Hudson's Bay Company

[Skeezix]

If the price is so high that they're not moving any units, I'd argue it's over-inflated. Would a retailer fail the test for setting an over-inflated regular price and putting the items on "sale" to generate sales? The Competition Bureau thinks so with mattresses. If I were to build a case based on items that went on sale, I'd request the sales figures for the regular price and for the sale price first as part of discovery.

The consumer isn't saving, say 50%, if no one would have bought that item at the original price. If no one paid 100% of the price, no one is saving money in the sale. To imply that a sale price is any sort of value to the consumer requires the original price that have generated at least minor sales and profit, or it's deceptive. Put differently, at least a small group of consumers had to agree with the price and buy the item, generating a profit for the retailer. If that didn't happen, it was over inflated and should have been adjusted without a sale or any implied message of savings.

No, again, that's not the law.

Someone's opinion as to what is, and what isn't, "over-inflated" isn't the law. The law doesn't typically micromanage pricing like that. And that the law typically doesn't set thresholds as to how much margin a retailer can achieve.

Retailers can charge whatever they want for a product. They are also entitled to put those products on sale if they can't sell them at the regular price. What they are not entitled to do is to misrepresent the regular price to make the sale price look better than it is. Having tried to sell something at a price no one was willing to pay does not, by itself, violate the law.

You're misrepresenting what the Competition Bureau has alleged. The claim has nothing to do with a regular price being "over-inflated" (again, not against the law), but rather that the regular price was misrepresented. This is a crucial legal distinction, and represents the difference between legal and illegal, but one which you're glossing over.

What do you mean "building a case"? On what basis would you get discovery?

Legally the original price need not "have generated at least minor sales or profits, or it's deceptive", nor does "a small group of consumers ha[ve] to agree with the price and buy the item". That's not the test. Selling a substantive volume of an item is one indicator that the regular price was legitimate, but the retailer could also be on the right side of the law if it sells zero units as long as it recently offered them at that price for a substantial period of time. The Tribunal and the courts typically use a 50% test to determine if something was being sold at a price in good faith for a substantial period of time, depending on the facts of any specific case. For example, when the Competition Bureau took Sears to the Tribunal about 10 years for its tire sales, the Tribunal determined that one brand of tire was on sale for more than 80% of the time in any given year. The Tribunal determined that if the tire was on sale that often, the regular price was not the price for a substantial period of time, and therefore the promoted regular and sale prices were deceptive. Not because anything was "over-inflated." Sears could sell tires for $1,000,000 each if it wants, and can then later put them on sale, as long as it keeps on the right side of the Competition Act in how it does so. I really suggest that you read some of the case law.

 

[Tuscani01]

If the price is so high that they're not moving any units, I'd argue it's over-inflated.

And how would you attribute the lack of sales to the "high price"? There are literally thousands of product in stores that don't move at regular price simply because they aren't necessities or product that people regularly buy, and many of these items NEVER go on sale. Are you saying these items' prices are over-inflated?

If the consumer needs the item, they will pay the full price. The majority of product in a store is not a need. It's a want. A retailer has no obligation to price it at a point that you feel is "fair". They can charge whatever they want. As long as they are following the laws set out in the competition act in regards to promo pricing, they are free to do so.

Toilet paper is probably the best example of this. You can pay up to $25 a pack at regular price. If you need it, you will pay the $25. Toilet paper is something that often goes on sale though, for less than $10 for that same pack - and sells its best at this price point. Does that mean toilet paper's original price is over inflated? *Hint - I know the real cost of that pack of toilet paper which the retailer buys.

 

[jje1000]

Uh oh:

Hudson’s Bay Company Announces 2,000 Job Cuts, Including Senior Management
The Canadian-American department store conglomerate is flattening its hierarchy across businesses, realising more than $350 million in annual savings when the changes are fully implemented.

https://www.businessoffashion.com/a...y-lays-off-senior-management-in-restructuring

 

[Skeezix]

Yeah, they are having trouble in the States, at Saks and Lord & Taylor, and even at their off price banners. All the department stores chains are feeling it - Macy's, Neiman Marcus, Nordstrom, etc.

For the last few years, HBC has reported sales at the Hudson's Bay and Lord & Taylor together, presumably because Hudson's Bay sales in Canada were doing better and disguised the issues they were having with Lord & Taylor in the States. Baker says that Hudson's Bay in Canada is still doing well, with sales growing. They are actually moving back to their old management structure from several years ago when they had separate management teams for each of Hudson’s Bay and Lord & Taylor to better handle different conditions in each country, and so that that don't "leave anything on the table in Canada". Given that it seems to be the only division that is still growing, we should expect renewed focus on Hudson's Bay by HBC.

