A man walks through the doors at the Hudson's Bay flagship department store in Toronto.Mark Blinch/Reuters
Canada’s oldest retailer, Hudson’s Bay Co., is facing a “financial crisis” and has been granted protection from its creditors as it seeks to restructure the business.
The company, which operates 80 Hudson’s Bay department stores across Canada, commenced proceedings on Friday under the Companies’ Creditors Arrangement Act (CCAA) and plans to liquidate some of its stores, according to court documents. The company did not specify how many stores would be forced to close.
The move by Hudson’s Bay to restructure its operations comes after an attempt to refinance its debt fell apart, and following “careful consideration of all reasonably available alternatives,” the company disclosed in a news release on Friday.
Without that financing in place, Hudson’s Bay is left without sufficient cash to fund its operations. The company has already stopped paying rent and has fallen months behind in payments to suppliers and service providers. Without protection under CCAA, the company would “be forced to cease operations,” according to court documents filed on Friday.
Hudson’s Bay has been losing money, and recorded a $329.7-million net loss in the year ended Jan. 31, 2025, according to a report filed with the Ontario Superior Court of Justice on Friday by the monitor overseeing the CCAA proceedings.
The company had $1.1-billion in outstanding secured debt obligations as of Friday, according to the monitor’s report.
In an affidavit filed in court on Friday, Hudson’s Bay Co. ULC chief financial officer Jennifer Bewley cited a concern that without a court-mandated stay of proceedings, landlords could lock the retailer out of its own stores. Such actions already began on Friday, when a landlord locked Hudson’s Bay out of a store in Sydney, N.S., and a team of bailiffs attempted to seize merchandise at another location in CF Sherway Gardens mall in Etobicoke, Ont., according to the affidavit.
“While very difficult, this is a necessary step to strengthen our foundation and ensure that we remain a significant part of Canada’s retail landscape, despite the sector-wide challenges that have forced other retailers to exit the market,” Hudson’s Bay president and chief executive officer Liz Rodbell said in a statement. “Now more than ever, it is critical that Canadian businesses are protected and positioned to succeed.”
The company had been in talks with potential investors earlier this year to refinance a portion of its credit facilities, in order to have enough cash to support the business and fund a turnaround plan. In the statement, Ms. Rodbell blamed the “threat and realization of a trade war” with the United States, and the resulting market uncertainty, for scuttling those deals. Hudson’s Bay is now looking for “strategic alternatives” for the business and will seek to preserve jobs “where possible,” according to the release.
As it faced mounting financial difficulties, Hudson’s Bay has been cutting costs in recent years, and has previously fallen behind in payments to its suppliers. And the retailer has been attempting to rebalance the business during a disruptive time for the entire sector – as shoppers hammered by inflation and rising interest rates have cut back on non-essential purchases.
Hudson’s Bay has now been granted a 10-day stay of proceedings by the Ontario Superior Court of Justice, while the company develops a restructuring plan to present to the court. In the meantime, stores will remain open and continue to operate, according to spokesperson Tiffany Bourre.
The retailer has received interim financing from a group of lenders led by Restore Capital LLC, an affiliate of Hilco Capital Ltd., a British private equity firm that specializes in turning around distressed companies. Hudson’s Bay will seek additional financing to fund its operations during the restructuring, according to Friday’s release.
The process only applies to the Canadian operations. Until recently, Hudson’s Bay operated under the same parent company as U.S. department store Saks Fifth Avenue. But the Canadian retailer became a stand-alone company late last year after the parent company, HBC LP, acquired Neiman Marcus Group in a US$2.65-billion deal.
That deal spun off the U.S. operations into a new company, Saks Global, that combined Saks, Saks Off 5th, Neiman Marcus and Bergdorf Goodman. Saks Global also holds the combined U.S. real estate assets of HBC and Neiman Marcus Group, which were worth US$7-billion, the company disclosed last July when the deal was announced. The deal also recapitalized the Canadian business, reducing its leverage and providing “enhanced liquidity,” according to a news release at the time.
The transaction closed in December, 2024, and the two companies are now separately financed. As of that time, Hudson’s Bay continued to own or lease $2-billion worth of real estate either alone or under a joint venture with RioCan Real Estate Investment Trust. The CCAA process also applies to that joint venture.
Hudson’s Bay has been cutting costs in recent years, announcing hundreds of layoffs in 2023 and dozens more last year. Earlier this year, the company cut a further 41 jobs, according to The Canadian Press. The company has also slashed marketing budgets and other expenses.
In late 2023, after the company fell significantly behind in payments to its product suppliers, HBC announced that it had raised US$340-million through a series of real estate transactions. The Bay confirmed at the time that it would use the cash to fund its retail operations, including paying overdue invoices to those vendors.
The company cited a number of factors placing pressure on its business, including the trade tensions with the U.S.; shifts to working from home following the pandemic that has affected downtown stores; and the strain on household budgets in Canada resulting from rising prices, high interest rates and a weak Canadian dollar.
“It’s no surprise,” said retail consultant George Minakakis, who noted that rumours that the Bay would be forced to restructure have been circulating in the industry for years. Mr. Minakakis noted that he visited Bay stores recently where escalators were not working and staff were scarce – signs that the retailer has not been investing in the business.
“It’s not just tired, it looks like they’ve given up,” Mr. Minakakis said. “That robustness, walking into a department store where you’re going to get a good experience and have some fun browsing, that doesn’t exist any more.”
The company has also decided to close six stores since executive chairman Richard Baker took Hudson’s Bay private in 2020, including flagship locations in Edmonton and Winnipeg, and one of its two downtown stores in Toronto. Mr. Baker is also executive chairman of Saks Global.
In December, 2023, former Bay executive Liz Rodbell returned to the Canadian department store chain as president and chief executive officer. At the time of her appointment, Mr. Baker wrote in a statement that Ms. Rodbell’s priorities would include leading “the continued transformation of Hudson’s Bay to deliver the most exciting shopping experience for Canadian customers.”