last week.
Now, the retailer with a storied past, first founded in 1670, is being forced to contemplate whether it has a future. At a court hearing in Toronto on Friday, Justice Peter J. Osborne told lawyers for Hudson’s Bay that he felt “melancholy” about the roughly 9,364 employees and 355 years of history affected by the crisis.
The company has been hobbled by losses and falling retail sales. Hudson’s Bay reported a $329.7-million net loss in the 12 months that ended Jan. 31, 2025, according to a report filed by the monitor overseeing the CCAA process.
Hudson’s Bay believes it can survive with a smaller store footprint if it can secure co-operation from landlords, according to the sources familiar with the company’s plans. The number of stores slated to close could change depending on the results of those discussions. At a court hearing scheduled for Mar. 17, Hudson’s Bay will seek approval for a plan to begin liquidating some stores and will ask for an extension of the CCAA process.
The company plans to “realign operations around a core group of high-performing retail locations,” according to an affidavit sworn by chief financial officer Jennifer Bewley on Friday.
Hudson’s Bay is a major anchor tenant in many of the malls where it operates. This means that it has longstanding lease deals that are very valuable because the tenant pays below-market rent, and the leases include other advantages. For example, anchor leases may prevent mall owners from redeveloping part of the property for mixed-use purposes such as residential or office space. In the past, Hudson’s Bay has negotiated payments from landlords in exchange for allowing such projects to proceed.
As part of the CCAA process, Hudson’s Bay will examine whether it can generate cash by selling some of those leaseholds, according to the sources.
When large tenants wind down operations – such as Sears Canada, Target Canada and Nordstrom Canada – it creates a problem for landlords, because there are limited numbers of retailers for whom it makes sense to take over such large spaces. If those “boxes” cannot be filled, and have to be subdivided for other use, that means expensive renovations and lost revenue for malls as the spaces sit dormant.
Such store closings can also have a domino effect because traditionally, anchor tenants act as major drivers of foot traffic to a mall. As a result, other retailers often have stipulations in their own leases saying that they have the right to exit a location if the anchor tenant is no longer there.
In recent years, Hudson’s Bay has underinvested in its brick-and-mortar operations and deeply cut costs. Stores in some cases have been understaffed, broken escalators and elevators have gone without repairs for long periods of time, and already declining foot traffic and sales have been further affected by the lack of upkeep. Meanwhile, a $130-million investment in e-commerce expansion in 2021 and 2022, which was designed to offset those declines, “did not yield the anticipated financial returns,” according to court documents.
Hudson’s Bay has received financial assistance from one of its major landlords in recent years.
In June, 2023, the company secured a $200-million term loan from Cadillac Fairview Corp. Ltd. to fund its Canadian operations. Cadillac Fairview, which holds the leases to 14 Hudson’s Bay stores, was the only party willing to provide liquidity to the retailer at the time, according to the affidavit.
Portions of that loan, and two other credit facilities, were repaid in December, 2024, as part of a corporate restructuring after parent company HBC LP’s US$2.65-billion deal to buy Neiman Marcus Group. The Canadian operations became a standalone company as a result of that deal, which spun off the U.S. retail businesses Saks, Saks Off 5th, Neiman Marcus and Bergdorf Goodman into a new company, Saks Global, which also holds US$7-billion worth of U.S. real estate assets. The U.S. business repaid portions of the loans at the time, in exchange for being released from its obligations.
There is still about $430-million outstanding under those three credit facilities as of March 7, of which $176-million remains outstanding on the Cadillac Fairview loan, according to court documents. Hudson’s Bay also carries $724.4-million in mortgage debt, for a total of $1.1-billion in outstanding secured debt obligations, according to the documents.
But the court documents also provide a glimpse into just how tense the situation has become with landlords as Hudson’s Bay has failed to pay rent. On Friday, the landlord at Mayflower Mall in Sydney, N.S., locked Hudson’s Bay out of its store. And at a Saks Off 5th store – which Hudson’s Bay operates under a license agreement with Saks Global – in CF Sherway Gardens Mall in Etobicoke, Ont., a team of bailiffs attempted to seize store merchandise, according to Ms. Bewley’s affidavit. Sherway Gardens is a Cadillac Fairview property.