On March 7, 2025, the Hudson’s Bay Company (HBC) obtained court protection after failing to secure an arrangement that would have required major concessions from its landlords, including shopping malls across Canada. The initial plan was to close about half of HBC’s 80 department stores. The plan was later revised to maintain 6 stores located in Toronto and Montreal, along with HBC’s online presence. This revised plan was later abandoned because of insufficient funding.

The filing for court protection revealed that HBC was several month behind on lease payments, and at risk of not being able to pay employees.¹ The filing also revealed that HBC had CA$1.1 billion in loans and mortgage debt,² and incurred a loss of approximately CA$330 million for the 12-month period ending on January 31, 2025.³ In addition, HBC was significantly behind on payments to its suppliers of merchandise, “a classic sign of a retailer in deep trouble.”⁴ Some brands had stopped delivering products because of overdue accounts.⁵

Founded in 1670 (almost two centuries before Canada officially became a country), the Hudson’s Bay Company proudly referred to itself as “the company that became a nation.”⁶ In recent weeks, social media platforms are said to have been “flooded with fondness for The Bay.”⁷ Unfortunately, not nearly enough of this fondness converted to sales, to save at least a small portion of the company. All of this while Canadians were proudly clamoring their “elbows up” slogan to protect Canadian sovereignty from U.S. tariff threats. I am surprised and disappointed at the lack of serious attention for rallying Canadians to save a truly Canadian icon from bankruptcy and liquidation.

Consequences of the failure

The bankruptcy and liquidation of HBC, Canada’s oldest and perhaps most iconic brand, not to mention the country’s biggest department store, is a failure of epic proportion. Even the judge assigned to HBC’s court application stated: “It is hard not to have a sense of melancholy when considering the application before me.”⁸ For some Canadians, the failure is difficult to accept. Stakeholders mostly impacted include employees, consumers, shopping malls and communities.

Employees – HBC’s more than 9,300 employees will lose their job, most likely without severance pay.⁹ Fortunately, the company pension plan is in a surplus position,¹⁰ which means that HBC’s 20,000 retirees should not be negatively impacted with reduced pension benefits.

Consumers – Consumers will no longer have the convenience of a full department store with a presence across Canada. They will also have a limited time to use outstanding gift cards totaling CA$24 million.¹¹ In addition, loyalty program members are no longer able to redeem points.¹²

Malls and retailers – Shopping malls across Canada will lose a major anchor tenant drawing customers. Few retailers may be willing to occupy the empty space available. Other shopping mall retailers and restaurants, may experience a significant sales decline, and may exit their location or demand concessions. Some shopping malls could face liquidity problems.

Communities – In small towns, store closures and job losses may have a profound effects on local economies. Although the departure of HBC will provide opportunities for other retailers to move in, the transition will take time, and may leave communities with less retail options now and in the future. Prices will go up if there is not enough retail competition at the local level.

Causes of the failure

In 2008, American real estate developer Richard Baker led a takeover of HBC through his investment firm NRDC Equity Partners. At the time, Mr. Baker insisted the takeover “was not a real estate play.”¹³ He said he was committed to refurbishing the stores.¹⁴ Three years later, Mr. Baker sold HBC’s Zellers locations to Target Corporation for CA$1.8 billion, approximately CA$700 million more than the takeover price of the entire company.¹⁵ In 2012, Mr. Baker took HBC public while its department stores were profitable, raising almost CA$400 million in additional equity.¹⁶ Rather than reinvesting money into the stores as promised, Mr. Baker acquired luxury retailer Saks for US$2.9 billion. In the following years, Mr. Baker monetized several other HBC assets to acquire additional retail companies, namely Neiman Markus and Galeria Kaufhof. Richard Baker later separated HBC from his other acquisitions (renamed Saks Global). In 2020, Mr. Baker decided to re-privatize HBC by acquiring the shares in circulation. Although the company was losing money by then, Mr. Baker argued that it was “totally gobbledygook illogical” to question HBC’s financial strength.¹⁷

Broken promises, greed for acquisitions, lack of reinvestment and retail incompetence were the most important factors explaining the failure of HBC. After Richard Baker took the company public in 2012, he showed up onstage at a management retreat dressed as Willy Wonka and told managers: “I’m going to make your dreams come true!!”¹⁸ The promise of dreams turned into a nightmare. While the company was generating between CA$300 and CA$500 million a year selling properties over several years, not nearly enough of that money was reinvested in the business. The sale-lease back of properties also resulted in greater financial leverage and higher operating costs. With insufficient reinvestment to improve the customer shopping experience, sales declined and losses mounted.¹⁹ During the four years leading to the re-privatization of HBC in 2020, the company share price fell from approximately $30 to $6, a drop of 80 percent.²⁰