 

[Bayer]

Indeed, hopefully the front-line staff in their Toronto stores won't be affected, because there are too few enough as it is. My partner shopped in the men's section at Yonge and Bloor last week and he had to hunt for a cashier.

 

[stanko]

Is Hudson's Bay ever going to update their point-of-sale system? I feel sorry for the employees that still have to deal with some MS-DOS system in the year 2017

 

[Amare]

Sears uses a similar DOS system which dates back to the 1970's and they keep trying to pitch there "re-invention". But i'm mystified as to why HBC hasnt updated these systems yet as they have the cash to do so.

 

[jje1000]

The future is online IMO, or at least some blend of online sales/going in-store for a 'personalized experience'.

Hence the steady erosion of traditional mid-level department stores as Amazon and other online retailers take up their market share.

Any retailer who fails to bridge the gap will fall behind.

 

[MetroMan]

Is Hudson's Bay ever going to update their point-of-sale system? I feel sorry for the employees that still have to deal with some MS-DOS system in the year 2017

The Bay is one of the few places in Toronto that doesn't accept tap payments. I've been leaving my wallet at home, using my ApplePay for purchases and The Bay has lost out on hundreds of dollars of potential impulse purchases from me because I forget that they don't accept tap payments and find out when I'm at the register.

 

[MetroMan]

The future is online IMO, or at least some blend of online sales/going in-store for a 'personalized experience'.

Hence the steady erosion of traditional mid-level department stores as Amazon and other online retailers take up their market share.

Any retailer who fails to bridge the gap will fall behind.

Apple has positioned itself at the forefront of that wave, modifying their stores to become places for experiences, for learning and interacting with other people who like the brand. They've even dropped "store" from "Apple Store". People still want to get out of their house and be around other people. The sense of community and novelty and learning at Apple enables it to survive the shift to online shopping.

Department stores like Hudson's Bay are at a disadvantage there. They're like the old fashioned version of Amazon. They're filled with dozens of departments that are easily shoppable online. They have to reinvent themselves as experiential places. Food is a good place to go into. Fashion events and a sort of community or "club" for clothing shoppers are another. Beauty and cosmetics also fits that experiential column. Home appliances, decor and electronics are departments that are going to drag Hudson's Bay down if they continue to expend space and resources on them.

Let's not forget that HBC and other department stores like Sears were at their primes as catalogue retailers. They can return to that online. For our interests here on Urban Toronto, that might be a bad thing because we will likely end up with a lot of empty large retail spaces. It makes sense now that Hudson's Bay cut themselves in half when Saks moved into their Queen St building. They might need to cut down further by closing the upper floors.

 

[Northern Light]

Apple has positioned itself at the forefront of that wave, modifying their stores to become places for experiences, for learning and interacting with other people who like the brand. They've even dropped "store" from "Apple Store". People still want to get out of their house and be around other people. The sense of community and novelty and learning at Apple enables it to survive the shift to online shopping.

Department stores like Hudson's Bay are at a disadvantage there. They're like the old fashioned version of Amazon. They're filled with dozens of departments that are easily shoppable online. They have to reinvent themselves as experiential places. Food is a good place to go into. Fashion events and a sort of community or "club" for clothing shoppers are another. Beauty and cosmetics also fits that experiential column. Home appliances, decor and electronics are departments that are going to drag Hudson's Bay down if they continue to expend space and resources on them.

Let's not forget that HBC and other department stores like Sears were at their primes as catalogue retailers. They can return to that online. For our interests here on Urban Toronto, that might be a bad thing because we will likely end up with a lot of empty large retail spaces. It makes sense now that Hudson's Bay cut themselves in half when Saks moved into their Queen St building. They might need to cut down further by closing the upper floors.

It would be my understanding that sales are substantially higher on the 'Bay' side of the store vs the Saks side.

I think HBC's fashion and housewares floors are doing fairly well, not as confident about furniture, but not sure to be honest.

**

I think Department stores, done right, can be quite successful. Most people looking to make major purchases (or clothing ones) want to try on/out the goods.

Where there is a fail is the failure to recognize that once a customer knows they like something, they no longer need to try it out (save and except eating a favourite meal).

