People walk into a Hudson's Bay store in Hamilton, Ont., on March 21.Carlos Osorio/Reuters
As an order processor at the Hudson’s Bay Co. distribution centre in Toronto’s east end, Kevin Grell has been working harder than usual in recent weeks – all while fearing for his livelihood.
“I see a lot of blankets and throws going out; water bottles, mugs, anything with the stripes,” said Mr. Grell, who packs and ships e-commerce orders for the Bay, referring to the company’s instantly-recognizable stripe design. “It’s actually been very busy.”
As Canadians hearing the news of the possible demise of Hudson’s Bay have been inspired to shop – flocking to stores and looking online to find deals, and a bit of Bay memorabilia – the more than 9,300 workers who keep the retailer’s operations running are facing the prospect of layoffs.
“Everybody is worried. They’re worried, they’re scared,” Mr. Grell said. “They don’t know what’s going to happen. It’s just distressing.”
Earlier this month, Hudson’s Bay was granted protection from its creditors under the Companies’ Creditors Arrangement Act. Initial discussions to try to save as much as half of the 80 Bay stores across the country were unsuccessful.
On Friday, the company received court approval to launch liquidation sales at all but six of those stores, as well as two Saks Fifth Avenue and 13 Saks Off 5th stores that the company operates in Canada. The clearance sales will begin on Monday, and will be completed by mid-June. The downtown Toronto store includes a Saks location, which is also not being liquidated at this time.
In the meantime, the company has told employees that they will continue to receive their pay for as long as they continue to work for Hudson’s Bay. But thousands of job losses are likely, and the coming layoffs will result in severance claims that total more than $100-million, estimates lawyer Andrew Hatnay of Koskie Minsky LLP, who represents some Hudson’s Bay employees.
Those who are terminated will not receive severance payments, according to an internal memo obtained by The Globe and Mail. Unifor, the union that represents nearly 600 employees at the e-commerce distribution centre as well as stores in Mississauga and Kitchener, Ont., has called on the company to honour its severance agreements.
“It’s an ominous sign of things to come,” Mr. Hatnay said in an interview. The lack of severance payment is a major concern, he said.
Mr. Hatnay is also concerned that the federal government’s Wage Earner Protection Program, designed to pay employees whose companies are bankrupt or in receivership, does not automatically apply in a CCAA proceeding until all employees are terminated. Because Mr. Hatnay expects Hudson’s Bay to conduct rolling layoffs over a period of months, that support may be delayed.
His firm has been receiving calls from Hudson’s Bay employees and retirees on a daily basis, Mr. Hatnay said.
“They’re extremely worried about job loss in a terrible economy, with tariffs and price increases,” he said. “We have many people calling us who have worked at the Bay for 20, 30 years. They spent their whole life servicing the company, some of these older employees you see at the cash register still, and they’re out of work. And so they’re deeply upset.”
“While this is a positive development, the reality is many people will be impacted by this wind-down” Hudson’s Bay president and chief executive officer Liz Rodbell wrote in another memo sent to employees on Friday. “It is important that we support one another as we move through this process together.”
Hudson’s Bay declined a request for comment.
One of the assurances that the company has given its employees is that the assets of the HBC Pension Plan are held in trust, and that the plan is fully funded as of the last actuarial valuation. That means there are sufficient assets to pay accrued benefits, which are not affected by the restructuring, according to the internal memo.
But the situation is still distressing for the workers. Store staff have been fielding a flood of questions from customers about when liquidation discounts will be available, all while they are deeply worried about what is next for them.
“I know they’re excited, but staff are not in the mood. They’re on the edge of losing everything,” said Alireza Kaveh, the co-owner of Romali Jewelry, which sells its products at Bay stores.
“When they say 9,000 employees are going to be jobless, it really hurts. It’s not 9,000 people; it’s 9,000 families,” Mr. Kaveh said. “You can easily triple the number of people that are affected.”
Unifor has also been fielding multiple calls from worried members.
“Some people are saying, ‘We’ll get through this.’ Some are like, ‘No, let’s face reality,’ ” said Dwayne Gunness, president of Unifor Local 40. “It’s mixed emotions. It’s tough, especially on this work force – which is about 90 per cent women – who have used their time to build the company and then end up in this situation.”
Mr. Gunness saw the news on Friday that the company was hoping to find an alternative plan for the six stores in Ontario and Quebec that are being exempted from the liquidation sales for now.
“Ironically, none of those six include the unionized stores,” he said.
At the distribution centre, Mr. Grell and his co-workers could tell the Bay was having problems. They noticed fewer orders going out, he said, and some brands that had stopped providing their products to the retailer, which has fallen months behind on payments to many of its suppliers.
Hudson’s Bay has also conducted temporary layoffs at the distribution centre in recent years, Mr. Grell said. During those periods, he posted his résumé on the online service Indeed, and he applied directly with other retailers. But nothing came up, and at age 61, he is concerned about his prospects.
“I’m not the only one. A lot of people at the distribution centre are doing the same thing,” he said. “It’s very hard to get a job.”
Editor’s note: The Globe received additional information from HBC on Monday, March 24, and this article has been updated accordingly to specify that the downtown Toronto Saks Fifth Avenue store is also exempt from liquidation.