Canadian retail group Hudson's Bay Company has announced the sale of the iconic luxury department store chain Lord & Taylor.
The buyer is Le Tote, which owns a clothing rental subscription service. The deal, which will include 38 operating US department stores, digital sales channels and rights to the Lord & Taylor brand, is worth $100 million, including $75 million in cash and $25 million in secured promissory notes payable in two years. As part of the deal, HBC will also receive a small stake in Le Tote and two seats on the company's board of directors.
“We are thrilled to have reached an agreement with Le Tote, which is creating a new model for Lord & Taylor that combines subscription-based fashion with traditional retail,” said Helena Fulkes, CEO of Hudson's Bay.
In turn, thanks to the sale of the Lord & Taylor business, which has recently been under pressure, Hudson's Bay will focus on the development of the Canadian department store chain of the same name (today it has about 90 stores) and the luxury Saks Fifth Avenue. HBC began a restructuring of the business with the sale of the Gilt online store and the German department store chain Galeria Kaufhof, which was bought by the Austrian Signa Holding in June. As for Lord & Taylor, the chain generated $1.4 billion in revenue in fiscal 2018, equivalent to 14% of all sales in the HBC portfolio.
Top fashion brand clothing rental service Le Tote was founded in 2012. The company offers subscription rentals to its customers for $79 per month. The fashion rental market was valued at $$1 billion in 2018, according to GlobalData. It is expected to grow by more than 20% annually and reach $2.5 billion by 2023.
After the purchase of Lord & Taylor, the company expects to literally “rediscover” the legendary brand. Le Tote will open smaller department stores, revisit existing stores and work on new locations. In addition, the new owners will expand and personalize existing offerings at Lord & Taylor, which traditionally specializes in dresses. One of the new directions in the department store business will be a service for renting clothes by subscription. At the same time, the possibility of strengthening online sales channels is being considered, including the launch of sales through Walmart website. But the final decision on this issue has not yet been made.