North America’s Oldest Firm Meets Its End. Some Argue Its Fate Was Avoidable

Hudson’s Bay Co. ULC, a company that’s so old it once played a central role for goods traders in Britain’s North American colonies, is being stripped for parts.

The retailer, currently under bankruptcy protection in Canada, had devised a plan to rescue six of its 96 stores from liquidation, including its flagship location in one of the biggest shopping hot spots in downtown Toronto. But that plan has run aground and those locations are now being wound up too, and the company’s 17th-century artefacts are being auctioned off.

It’s a somber end for thousands of employees and a company that was a dominant force in the Canadian retail landscape for decades.

The company was doomed after the Covid-19 pandemic hit, according to one person with detailed knowledge of HBC’s operations, who said Canada’s strict stay-at-home orders meant stores closed for longer than expected and consumer behaviour shifted.

But several other people with knowledge of the matter say the retailer erred by waiting too long to restructure.

As recently as January, at least three private credit firms were ready to provide financing, according to the person close to HBC, but they changed their minds after US President Donald Trump’s tariff policy became clearer.

HBC then engaged Reflect Advisors in February to help it restructure after those attempts to raise money failed. Reflect’s consultants quickly realised the company needed an emergency cash injection, the people said. Five days after being hired, it began asking creditors for more capital.

Days after HBC filed for creditor protection on March 7, one creditor extended 16 million Canadian dollars ($11.5 million) to cover operational expenses while the company and its advisers waited for a private credit lender to finalise a larger loan that might have saved 40 stores, the person close to HBC said. But that firm backed out at the last minute, the person said.

The failure to secure more capital sent HBC on a path of liquidating its stores, including the Saks Fifth Avenue and Saks Off 5th stores it operates in Canada. Typically, companies that apply for creditor protection develop restructuring plans before considering that drastic step.

“The uniqueness is the speed with which the bankruptcy filing has occurred and how quickly discussions started about liquidation,” said Andrew Hatnay, a partner at Koskie Minsky LLP who represents HBC employees.

HBC retains the right to remove stores from the liquidation process if a buyer emerges, Reflect Advisors stated in an affidavit.

“Our team has worked incredibly hard to identify a viable path forward, and our resolve is strengthened by the overwhelming support from customers and associates who have shared heartfelt stories about Hudson’s Bay and what our stores have meant to them, their families, and their communities across the generations,” HBC chief executive officer Liz Rodbell said in a statement made prior to the court proceedings.

Culture Trouble

Founded in 1670, Hudson’s Bay evolved from a colonial fur trading business into the country’s largest department store chain, and is North America’s longest continuously operating business. Like many traditional retailers, it struggled in the 2000s and 2010s to keep pace with the rise of e-commerce and changing consumer habits.

These troubles were exacerbated after HBC went private in 2020, a transaction that concluded a months-long fight that required Richard Baker, HBC’s executive chairman, to sweeten his offer twice. Luck was not on the company’s side — days after the deal closed, the pandemic forced all stores to shutter.

Then came a series of strategic missteps, according to other people familiar with its operations. A lack of coherent long-term vision and a perceived unwillingness to invest within Canada left the company in a constant state of flux, according to these people. Former employees described a culture in which some executives failed to take seriously the concerns of frontline employees and managers.

In 2021, HBC split its e-commerce and store operations, mirroring a strategy its parent company used for its US operations. HBC spent 130 million Canadian dollars and hired more than 500 employees, but the move didn’t yield the expected returns.

“Revenue from digital channels failed to offset the decline in brick-and-mortar sales, and debt levels increased without a proportional improvement in profitability,” HBC’s chief financial officer stated in an affidavit.

The initiative also diverted resources from its physical stores. When Canadian retail didn’t bounce back as quickly as expected from the first year of the pandemic, HBC had to sell surplus inventory at significant losses, the person with detailed knowledge of the retailer’s operations said.

Adding to the turmoil were leadership controversies.

Baker told Canada’s Globe and Mail newspaper in March 2023 that the department store chain comprised “a teeny weeny, tiny bit” of the parent company’s overall value, which was driven by real estate and digital ventures. Employees aired their concerns about the quote in a town hall, but Baker didn’t directly answer questions about it or try to alleviate concerns, former employees said.

Then Baker announced in July 2024 that he’d struck a deal to acquire Neiman Marcus Group for $2.7 billion. This move brought together luxury brands such as Neiman Marcus, Bergdorf Goodman, Saks Fifth Avenue and Saks Off 5th under a new entity, Saks Global. The fact that he raised billions to invest in the US while HBC’s Canadian stores were left with broken escalators caused resentment, the people said.

The resentment wasn’t entirely founded, said the person close to HBC’s operations. The US and Canadian businesses were distinct, and no money was sent to the US from Canada after the company went private, the person said. Rather, $350 million was sent to the Canadian arm from its US operations under a credit facility, the person said.

The injection wasn’t enough. In December, on assuming ownership of Neiman Marcus, Baker formally separated Saks from HBC. Publicly, this move was framed as consolidating luxury retail brands under one umbrella, allowing Hudson’s Bay to focus on its core operations in Canada.

HBC’s troubles have affected big Canadian real estate companies like Cadillac Fairview, a subsidiary of the Ontario Teachers’ Pension Plan. Cadillac at one point lent 200 million Canadian dollars to HBC to support the retailer’s operations and maintain its role as an anchor tenant in several of its shopping centres — with one condition being that no money was sent from its Canadian operations to the US, according to the person close to HBC. The retailer repaid 24 million Canadian dollars after it bought Neiman Marcus.

“I think they’re just a really supportive landlord. And they were trying to help HBC survive,” Ontario Teachers CEO Jo Taylor said in an interview. “The view taken, which I could understand completely, was its survival would’ve been a better outcome for Cadillac” over the long term than had HBC failed, “as it has done.”

“We are disappointed for them.”

By Paula Sambo and Layan Odeh