Canadian retailer Hudson’s Bay Co has closed its previously announced sale of department store chain Lord + Taylor to Le Tote Inc, a San Francisco-based fashion rental subscription service. The purchase price was C$99.5 million (US$75 million). As part of the deal, Le Tote has acquired the Lord + Taylor brand and related intellectual property as well as the operations of 38 stores, Lord + Taylor digital channels and the associated inventory. Le Tote’s backers include Andreessen Horowitz, Azure Capital Partners, GV, Lerer Hippeau Ventures, Sway Ventures and Y Combinator.
PRESS RELEASE
TORONTO–(BUSINESS WIRE)–Hudson’s Bay Company (TSX:HBC) successfully completed the sale of Lord + Taylor to Le Tote, Inc., a leading fashion rental subscription service, for $99.5 million (USD$75 million) in cash and a secured promissory note for $32.2 million (USD$25 million) payable in cash after two years, subject to customary adjustments.
HBC now holds an equity stake of approximately 25% in Le Tote, and a right to designate two members to Le Tote’s Board of Directors.
Le Tote has acquired the Lord + Taylor brand and related intellectual property, as well as assumed operations of 38 stores, Lord + Taylor digital channels and the associated inventory. In addition, Le Tote has hired the vast majority of Lord + Taylor’s associates.
HBC will maintain economic responsibility for the rent payments owed by Lord + Taylor at the 38 locations operated by Le Tote for the initial three years post-closing. Net of HBC’s distributions from HBS Global Properties, HBC expects to continue to be liable for approximately $77 million in Lord + Taylor total cash rent on an annual basis. Starting in 2021, HBC and Le Tote will have options to reassess the Lord + Taylor store network, which may include HBC recapturing select locations to determine their highest and best use, including possible redevelopment into mixed-use properties, which is an inherently complex, capital intensive, long-term project. For any recaptured or returned stores, HBC retains long-term rent responsibility, risk and costs for redevelopment.
HBC investors should refer to the company’s public filings available at www.sedar.com and at www.hbc.com, including the company’s Material Change Report filed August 28, 2019, for additional information and details on the transaction.
About HBC
HBC is a diversified retailer focused on driving the performance of high-quality stores and their omni-channel platforms and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC’s portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with nearly 250 stores and approximately 30,000 employees around the world. HBC’s leading businesses across North America include Saks Fifth Avenue, Hudson’s Bay, and Saks OFF 5TH. HBC also has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Joint Venture, which owns properties in the United States. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.