Toronto and New York–Hudson’s Bay Company today announced a series of actions to position the department store ccompany to deliver an enhanced all-channel customer experience, accelerate financial performance and drive future success. Reflecting the HBC’s substantial growth and strong performance since the 2013 acquisition of Saks Incorporated, the initiatives are designed to enable HBC to invest greater resources in the areas of the business offering the most significant return on investment potential, while leveraging strengths across its retail banners and increasing efficiencies.
The actions are expected to generate an additional $75 million in annualized cost savings and synergies. The Company anticipates taking a charge of approximately $20 million in the third quarter of fiscal year 2015 in connection with the realignment.
The actions being announced for the North American business today include:
∙ Establishing new Centers of Excellence for the Customer Relationship Management, Creative, and Human Resources functions, complementing existing Centers of Excellence some of which include: Digital, Information Technology, Legal, Logistics, and Real Estate;
∙ Consolidating key business functions to enable more productive and efficient operations and refocus resources on customer-facing aspects of the business;
∙ Implementing substantial technology enhancements and accelerating the consolidation to one common platform across Company banners, under the leadership of newly hired executives Janet Schalk, Chief Information Officer, and Dion Rooney, Executive Vice President, HBC Digital; and
“Through organic growth and acquisitions, HBC has established itself as one of the fastest-growing department store retailers in North America and a truly unique global company,” said Richard Baker, chairman. “This significant growth has created meaningful opportunities for us to further build our business while operating even more effectively. To that end, we are focused on taking the appropriate next steps to position HBC to deliver continued industry-leading performance and long-term growth, while best delivering for our customers in a constantly evolving industry environment.”
The actions announced today are expected to result an annualized cost savings and synergies during fiscal year 2016 totaling $75 million, in addition to the previously announced synergies the Company is on track to achieve in connection with the integration of Saks Incorporated. The Company anticipates taking a charge of approximately $20 million in the third quarter of fiscal year 2015 in connection with the realignment.
Since the Company’s 2013 acquisition of Saks Incorporated, it has hired more than 2,000 associates in connection with new store growth and the expansion of the digital offering across its store banners. As that integration has proceeded, the organization has been positioned to operate more efficiently.
Consequently, the realignment announced today includes a reduction in positions at headquarters and in corporate functions across HBC’s store banners, impacting approximately 265 associates in North America. Affected Associates will receive a severance package and outplacement support to help ease their transition and will be considered for open positions with HBC as appropriate.
GALERIA Deal Finalized
In addition, the company will be investing in store growth in 2016, including the opening of seven Saks Fifth Avenue locations and 25 OFF 5TH locations, in part through the expansion of both banners into Canada.
In other news from the company today, Hudson’s Bay Company finalized its acquisition of GALERIA Holding, the parent company of Germany’s leading department store GALERIA Kaufhof and Belgium’s only department store, Galeria INNO. for an enterprise value of $2.8 billion. In conjunction with the closing, HBS Global Properties, HBC’s real estate joint venture with Simon Property Group, acquired 41 GALERIA properties in a transaction valued at $2.9 billion.
With this latest acquisition, HBC now has an international retail platform with over 460 locations in four countries, including Saks Fifth Avenue.