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Can HBC, Canada’s oldest retailer, hang on?

From fur trading to e-commerce, the oldest and most resilient retailer in Canada has been the Hud...

From fur trading to e-commerce, the oldest and most resilient retailer in Canada has been the Hudson’s Bay Company (HBC) since 1670.

The company’s roots go back so far, they pre-date Confederation by nearly 200 years.

If ever there was an example of reinvention, over and over again, it will never be said that this retailer went down without a fight.

HBC is behind on the bills

The namesake department store of HBC is most commonly known as The Bay.

The company has been in the news a lot this past year for failure to pay rent in shopping malls across Canada. The Bay, like many retailers, has reportedly not paid rent since the COVID-19 pandemic began in the spring.

In mid-November, an Ontario judge ordered HBC to pay at least half the rent owing to one of its many landlords, which staved off eviction at that time.

However, on the West Coast, the Coquitlam Centre locked the doors on the retailer just prior to the Black Friday weekend sales. That store has since reopened.

HBC has 120 Canadian stores including Coquitlam. Filed court records state $20 million a month in leases have not been paid to eight landlords alone.

Sharing the burden

In a rare move, HBC has also been suing its landlords.

The company argues that Oxford Properties, operating Toronto’s Yorkdale Shopping Centre, failed to run a first-class mall this past year and it deems the lease to be in default.

Ditto on the leased premises in Coquitlam.

HBC has publicly maintained it believes all landlords and tenants should share the burden of the disruption of business due to the pandemic.

Despite the rental arrears, there is no doubt landlords are considering ways to keep The Bay in place given the fallout many faced when Sears and Target went down so abruptly.

Large department store footprints were not easily backfilled during sunnier economic times. This would even more daunting now.

Opportunity knocks

HBC went private as a corporation just prior to the pandemic, with promises to turn around already struggling sales outside of public scrutiny.

In preparation for that plan it closed down the Home Outfitters division in July 2019, despite having substantial term left on some of those leases.

HBC went to market to sublease those properties, but some analysts are speculating HBC is using the pandemic to wriggle out of continuing to pay on those commitments.

The pandemic has also sped up planned closures, such as The Bay’s flagship in downtown Winnipeg. Plans were in place to close in February 2021, but doors were quietly shuttered as of Nov. 30.

Retail dinosaurs

It seems the Bay may be destined to join history footnotes behind other retail stores of yore.

After 130 years, the T. Eaton Company Limited went bankrupt in 1999. Eaton’s controlled 60 per cent of all department store sales in Canada at one time, but was down to a meagre 10.6 per cent by the end.

Sears Canada hung on a bit longer, only discontinuing its catalogue service in 2017. But it too finally bit the dust in January 2018 and was replaced by a food court in Saskatoon’s Midtown Plaza.

These chains were merely babies beside the 350-year-old Hudson’s Bay Company.

Let’s hope the pandemic is not the final nail in this beloved Canadian retailer’s coffin.

P.S. Barry Stuart, ICR Commercial Real Estate managing partner and senior sales associate, just loves my FUN facts (which are rarely fun) but here are just a few bits I found super interesting on the Hudson’s Bay Company Wikipedia:

* The Hudson’s Bay Company was granted a monopoly over the region drained by all rivers and streams flowing into Hudson Bay in northern Canada through a Royal charter from King Charles II.

* Hudson’s Bay Company’s first inland trading post was established by Samuel Hearne in 1774 with Cumberland House, Sask.

* Between 1820 and 1870, HBC issued its own paper money.

* Louis Riel Sr. led a crowd of armed Metis men to the trial of Pierre Guillaume Sayer in 1849, which contributed to the end of the HBC monopoly.

* The first of the grand “Original Six” department stores was built in Calgary in 1913. The other department stores that followed were in Edmonton, Vancouver, Victoria, Saskatoon and Winnipeg.

* The Saskatoon store was torn down in 1960 and replaced with a modern three-storey building on the same site, which was converted to residential lofts in 2004.

* HBC revenue was listed at $9.4 billion in 2018.

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