Hudson’s Bay Seeks Creditor Protection

Hudson’s Bay Co. (Toronto) has filed for creditor protection and says it intends to restructure its business The department store retailer announced the move Friday evening (March 7), saying it has been facing “significant” challenges including trade war tensions with the U.S., post-pandemic drops in downtown store traffic and other economic headwinds.

“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,” said President and CEO Liz Rodbell in a news release. “Now more than ever, it is critical that Canadian businesses are protected and positioned to succeed.”

Hudson’s Bay said going into creditor protection – roughly equivalent to filing for Chapter 11 bankruptcy in the U.S. — will allow it to “streamline costs and refocus on its core strengths.”

In its coverage of the news, the Toronto Star said industry insiders have been expecting the chain to go bankrupt for some time, but rumors intensified after Hudson’s Bay split with its Saks Fifth Avenue subsidiary last December. Saks bought American retailer Neiman Marcus for $2.65 billion (U.S.), and created a new entity called Saks Global, which is not part of the CCAA proceedings.

“A lot of people in the industry were anticipating something was going to happen in the first quarter after HBC CEO Richard Baker ring-fenced the American assets and separated the Canadian entity into a stand-alone,” Fred Waks, President of local real estate developer Trinity Group told the Star.

Hudson’s Bay consists of 80 stores and, through a licensing agreement, three Saks Fifth Avenue and 13 Saks Off 5TH stores in Canada. It is that country’s oldest company, having been established in 1670 as a fur trader.