- Le Tote acquires Lord + Taylor brand and assumes operations of
38 stores and e-commerce presence
- HBC maintains ownership of Lord + Taylor real estate
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.
Figures in this news release assume USD:CAD = 1:1.3272.
Forward-Looking Statements
Certain statements made in this press release are
forward-looking statements within the meaning of applicable
securities laws, including, but not limited to, statements with
respect to: HBC’s expectation with respect to its continued
liability for Lord + Taylor cash rent on an annual basis; HBC’s
anticipated plans with respect to the redevelopment of any
recaptured or returned stores, including the cost and timing
thereof; and other statements that are not material facts. Often
but not always, forward-looking statements can be identified by the
use of forward-looking terminology such as “may”, “will”, “expect”,
“believe”, “estimate”, “plan”, “could”, “should”, “would”,
“outlook”, “forecast”, “anticipate”, “foresee”, “continue” or the
negative of these terms or variations of them or similar
terminology.
Although HBC believes that the forward-looking statements in
this press release are based on information and assumptions that
are current, reasonable and complete, these statements are by their
nature subject to a number of factors that could cause actual
results to differ materially from management’s expectations and
plans as set forth in such forward-looking statements, including,
without limitation, the following factors, many of which are beyond
HBC’s control and the effects of which can be difficult to predict:
(a) the possibility that the anticipated benefits from the
transaction cannot be realized in a timely manner or otherwise; (b)
risks and uncertainties relating to the redevelopment of any
recaptured or returned stores by HBC, including rent, cost, timing,
operational, real estate, planning and execution risks; (c) risks
related to HBC’s economic responsibility for the rent payments owed
by Lord + Taylor for transferred stores for the applicable period
post-closing; (d) credit, market, currency, operational, real
estate, liquidity and funding risks generally, including changes in
economic conditions, interest rates or tax rates; (e) risks and
uncertainties relating to information management, technology,
supply chain, product safety, changes in law, competition,
seasonality, commodity price and business; and (f) other risks
inherent to the Company’s business and/or factors beyond its
control which could have a material adverse effect on the
Company.
HBC cautions that the foregoing list of important factors and
assumptions is not exhaustive and other factors could also
adversely affect its results. For more information on the risks,
uncertainties and assumptions that could cause HBC’s actual results
to differ from current expectations, please refer to the “Risk
Factors” section of HBC’s Annual Information Form dated May 3,
2019, HBC’s second quarter Management’s Discussion & Analysis
of Financial Condition and Results of Operation dated September 12,
2019, as well as HBC’s other public filings, available at
www.sedar.com and at www.hbc.com.
The forward-looking statements contained in this press release
describe HBC’s expectations at the date of this press release and,
accordingly, are subject to change after such date. Except as may
be required by applicable Canadian securities laws, HBC does not
undertake any obligation to update or revise any forward-looking
statements contained in this press release, whether as a result of
new information, future events or otherwise. Readers are cautioned
not to place undue reliance on these forward-looking
statements.
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INVESTOR RELATIONS: Jennifer Bewley Phone: (646) 802-4631 Email:
jennifer.bewley@hbc.com
MEDIA: Andrew Blecher Phone: (646) 802-4030 Email:
press@hbc.com