So too much space can be wasted on inventory and/or items for which a try-out is irrelevant.

ie appliances (you don't try out a fridge or washer/dryer in store), or that favourite pair of jeans you've been buying for the last 2 decades.

Experience is a key factor for sure.....its about getting some exposed to new products/styles and how to use them.

While that can be done (and should be, selectively) with interaction (fashion shows/advisors, tastings, or other lifestyle events......;

A great deal can be done with well done static display, good customer service, correct product choices, and reasonable pricing.

Large-scale failures in this segment (department stores), so far, have clearly been the result of not getting the basics right, or doing so far too late.

FWIW, I don't see 'The Bay' dropping large numbers of stores in the near term.

Nor do I foresee large cuts to square footage.

I do, however, imagine some considerable repurposing of square footage, shifting more to the store experience, to services and to productive lines.

****

The U.S. based stores are a different matter as that market is much more saturated, particularly in the upper-middle income space.

The only question is who is going to close what first.

 

[MetroMan]

I was at the Bay Queen buying some CO2 for my SodaStream and the cashier told me she hadn't heard of anyone being laid off there. Says it's probably mostly US layoffs.

 

[Filip]

A friend of mine is a buyer here and she's been let go.

 

[Fritter]

Is Hudson's Bay ever going to update their point-of-sale system? I feel sorry for the employees that still have to deal with some MS-DOS system in the year 2017

Not same store, but I was in a Dairy Queen recently and was amazed at the Commodore era monitor they were using in the order prep line.

 

[jje1000]

Activist shareholder- trouble or something necessary? Are we seeing an attempt at extracting value from the HBC?

I would actually prefer if Hudson's Bay went around redeveloping its stores on its own and entering the real estate management business rather than simply selling off property for a one-time gain.

U.S. activist investor seeks shakeup at Hudson's Bay, shares surge

An activist investor wants a shakeup at Canada’s iconic Hudson’s Bay Co.

Land and Buildings Investment Management of Stamford, Conn., said Monday it now holds a stake of almost 4.5 per cent in the retailer and wants the company to unlock its “substantial untapped real estate value.”

Hudson's Bay shares were up more than 16 per cent in Toronto on the news.

In a letter to the board, released publicly, Land and Buildings called for either “monetization or repurposing” of HBC real estate assets or a management buyout of the company.

“Ostensibly, Hudson’s Bay is a department store company, but unlike its peers that may own some of their real estate and whose values may approach or slightly exceed their share prices, Hudson’s Bay owns the vast majority of its real estate,” it said.

“As such, it is one of those rare diamonds in the rough that a real estate investor occasionally finds in a career, where the value of the real estate, which the company estimates is worth $35 [Canadian] per share, could be worth 4 times the current share price of $8.88. Even if the real estate is worth half the company’s estimate, the shares would still be worth double today’s share price.”

Land and Buildings said it takes comfort in the fact that the board is “stacked” with real estate professionals. And while it doesn’t know chairman Richard Baker well, others speak highly of him.

“That said, the jury still appears out in our view, if for no other reason that during his tenure, the Company’s shares have declined from a high of nearly $30 to the current $8.88,” the letter states.

“Hudson’s Bay is a real estate company, full stop. If there is a smart and better use of any or all of the locations, stores should be closed and redeveloped and put towards their optimal use.”

In a separate statement, Hudson's Bay confirmed that it had received the letter.

"The company is reviewing the letter and will respond in due course," the retailer said.

The report comes just about a week after HBC posted a hefty quarterly loss and announced plans to cut 2,000 jobs in its North American retail operations.

Cuts are aimed at saving more than $350-million a year by the end of its 2018 fiscal year, and boosting its digital operations.

HBC, which owns Hudson’s Bay, Saks and Lord & Taylor, recorded a drop in same-store sales of 2.9 per cent in the first quarter.

Its quarterly loss widened to $221-million, or $1.21 a share, from $97-million or 53 cents a year earlier, while sales dipped to $3.2-billion from $3.3-billion.

https://www.theglobeandmail.com/rep...-seeks-shakeup-at-hbc-report/article35355848/

Quote of note:

“Hudson’s Bay is a real estate company, full stop,” Litt writes. “If there is a smarter and better use of any or all of the locations, stores should be closed and redeveloped and put towards their optimal use,” he added. “The next logical step is to aggressively move to monetize and redevelop the company’s real estate, including some of its irreplaceable crown jewel locations."

https://www.bloomberg.com/news/arti...son-s-bay-targeted-by-activist-land-buildings

Does the HBC currently rent out non-store space in its older department stores?