In another sign of its ongoing image revitalization project, Hudson’s Bay Co. may be looking to purchase Saks Inc. and its luxury Saks Fifth Ave stores.
Women’s Wear Daily reported Monday morning that, “according to industry sources,” Hudson’s Bay CEO Richard Baker has been working on the possible purchase of Saks, although neither Hudson’s Bay nor Saks could comment the report.
Saks shares were up more than one per cent on the news of the report on a day when most stocks were dropping because of poor economic trends in China. Saks has a market capitalization of more than US$2 billion and 46 Saks stores and 60 OFF 5th stores in the U.S.
If HBC were to purchase Saks Inc., it could be another indication of the more upscale direction the company is currently headed in, said Canaccord Genuity consumer products analyst Derek Dley.
Since the arrival of vice-chairman Bonnie Brooks, HBC has turned its eye towards revitalizing its image, bringing more popular and high-end brands to The Bay, such as TopShop. HBC also bought the rights to Kleinfeld Bridal, of Say Yes to the Dress fame, set to arrive in 2014, and has opened a boutique space exclusively for women’s shoes at its flagship store on Queen Street in Toronto. Until recently, the sale of expensive and exclusive brands in Canada was a market largely monopolized by Holt Renfrew.
“Saks represents another luxury brand, and along the lines of what you see in Canada at Holt’s, so [its possible purchase] works well with that strategy,” said Dley.
HBC would be able to take advantage of Saks prime retail locations in the U.S., but also use the company’s relationships with luxury brands to help bring more high-end products into The Bay stores in Canada, he added.
“It would probably allow Hudson’s Bay to attract some more of the brands that they may not have been able to bring into their stores at this point,” said Dley.
HBC will soon be jockeying for department store sales with the arrival of the American chain Nordstrom north of the border in 2014.
Richard Baker has been making waves in the North American retail industry since becoming the Chairman of Lord & Taylor in 2006. In 2008, he became the “Governor,” or CEO of HBC, and formally completed the company’s acquisition of Lord & Taylor in 2012. Both retailers now operate under the same corporate umbrella. It was Baker’s sale of HBC’s Zellers stores for a reported $1.2 billion that also allowed American retailer Target to set up shop north of the border.
Baker recently told the Canadian Press that he isn’t worried about Nordstrom’s arrival, however, stating that once The Bay’s customers see the “value product offering at Nordstrom,” they will be “even more excited and energized to shop in our stores.”
As for the likelihood of a Saks purchase, a Hudson’s Bay Co. spokesperson said in an email that the company will not be providing any comment at this time.
With files from The Canadian Press.