It can be argued that many other factors contributed to the failure of HBC. These factors include a greater tendency for online shopping (Amazon), increased competition from low-priced department stores (Walmart, IKEA, Costco), retailers broadening their offering (Canadian Tire, Loblaws), and category killers growing or maintaining their presence in Canada (Best Buy, Toys R Us). Systemic factors such as the pandemic, inflation, higher interest rates and trade uncertainties did not help. But these factors affected all other retailers just the same. HBC easily could have survived by maintaining a healthy balance sheet, adopting a better market focus, and placing greater emphasis on quality brands. However, that would have required prudent financial management, reinvestment in key locations, closure of underperforming locations, and adoption of an effective online strategy, all of which eluded Mr. Baker. It took thousands of dedicated managers to build a successful retail brand over more than 350 years. It took less than 20 year for a bad owner to destroy it.

Glimmers of hope

The failure of HBC leaves a gaping hole in the Canadia retail landscape. “It’s unfathomable that an exceptionally rich company endowed with amazing real estate and tremendous historic value, could survive 355 years as the oldest continually operating company in the world, and then be reduced to its tragic position today” said Bonnie Brooks, a former president of HBC.²¹ “I think there is still a place for a terrific department store in Canada, one that is specifically targeted to its core customer base and aligned with the price points and product assortments they want, and that doesn’t exist elsewhere in the Canadian market. If this market sees a value and quality offering aligned to what they want, I believe they will support it, especially if it is Canadian” said Ms. Brooks.²²

Anyone interested in acquiring HBC brands and assets had until Wednesday April 30th to submit a bid as part of the current liquidation process.²³ Multiple bids were received according to sources familiar with the matter. One source mentioned that “a strong mix of recognizable North American businesses, together with financial partners, have expressed interest.”²⁴ Successful bids will be announced no later than May 30th. Let’s hope that one bidder will honor and resurrect the iconic HBC brand that’s been part of Canada for more than 350 years. Any other outcome is a tragedy.

Endnotes

__________________________

¹ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (Globe & Mail, Apr 26, 2025).
² Susan Krashinsky Robertson, HBC to begin liquidating six remaining stores, setting stage for historic chain’s demise, (Globe, Apr 24, 2025).
³ Susan Krashinsky Robertson, Hudson’s Bay looks to keep half of its 80 stores open as it seeks concessions, (Globe and Mail, Apr 24, 2025).
⁴ Susan Krashinsky Robertson, Hudson’s Bay looks to keep half of its 80 stores open as it seeks concessions, (…).
⁵ Susan Krashinsky Robertson, Hudson’s Bay employees face layoffs as retailer set to liquidate stores, (Globe and Mail, Apr 24, 2025).
⁶ Susan Krashinsky Robertson, Hudson’s Bay looks to keep half of its 80 stores open as it seeks concessions, (…).
⁷ Bernadette Morra, Bay days, (Ottawa Citizen, April 5, 2025).
⁸ Bernadette Morra, Bay days, (Ottawa Citizen, April 5, 2025).
⁹ Naimul Karim, HBC seeks to set up fund for laid-off employees, (Ottawa Citizen, April 22, 2025).
¹⁰ Naimul Karim, HBC seeks to set up fund for laid-off employees, (Ottawa Citizen, April 22, 2025).
¹¹ Susan Krashinsky Robertson, Hudson’s Bay heads to court as it warns it may need to close department store chain, (Globe, March 17, 2025).
¹² Susan Krashinsky Robertson, Hudson’s Bay heads to court as it warns it may need to close department store chain, (…).
¹³ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
¹⁴ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
¹⁵ Susan Krashinsky Robertson, Hudson’s Bay: The fall of a retail icon, (Globe and Mail, March 15, 2025).
¹⁶ Susan Krashinsky Robertson, Hudson’s Bay: The fall of a retail icon, (Globe and Mail, March 15, 2025).
¹⁷ Susan Krashinsky Robertson, Hudson’s Bay: The fall of a retail icon, (Globe and Mail, March 15, 2025).
¹⁸ Jessica Johnson, Don’t cry for HBC – there’s nothing left to mourn, (Globe and Mail, March 22, 2025).
¹⁹ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
²⁰ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
²¹ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
²² Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
²³ Susan Krashinsky Robertson, The fall of HBC – How Richard Baker presided over the failure of a Canadian icon, (…).
²⁴ Tara Deschamps, Canadian Tire has bid on some Hudson’s Bay assets, sources say, (Globe and Mail, May 2, 2025).