Sale signage at a Hudson's Bay store in Toronto on April 22.Giordano Ciampini/The Canadian Press
Hudson’s Bay Co. will begin clearance sales at six stores that the retailer previously left out of the liquidation, according to new court documents – setting a ticking clock to the possible demise of Canada’s oldest retail chain.
Hudson’s Bay is closing in on a deadline next week for bids to be submitted in the sale process for the company’s assets and operations.
But the retailer believes there is a “low probability” a buyer will emerge for the six stores, according to an affidavit sworn by Adam Zalev, co-founder and managing director of Reflect Advisors LLC, which is acting as financial adviser to Hudson’s Bay.
The future of the historic retailer, which has deep ties to Canada’s past, is hanging in the balance. Faltering under mounting losses and $1.1-billion in debt, Hudson’s Bay was granted court protection from its creditors on March 7 under the Companies’ Creditors Arrangement Act.
In recent weeks, nostalgic Canadians have rushed into Bay stores, buying up the company’s signature point blankets and other merchandise featuring its iconic stripe design, and deal-seeking shoppers have snapped up items on clearance.
Sales have exceeded expectations since the department stores launched liquidation sales in late March at 74 Hudson’s Bay stores, as well as two Saks Fifth Avenue and 13 Saks Off Fifth stores that the company operates in Canada under a licence with Saks Global. But the initial rush has begun petering out, according to court documents filed on Tuesday.
The remaining six stores were left out of the liquidation because the company was hoping a bidder would step forward with a plan for the future that could save some of its locations. In a confidential memorandum sent to potential bidders earlier this month, which was obtained by The Globe and Mail, Hudson’s Bay pitched a plan that would require an $82-million investment in the first year to turn around the six stores.
That six-store model has not attracted likely bidders, according to the affidavit. If no plan emerges for a buyer or investor to revive a portion of the store operations in the next week, it could spell the end for a 355-year-old name in Canadian retail.
Continuing to exclude those stores was “negatively impacting” the company’s efforts to realize sales that would help repay its lenders, according to the affidavit.
Liquidation will begin at the stores on Friday. They include the flagship downtown locations in Toronto and Montreal; Yorkdale Shopping Centre in Toronto; Hillcrest Mall in Richmond Hill, Ont.; CF Carrefour Laval in Laval, Que.; and CF Fairview Pointe-Claire in Pointe-Claire, Que. The downtown Toronto store includes a Saks location that was previously left out of liquidation.
The six stores, as well as other locations, could still be pulled out of liquidation depending on the outcome of the sale process.
Other court documents have confirmed that multiple bidders have expressed interest in part of the company’s assets or operations.
In a separate process to monetize the Hudson’s Bay leases, several parties that have expressed interest in the leases have also specified that their bids for those locations are connected to a planned submission under the sale process, according to a report from the monitor overseeing the Bay’s creditor-protection process.
From March 15 to April 18, a period that included the first four weeks of the liquidation, Hudson’s Bay reported $235.7-million in retail sales as more people than usual visited its stores and website.
Hudson’s Bay is also seeking approval to begin selling off its collection of art and historic artifacts. The vast collection, comprising more than 1,700 pieces of art and more than 2,700 artifacts, includes the 1670 charter that launched the company and played a pivotal role in Canada’s history.
The document gave the company exclusive trading rights over nearly one-third of what is now Canada. Relying on the doctrine of terra nullius, the charter claimed dominion over that territory without the consent of Indigenous peoples already living there.
On Tuesday, Grand Chief Kyra Wilson of the Assembly of Manitoba Chiefs sent an “urgent” plea to the court monitor overseeing the Bay’s creditor-protection process, to halt the sale of any Indigenous artifacts in the collection.
“Selling these items at auction without full transparency and consultation with impacted First Nations would not only be morally irresponsible but also represent a continuation of the colonial dispossession of First Nations’ lands and belongings that the HBC directly profited from for centuries,” Ms. Wilson wrote.
Her letter expressed “deep concern” about the sale of artifacts that are “of profound cultural, spiritual and historical significance to First Nations people,” and called on the company to immediately make public the full catalogue of items considered for auction.
The letter also called on the company to work with institutions and First Nations “to identify pathways for repatriation, shared stewardship and respectful preservation.”