Hudson’s Bay Seeks Creditor Protection Amid Financial Struggles

TORONTO, Canada — Hudson's Bay, Canada’s oldest retailer, announced Friday its filing for creditor protection as it seeks to restructure amid significant financial pressures.

The company, which dates back to 1670, stated in a press release that it has been grappling with subdued consumer spending, trade tensions with the U.S., and a post-pandemic decline in downtown store traffic. President and CEO Liz Rodbell emphasized the necessity of this move, saying, “While very difficult, this is a necessary step to strengthen our foundation and ensure that we remain a significant part of Canada’s retail landscape.”

The filing was made under the Companies’ Creditors Arrangement Act (CCAA) with the Ontario Superior Court of Justice. Hudson’s Bay intends to utilize this process to streamline operations and refocus on its core strengths, while also ensuring as many jobs as possible are preserved.

In conjunction with the court proceedings, the company has secured $16 million in interim financing from U.S.-based investment management firm Restore Capital and other lenders, intended to ensure operational continuity during the restructuring process.

Hudson’s Bay is navigating a tumultuous retail environment, marked by store closures and layoffs in recent years. A notable example of this decline is evident at its flagship location on Queen Street West in Toronto, which has seen significant operational changes and decreased customer engagement in recent months.

“The real estate isn’t as valuable as it was five years ago,” lamented Fred Waks, president of Trinity Group and former chief operating officer at RioCan. He highlighted that much of Hudson’s Bay’s historical value rested on redevelopment opportunities that have deteriorated in the current marketplace.

The court filings disclosed troubling details about Hudson’s Bay’s finances, including difficulties in meeting payments to landlords and vendors and potential failure to meet payroll obligations without additional funding. Chief Financial Officer Jennifer Bewley stated in an affidavit that the company has deferred payments for months and might default on its leases if conditions do not improve.

Despite these challenges, Hudson’s Bay is committed to maintaining its retail operations, which include over 80 locations across Canada. The company also continues to operate three Saks Fifth Avenue stores and 13 Saks Off 5th locations through licensing agreements.

In recent years, the retailer had attempted various strategies to adapt to its tough circumstances, including a forced e-commerce expansion and product changes. Yet, some industry experts feel these efforts have proven insufficient. Retail strategist Liza Amlani noted, “I did a walk-through just to see what was going on and crickets… There were no people. Excessive markdowns, rails and rails of product.”

The iconic Canadian chain has been under pressure for a considerable time, with predictions of bankruptcy circulating within the industry. The situation was worsened after it split from its Saks Fifth Avenue subsidiary last December, leading to widespread speculation about its future.

Rodbell reiterated Hudson’s Bay’s commitment to revitalizing its brand, stating, “Our goal is to re-establish our foothold and ensure the company’s long-term place in the evolving Canadian retail market.”