Liquidation sales kicked off Monday morning at all but six of Hudson’s Bay’s locations, as the company continues to search for a way to restructure.
An Ontario judge gave Canada’s oldest company permission on Friday to begin clearing the inventory at most of its stores, a process which starts today and is expected to wrap up by June 15.
After liquidation sales end, the company will vacate these locations by June 30. All loyalty programs and points have been suspended, leaving around 8.2 million Canada members with about $58.5 million in unused points, but gift cards can still be used at stores until April 6.
Online sales through TheBay.com will continue up to and including April 15. All products sold in a liquidation sale are final sale.
The six stores currently omitted from the liquidation include three locations in Quebec and three in Ontario, including the flagship store on Toronto’s Yonge Street, a location at the city’s Yorkdale Shopping Centre, and one in Richmond Hill, Ont., as well as locations in downtown Montreal, at Carrefour Laval and in Pointe-Claire, Que.
While these six stores may have regular ongoing sales as part of their normal operations, they aren’t mandated to clear their inventory the same way as the stores getting liquidated.
The liquidation comes after the company filed for creditor protection earlier this month, admitting that they were struggling with financial difficulties due to a number of factors, including a drop in downtown traffic post-pandemic, and that they had already deferred some payments to landlords.
Hudson’s Bay operates 80 stores, as well as three Saks Fifth Avenue stores and 13 Saks Off 5th locations in Canada through a licensing agreement.
Liquidation officially underway
Hudson’s Bay lawyer Ashley Taylor said on Friday that the company was permitted to save six stores for the time being because recent sales have exceeded company expectations, paving the way for the continued operation of those stores as they pay back interim financing.
As media reports churned about the 355-year-old company facing potential extinction, shoppers have been flocking to stores to snag products emblazoned with the company’s iconic stripes. Court documents showed that the company made $21 million in sales between March 8 and 14, beating its own estimates by about $7.4 million.
But while the term “liquidation sales” may bring big discounts to mind, shoppers are unlikely to see huge price drops on Monday as the process starts. Although it will vary depending on product type, sales are likely to start at around 20 per cent off and grow steeper as the weeks pass.
Shoppers are scrambling to collect Hudson’s Bay memorabilia after the company won approval to start liquidation sales at all but six stores next week. The flagship store in downtown Toronto is among the survivors.
One shopper heading to scope out liquidation prices at a Toronto Hudson’s Bay location at Scarborough Town Centre on Monday told CBC News she felt a little “disappointed” to not see big sales numbers.
“I kind of thought that it would be all set up and liquidated, and there would be some good deals. But it was kind of like a busy Monday morning shopping at The Bay on a normal day,” Joanne Chwalek said, adding that it was “sad” to see the department store fade out.
“I have an old Hudson’s Bay blanket at home, so it’s definitely part of our heritage.”
6 stores clinging to life
The court order allows the company to remove more stores from its liquidation if it secures funding, but it also allows for the six stores currently spared to be added to the liquidation if a plan to restructure — which hasn’t been established yet — isn’t solidified quickly.
Hudson’s Bay successfully restructuring in a meaningful way is “definitely a long shot,” according to David Ian Gray, an instructor in retail studies at the Capilano School of Business.
“My understanding as of late last summer was anywhere from 20 to 30 [stores] were turning a profit still, but that’s a fraction of the 80, plus the licensed stores,” he said. “That means most of them are unprofitable and they’ve been unprofitable for some time and they’ve accumulated immense amounts of debt.”
Andrew Hatney, a lawyer for the employees of Hudson’s Bay, told CBC News on Friday that six stores being spared doesn’t help many of the more than 9,000 employees on the chopping block.
Although employees at these locations still have a job for the meantime, “there’s no plan for those stores,” he said.
“They have a very short time window. Those are the words they used.… How this turns out is a big unknown.”
For locations undergoing liquidation sales, some employees may be kept on to help with the sales, he explained, providing some short-term income.
“But after this, the shelves are bare and those shelves are sold, we expect all these employees to be losing their jobs.”
The ripple effect extends beyond the direct employees facing imminent job loss. In high-traffic urban areas, some landlords currently hosting Hudson’s Bay locations will be able to find a new tenant quickly, Gray said. But smaller communities in Canada, where the local Hudson’s Bay might have been the biggest department store around, may struggle more when stores close.
“That could be the only game in town and a major employer,” he said. “They could be living through the loss for some time. But they’ve gone through it with Sears, they’ve gone through it with Eaton’s, and we do move on.”
