The company said significant pressures, including subdued consumer spending, trade tensions between the U.S. and Canada, and a post-pandemic decrease in downtown store traffic, are factors in the decision.
Vancouver’s flagship Hudson’s Bay store was quiet Saturday, with only a handful of Vancouver shoppers — a scarcity that marks the decline of North America’s oldest company and a pillar of Canadian retail since its founding in 1670.
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After years of struggling with rising inflation and online retail, Hudson’s Bay has filed for creditor protection to avoid bankruptcy.
“I’m shocked and upset. This is a big loss for Canada,” said Eileen Tymm, 88, a regular shopper at The Bay, Penticton’s only department store for more than six decades.
“It has always had the quality items I’ve looked for,” Tymm said. “If the store closes, I won’t be able to find the same high-quality items all in one place anymore — and shopping on Amazon just isn’t the same. I enjoy going out.”
Hudson’s Bay announced the move Friday, saying it has been facing significant pressures, including subdued consumer spending, trade tensions between the U.S. and Canada, and a post-pandemic decrease in downtown store traffic.
“While very difficult, this is a necessary step to strengthen our foundation and ensure that we remain a significant part of Canada’s retail landscape, despite the sector-wide challenges that have forced other retailers to exit the market,” Liz Rodbell, company president and CEO said in a news release.
The news wasn’t a surprise to Vancouver shoppers, who watched the Granville Street store deteriorate.
“It’s always like a ghost town in there,” said Kiera Peters. “Half of the lights are off, and the escalator is always broken.” On Saturday, the store elevators were out of service and the store entrances strewn with litter.
Vancouver retail analyst David Ian Gray says that filing for creditor protection was unavoidable.
“The stores have been facing a slow death, with continued neglect and job losses. There had been no real effort to reinvent them,” Gray said.
“It tells us that the company was keeping its stores in Canada going as long as they were getting some profit out of then, but now that they are making less, they are letting go.”
Gray noted that Nordstrom used a similar process when it closed its stores in Canada in 2023.
“Its Canadian stores were set up as a separate corporation by Nordstrom, then it essentially bankrupted its Canadian operations to avoid paying debts it accumulated in the country,” said Gray.
“It’s a cold move.”
As part of the filing in Ontario Superior Court of Justice Friday, Hudson’s Bay said it’s exploring options to strengthen its business and is committed to preserving jobs where possible.
The retailer’s struggles come on the heels of a major corporate restructuring. Hudson’s Bay’s parent company, Hudson’s Bay Co., acquired the bankrupt Neiman Marcus Group in 2020, with plans to combine it with Saks Fifth Avenue and Saks Off 5th called Saks Global. As part of the deal, tech giants Amazon and Salesforce were expected to become investors.
However, Hudson’s Bay was left as a stand-alone entity, managing its stores and e-commerce platform, TheBay.com.
As consumer spending dropped, Hudson’s Bay closed several B.C. stores and issued several rounds of layoffs.
Last year, Hudson’s Bay let go of 41 employees following job cuts in April 2023 that affected about one per cent of its workforce.
In November 2023, it abandoned plans to open a new location at Vancouver’s Oakridge Park, saying it was focusing instead on a $700 million mixed-use project for its Vancouver store, a project that is now in question.
Despite its efforts to cut costs, the company continues to face financial trouble.
Jennifer Bewley, the chief financial officer for Hudson’s Bay’s parent company, said in an affidavit filed in court that the business is having trouble making payments to landlords, service providers and vendors and has had to defer certain payments for months.
Bewley also warned that without additional funding, the company will be unable to meet its payroll obligations, affecting 9,364 employees.
“Without the benefit of court protection, failure by Hudson’s Bay to pay rent at its stores will result in a rapidly escalating chain of events, leading to lease defaults,” she added.
– With files from The Canadian Press