Hudson’s Bay Company filed for creditor protection last week, saying it’s struggling to pay landlords, vendors and employees — and it’s a process that could lead to the sale or closure of Canada’s oldest company.
Retail experts say the writing has been on the wall for several years, with some stores in disarray, the shopping experience lacking, several locations shuttered and many workers laid off.
“The brand is not in good condition and the reasons for that go back decades. This is not something that has happened in the last few years,” said Doug Stephens, the CEO and founder of Retail Prophet.
The company’s restructuring plan includes closing some stores and downsizing its operations. So where does that leave customers with outstanding gift cards or rewards points?
For now, you can still shop at Hudson’s Bay, both in stores and online. But a few things have changed, and the company’s future is still up in the air. Here’s what you need to know.
Stores still open, but closures could come
Some physical locations — if not all — could eventually close. If you do pop into the retailer, you’ll notice significant clearance sales and markdowns as the company tries to clear out inventory.
No decisions have been finalized regarding store closures, a company spokesperson told CBC News. The Bay is reportedly considering closing 40 of its 80 stores, according to The Canadian Press.
Meanwhile, some stakeholders are already taking action against the Bay for missed payments.
A mall landlord in Sydney, N.S., tried to block entry into a Hudson’s Bay store last week because the company was behind on its rent payments, and a team of bailiffs in Sherway Gardens mall in Etobicoke, Ont., tried to seize merchandise from another Bay store, according to the company’s court filing.
Gift cards, yes; rewards program, no
Customers can’t redeem or earn points right now, because the company’s rewards program is on pause, a Hudson’s Bay spokesperson told CBC News.
So if you have an outstanding amount of points on your rewards card, you’ll just have to hang onto it for now. And if your account hasn’t seen any activity for 24 months, the points might have already expired, the court filing says.
As of Feb. 1, more than eight million Canada customers had outstanding points worth a total of $58.5 million.
After centuries in business, Canada’s oldest retailer Hudson’s Bay has filed for creditor protection in a bid to stay financially afloat after years of declining sales, fierce competition from online retailers, and growing Canada-U.S. trade tensions.
A note on the company’s website also adds that it cannot track or accumulate points on purchases made during the program’s pause “and apply them retroactively.”
Shoppers can still use existing gift cards, which are “redeemable right up until the company goes into bankruptcy,” said Boutet. But they can’t buy new ones because the company isn’t currently selling them.
What happens next?
The Bay filed for creditor protection through the Ontario Superior Court of Justice, which will decide on Monday whether the company can secure the financing it needs or if it will have to close and liquidate its assets to pay off the money it owes.
“The first steps for them are going to be to try and clean up the balance sheet. They’re going to be trying to offload extraneous debt,” said Stephens.
If they close stores, a portion of the company’s 9,000-plus employees will be laid off. It will have fewer leases to pay and will likely renegotiate existing ones, he added.
Canada’s oldest retailer, which operates the Hudson’s Bay department stores, announced it is seeking creditor protection on Friday, but that it intends to hold onto many of its prominent locations. Retail strategist David Ian Gray said scaling down and exploring their own product lines could be options for the ailing department store chain.
But alleviating debt alone won’t be enough to solve the Bay’s problems, said Stephens. “If they are going to simply resurrect the Bay to be the old Bay, that’s not going to bring, particularly, young consumers to their door.”
“They really have to rethink the whole experience from the ground up,” he said. “What could they put in those stores in the way of food, entertainment, social engagement, things that draw people into their stores and breathe new life into that brand? That’s what they need to do.”
“Buy Canadian” rebranding
Though it has a storied Canadian history, Hudson’s Bay was bought by an American private investment firm, NRDC Equity Parners, in 2008.
Boutet said that Hudson’s Bay is not sustainable in its current format. The best case scenario is that “somebody acquires the brand and brings it back from a much more focused, Buy Canadian sort of angle. Much smaller footprints in a specialized retail format,” he said.
Several major department stores (or their Canadian footprints) have encountered significant challenges or closed in recent years, including Sears, Nordstrom, Target and JCPenney. One outlier is Montreal’s Simons, which has expanded since the pandemic.
“Department stores in general — there’s some pockets in Europe and Asia where they still function, but it’s just that the format doesn’t work anymore,” Boutet said.