Hudson Bay Company.pdf - For the exclusive use of M Hossain 2018 W18265 HUDSONS BAY COMPANY RESTRUCTURING IN A RETAIL DECLINE1 Kelly Whitehead and

Hudson Bay Company.pdf - For the exclusive use of M Hossain...

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HUDSON’S BAY COMPANY: RESTRUCTURING IN A RETAIL DECLINE1W18265 Kelly Whitehead and Steven Campbell wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; . Copyright © 2018, Ivey Business School Foundation Version: 2018-04-27 In November 2017, Hudson’s Bay Company (HBC) was at a critical impasse. The company, although beloved in the Canadian retail landscape for its rich Canadian heritage, faced significant pressure from activist investor Land & Buildings Investment Management (LBIM) after recording a CA$201 million2loss in the second quarter (Q2) of 2017, amid failures to monetize its real estate assets.3LBIM alleged that HBC was withholding information about a potential offer from management to take the company private, while suggesting that HBC was waiting for an industry turnaround that, in the current retail environment, was unlikely to occur.4HBC responded by focusing on cost-cutting measures, including the removal of 2,000 jobs in June 2017 and the renewal of its interest in its e-commerce portfolio.5However, with the announcement that chief executive officer (CEO) Gerald Storch would be stepping down at the beginning of November 2017 after the high-profile battle with LBIM, it was clear that HBC’s efforts were doing little to assuage the activist’s concerns.6How should HBC proceed to regain profitability in a Canadian retail environment that was increasingly pessimistic for brick-and-mortar department stores? HUMBLE BEGINNINGSHBC was the oldest retailer on the Canadian market and had risen from humble beginnings as a fur trading company in 1670, nearly two centuries prior to Canada’s Confederation. Although it initially targeted only the trading posts around James Bay and Hudson’s Bay, by the late 18th century, the company had expanded into the interior of Canada. The posts it developed along the river networks predated the major Canadian cities soon to follow, such as Winnipeg, Calgary, and Edmonton. HBC began its transformation into a department store retailer in the early 20th century, with a modernization program in 1912 resulting in what was referred to as the original six HBC department stores: Calgary, Edmonton, Vancouver, Victoria, Saskatoon, and Winnipeg.7The company would later expand its department store presence, continuing its path toward becoming an iconic Canadian retailer.
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