CASE #2HUDSON’S BAY CO. –ANOTHER TITANIC CROSSING THE ATLANTIC?
IntroductionThe Hudson’s Bay Company (HBC) is the world’s oldest continuously operating trading company. It has had to reinvent itself many times and has evolved from its beginning as a fur trading company to Fifth Avenue. HBC has proven it can withstand the pressures of constant change time and time again. It has been meeting the competition head on since its beginning and has a long history of restructuring, acquisitions, strategic alliances, collaborative partnerships, mergers, and international partnerships as part of its strategies to remain competitive. HBC is an early mover, with its first merger going back to 1821 when it merged with the North West Company; and with an international strategy as early as 1921,when the HBC Board named the Canadian Advisory Committee to advise on overseas growth. (A Brief History of HBC) We have studied HBC’s evolution and strategic actions taken, offensive and defensive, to complement its competitive approach.Significant Canadian Strategic ManeuversBetween January 2010 and January 2015, HBC (Hudson’s Bay Co.) completed two strategic maneuvers. They are as follows:i)On March 9, 2011, HBC secured Exclusive Canadian Franchise Rights for UK’s Topshop and Topman.This announcement came after months of speculation and included the right for both shops, within stores and standalone stores. Operating in 37 countries around the world, the franchise agreement would see Topshop and Topman launch stores within The Bay in the Fall of 2011. Bonnie Brooks, President and CEO of The Bay says, “It’s a material step towards cementing The Bay as a world-class department store that delivers the ultimate fashion experience for our savvyclientele.” Topshop’s individuality has earned it worldwide respect, cementing its place on the international style map. “Both Topshop and Topman have a brave and irreverent approach to style that has captured the imagination of the fashion-conscious shoppers and industry insiders alike,” adds Ms. Brooks.ii)On November 4, 2013 Hudson’s Bay Company acquired American luxury retailer Saks Fifth Avenue.
This merger brings together three of the retail industry’s most iconic brands – Hudson’s Bay, Lord& Taylor and Saks Fifth Avenue, for creating a leading North American retailer addressing a broadconsumer spectrum across the luxury, mid-tier and outlet retail sectors. HBC acquired Saks Fifth Avenue for US$16 per share in an all-cash transaction valued at US$2.9 billion. As a result, HBC operates a total of 320 stores, including 179 full line department stores, 72 outlet stores, 69 home stores, and three online stores. HBC will continue to build upon Saks’ market-leading position and identity as a luxury retailer.