Hudson’s Bay Acquires Saks

Jul 29, 2013 1:28 PM  By

Hudson’s Bay Company announced on July 29, the acquisition of Saks Inc., valued at $2.9 billion or $16 a share, according to a press release from Saks. Hudson’s Bay Company also owns Lord & Taylor and Home Outfitters.

“Saks is a pretty sizable company and this a pretty sizable deal.  It’s kind of a big fish to swallow for Hudson’s Bay,” said Chris Kampe, managing director of Tully & Holland, an investment banking company for companies that sell consumer products.

According to the press release, the combined company will operate 320 stores, including 179 full-line department stores,  72 outlet stores and 69 home stores in locations in the U.S. and Canada along with three ecommerce sites. Saks currently operates 41 stores in 22 states in the U.S.

Kampe said Hudson’s Bay has multiple marquees and is really a Canadian company.  The Canadian market he said, has more value than the U.S. and with Saks being a high fashion brand company, it doesn’t necessarily seem to fit.

According to Kampe, there hasn’t been any significant changes made to the Lord & Taylor brand when Hudson’s Bay Company acquired it in 2012.

According to the press release, the acquisition of Saks will drive significant growth opportunities for Hudson’s Bay Company including the introduction of Saks into Canada through full-line, outlet and online formats.

The acquisition will build upon Canada’s position as Saks.com’s largest international ship-to market, according to the press release. The combined company will maximize the existing ecommerce platforms across all three banners to enhance customers’ shopping experience, Hudson’s Bay will continue OFF 5th’s expansion throughout the U.S.

Milton Pedraza, CEO of the Luxury Institute, said he thought the Lord &Taylor parent company buying Saks is an interesting concept.

“I think Saks had a chance to do many things on their own, they certainly had access to capital,” said Pedraza.

Pedraza said Saks missed the opportunity to be the most terrific customer centered company.

“And now they are being acquired because they really failed to do that,” said Pedraza.

Pedraza said Saks needed to optimize the customer experience, the products and the real estate and they didn’t.

Pedraza said he thought the acquisition is a good deal and if anybody can take advantage of that it’s Hudson’s Bay.

According to Saks Fifth Avenue’s first quarter financial results ending May 4, the company posted a net income of $20.0 million. In 2012, the company posted a net income of $32.1 million.

Saks expects to incur approximately $5 to $6 million of additional expenses related to Project Evolution.  And the company has accelerated the planned launch of OFF5TH.com into fall 2013, previously slated for 2014, according to the company’s financial results.

According to Hudson’s Bay first quarter financial results ending May 4, the company retail sales were $884 million, an increase of 4.2% compared to the first quarter in 2012.  Ecommerce sales were $31.1 million, an increase of 32.8% compared to the first quarter of 2012.