July 29, 2013
Will Hudson’s Bay Return Saks to Its Former Glory?
A RetailWire poll asked last month if Saks would be more or less likely to succeed should it be taken over by Hudson’s Bay Co. (HBC). Forty-six percent said the deal would very likely succeed, while 27 percent said somewhat likely. Only 18 percent thought an acquisition would not succeed. Now, we’ll all get to see who was right as HBC and Saks announced this morning that the two companies have entered into a definitive merger agreement.
The deal means that three "iconic" North American department stores — HBC, Lord & Taylor and Saks — will operate under one corporate umbrella. The new company will operate 320 units total, including 179 full-line department stores, 72 outlets, 69 home stores and three websites in the U.S. and Canada.
As is always the case with such deals, HBC touted it would save $100 million Canadian over three years as a result of synergies.
"I’ve had a long connection with Saks over the years, and am thrilled to bring one of the world’s most recognized luxury retailers into the HBC family," said Richard Baker, HBC’s chairman and CEO, in a statement. "With the addition of Saks, HBC will offer consumers an unprecedented range of retailing categories and shopping experiences. This acquisition will increase our growth potential both in the U.S. and Canada, generate significant efficiencies of scale, add to our powerful real estate portfolio and deliver substantial value to our shareholders."
"We believe this transaction delivers compelling value to our shareholders and that Saks Fifth Avenue is an excellent fit within the HBC organization," said Steve Sadove, chairman and CEO of Saks. "We also believe that HBC recognizes the tremendous value of our people, our real estate, our customer and vendor relationships, and most importantly the power and potential of our iconic brand. … We have made significant progress over the past few years to position Saks for future growth and to evolve into an omni-channel retailer. We are excited about what this opportunity and being part of a much larger enterprise can mean for the future of the Saks Fifth Avenue brand."
HBC plans to introduce Saks into Canada with flagships, outlets and a strong online presence. Canada is already saks.com’s largest "ship-to market" outside of the U.S. The company said it plans to take steps to upgrade customers’ shopping experiences across all its banners while improving productivity in stores and through digital channels.
The company — we’re assuming for Wall Street’s benefit — made a point of highlighting its real estate assets, including "marquee owned properties" in New York, Beverly Hills, Toronto, Vancouver and Montreal.
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Recent Discussions
Discussion Questions
What do you expect the acquisition of Saks by Hudson’s Bay will mean for the American department store chain? What will the deal mean for Lord & Taylor?
Poll
While the HBC deal represents some expansion opportunity for Saks “north of the border,” the bigger impact will be on the mix of Saks and L&T locations here in the U.S. HBC should have at least some ability to switch nameplates from Saks to L&T (or vice versa) depending on lease terms, store profitability and mall demographics. The back-of-the-house cost efficiencies ought to be a win for all three stores, too.
David has captured my thoughts, but far more succinctly. The one comment I would add is that seldom are the forecasted BOH savings achieved to the extent predicted. Hopefully the success HBC has achieved is indicative of what they can accomplish with Saks and L&T.
Could it mean an improvement for Saks? I visited Saks at one of the finest shopping experiences in the country. I felt as if I was walking back into the sixties or seventies. It was especially dated in comparison to the retailers surrounding it.
Of all the stores that I think consumers should like more would be Lord & Taylor. I wish there was one closer. It is truly a fine store.
Maybe it would be best to consolidate Saks to Lord & Taylor and grow what I would believe to be the stronger of the two brand icons.
Saks, Sears and Kmart seem to have the same common issues. It is doubtful HBC will have a significant influence.
“We also believe that HBC recognizes the tremendous value of our people, our real estate, our customer and vendor relationships, and most importantly the power and potential of our iconic brand.” Doesn’t this read like every other press release involving a similar company sale? Only time will tell if this will succeed, but Mr. Sadove won’t likely be there, will he?
Gee, seems like only a few weeks ago we were discussing this. Of course it WAS only a few weeks ago…anyway, I wasn’t a big fan then and I’m still unconverted. My concerns were that (1) Canada is being oversupplied with high-end dept stores (particularly with Nordstrom entering the market next year), and (2) L&T will be marginalized. Nothing has diminished those concerns, but nothing would make me happier than to be proved wrong…and of course many/most thought L&T wouldn’t survive the Macy’s-May merger, so happy surprises aren’t unheard of.
Anybody in control of three iconic department store brands has plenty of opportunities and even more options. HBC can treat its holdings as a portfolio of once respected, but more recently mismanaged, department stores, or it can treatment as cash cows whose heritages can be mercilessly exploited and the stores turned into cash cows as long as they last. True, department stores are not what they used to be, but these brands can still draw crowds of shoppers if handled appropriately.
The synergies here are obvious, but it’s easy to hope for a fresh influx of inspiration too. It sounds exciting.
