Jul 9, 2019
HBC should make store closures part of game plan, shareholder says
, BNN Bloomberg
Exclusive: Hudson's Bay may close some of its namesake stores
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A top Hudson’s Bay Co. (HBC.TO) shareholder says the retailer should consider closing stores because it may be in the company’s best interest to sell some of its “extremely valuable” real estate amid pressure to improve performance.
“I think closing stores is part of a game plan that should be within HBC’s strategy,” said Joshua Varghese, portfolio manager at CI Investments’ Signature Global Asset Management, which is HBC’s seventh-largest shareholder, according to Bloomberg.
Speaking in a television interview with BNN Bloomberg Tuesday, Varghese said he believes HBC’s management team is aware of the changing retail landscape but said “we do need to see more definitive action” from them.
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He added that at a time when department stores in Canada are struggling, HBC should think about selling some of its real estate or finding a better use for it.
“The real estate within HBC is extremely valuable, both the real estate that they own and the real estate that they lease as well,” Varghese said. “It’s not the best use to have a department store within it.”
A source familiar with the company’s plans recently told BNN Bloomberg Canada’s oldest retailer is exploring the possibility of closing some of its department stores in Canada and is actively looking to restructure some of its leases with store landlords.
The discussions come as Richard Baker, HBC’s executive chairman, heads a $1.74-billion bid to take the company private. Baker and his buyout partners are proposing to purchase full control of HBC at $9.45 per share, which Varghese said is “far too low” but is likely part of an initial bargaining tool. Last month, HBC said its board has formed a special committee to consider the proposal.
“I don’t think the management team really expects shareholders to accept that type of offer,” Varghese said, adding it would be “a steal of the company if they were able to get it.”
“I have a feeling the minority shareholders will continue to be very vocal with the special committee and would probably share that view that the $9.45 [offer] is far too low.”
