Hudson’s Bay Company said it plans to close up to 10 Lord & Taylor stores over the next year, including its New York City flagship on Fifth Avenue, to focus on its digital presence. Overall Hudson’s Bay reported a double-digit gain in online sales but a larger overall net loss in the first quarter.
The company also cited a new leadership team combined with an optimized store footprint as the rationale for the closures, executives said on an earnings call.
“We’re taking action to reposition Lord & Taylor for improved results and increased profitability,” said Helena Foulkes, who came on board as CEO of Hudson’s Bay in February. “With a new leader (Lord & Taylor president Vanessa LeFebvre) dedicated to evolving our experience and merchandise assortment to best meet customer expectations and shopping preferences, we will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities.”
In addition to LeFebvre, other new executives at Hudson’s Bay include CMO Bari Harlam and Steve Gould, head of digital operations.
Foulkes said Lord & Taylor’s new presence on the revamped Walmart.com, announced last week, is a great example of the company’s stepped up digital focus and represents how management is thinking about the entire business. Saks is also one of several luxury brands for sale on Walmart’s new upscale urban subscription service Jetblack.
Lord & Taylor was acquired by Hudson’s Bay Company in 2012. The company also owns Saks Fifth Avenue including its Saks Off 5th discount brand and Home Outfitters.
Hudson’s Bay originally planned to keep Lord & Taylor’s iconic presence on Fifth Avenue in a building which it occupied since 1914; it was sold for $850 million in October, according to Bloomberg.
Gina Ashe, CEO of ThirdChannel, said retailers and brands “need to take a magnifying glass” to examine their in-store experience in light of these and other store closings.
“The industry is undergoing rapid transformation at the hands of changing consumer preferences,” Ashe said. “And it makes sense considering that millennials and gen Z now make up as much as 60% of the buying population and have much different expectations than the generations that came before. For this new generation of shoppers, convenience is everything, and a unique experience is no longer the exception, it’s the rule.”
Hudson’s Bay also announced this week it would sell Gilt Groupe to Rue La La, which it had just purchased in 2016 for $250 million, in a preservation merger of the two largest flash sale sites. Terms were not disclosed. Foulkes said the divestiture of Gilt will allow the company to redirect resources to Saks Off 5th “and realize the full potential that the luxury off-price banner offers.”
For the quarter, Hudson’s Bay reported a net loss of $314 million for the first quarter, up from $214 million in the prior year. Comparable sales were up 6% at Saks but strength in North America was offset by “weakness at our European banners, which had a challenging quarter,” said Hudson’s Bay Executive Chairman Richard Baker.
“We are looking closely at every aspect of the businesses and it is clear that we have significant opportunity to improve across many areas,” Baker said.
Digital sales were up by double digits in the quarter, and Hudson’s Bay’s revamped online platform is expected to launch in the coming months.