There is now sufficient scale for Saks and Lord & Taylor to update the umbrella loyalty strategy to allow customers to meaningfully accelerate their loyalty rewards attainment by allowing earning across the respective brands.
Additionally, there would appear to be an opportunity for HBC, Saks and Lord & Taylor to share best practices, combine resources and leverage investments to create a world-class customer-centric strategy and plan that spans their omni-channel, international presence.
There is ample evidence of this opportunity. Interest in customer-centric retailing in the high-touch category of luxury department stores has been growing. Macy’s and other brands have embarked on this strategy. Saks and others have invested heavily in clienteling systems to improve their ability to provide each guest with a relevant, personal and memorable shopping experience.
I hope that Saks will continue as a beacon for true fashion and obtainable couture for the well-heeled. The opportunities at this level of retail are dwindling FAST and, now, horribly watered down and diminished in service, offerings, and patron experience. The “B” store has become an expensive and glorified “M” store. Neiman’s still offers excellent service as does Saks. They are both outdone in service by Nordstrom, although both may generally have better high-end assortments.
L&T has had some really refreshing and great things under the HBC-NRDC umbrella. I hope the same for Saks.
I CERTAINLY hope that they are not simply used as cash cows for exploitation. That is a possibility, although I do not think so, in observation of L&T over the last few years.
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While the HBC deal represents some expansion opportunity for Saks “north of the border,” the bigger impact will be on the mix of Saks and L&T locations here in the U.S. HBC should have at least some ability to switch nameplates from Saks to L&T (or vice versa) depending on lease terms, store profitability and mall demographics. The back-of-the-house cost efficiencies ought to be a win for all three stores, too.
David has captured my thoughts, but far more succinctly. The one comment I would add is that seldom are the forecasted BOH savings achieved to the extent predicted. Hopefully the success HBC has achieved is indicative of what they can accomplish with Saks and L&T.
Could it mean an improvement for Saks? I visited Saks at one of the finest shopping experiences in the country. I felt as if I was walking back into the sixties or seventies. It was especially dated in comparison to the retailers surrounding it.
Of all the stores that I think consumers should like more would be Lord & Taylor. I wish there was one closer. It is truly a fine store.
Maybe it would be best to consolidate Saks to Lord & Taylor and grow what I would believe to be the stronger of the two brand icons.
Saks, Sears and Kmart seem to have the same common issues. It is doubtful HBC will have a significant influence.
“We also believe that HBC recognizes the tremendous value of our people, our real estate, our customer and vendor relationships, and most importantly the power and potential of our iconic brand.” Doesn’t this read like every other press release involving a similar company sale? Only time will tell if this will succeed, but Mr. Sadove won’t likely be there, will he?
Gee, seems like only a few weeks ago we were discussing this. Of course it WAS only a few weeks ago…anyway, I wasn’t a big fan then and I’m still unconverted. My concerns were that (1) Canada is being oversupplied with high-end dept stores (particularly with Nordstrom entering the market next year), and (2) L&T will be marginalized. Nothing has diminished those concerns, but nothing would make me happier than to be proved wrong…and of course many/most thought L&T wouldn’t survive the Macy’s-May merger, so happy surprises aren’t unheard of.
Anybody in control of three iconic department store brands has plenty of opportunities and even more options. HBC can treat its holdings as a portfolio of once respected, but more recently mismanaged, department stores, or it can treatment as cash cows whose heritages can be mercilessly exploited and the stores turned into cash cows as long as they last. True, department stores are not what they used to be, but these brands can still draw crowds of shoppers if handled appropriately.
The synergies here are obvious, but it’s easy to hope for a fresh influx of inspiration too. It sounds exciting.
There is now sufficient scale for Saks and Lord & Taylor to update the umbrella loyalty strategy to allow customers to meaningfully accelerate their loyalty rewards attainment by allowing earning across the respective brands.
Additionally, there would appear to be an opportunity for HBC, Saks and Lord & Taylor to share best practices, combine resources and leverage investments to create a world-class customer-centric strategy and plan that spans their omni-channel, international presence.
There is ample evidence of this opportunity. Interest in customer-centric retailing in the high-touch category of luxury department stores has been growing. Macy’s and other brands have embarked on this strategy. Saks and others have invested heavily in clienteling systems to improve their ability to provide each guest with a relevant, personal and memorable shopping experience.
I hope that Saks will continue as a beacon for true fashion and obtainable couture for the well-heeled. The opportunities at this level of retail are dwindling FAST and, now, horribly watered down and diminished in service, offerings, and patron experience. The “B” store has become an expensive and glorified “M” store. Neiman’s still offers excellent service as does Saks. They are both outdone in service by Nordstrom, although both may generally have better high-end assortments.
L&T has had some really refreshing and great things under the HBC-NRDC umbrella. I hope the same for Saks.
I CERTAINLY hope that they are not simply used as cash cows for exploitation. That is a possibility, although I do not think so, in observation of L&T over the last few years.