ShonTron
Moderator
Hillcrest is interesting. A second-tier mall, but in a somewhat affluent suburb. I would have thought Square One or STC would have made the cut instead.
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Northern Light
Superstar
To be clear....this is NOT the rescue of the chain, there is no buyer and no financing. Assuming this is approved.
What has happened is that people suddenly flooding into Bay stores whether in search of deals, wanting to buy heritage stuff (point blankets) or to pick up a favourite brand or size not available elsewhere has sent sales numbers skyrocketing.
The Bay will actually keep the six stores afloat.......for a few more weeks/months, based entirely on the sales revenue made.
While that will let them make payroll, I'm not sure how much they'll be able to procure from vendors, unless paying cash up front.
What has happened is that people suddenly flooding into Bay stores whether in search of deals, wanting to buy heritage stuff (point blankets) or to pick up a favourite brand or size not available elsewhere has sent sales numbers skyrocketing.
The Bay will actually keep the six stores afloat.......for a few more weeks/months, based entirely on the sales revenue made.
While that will let them make payroll, I'm not sure how much they'll be able to procure from vendors, unless paying cash up front.
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Richard White
Senior Member
matrix
Active Member
Six stores is more than I thought would be saved. The only standout to me really is Hillcrest. Maybe it's the area?
Either way, good to see Queen St. may be saved here. That's heritage
Either way, good to see Queen St. may be saved here. That's heritage
nightstreak
Active Member
I read that they have $500M worth of inventory. If they liquidate the inventory in 90 of their stores, then they’re well on their way to paying off their supplier debt. There’s also the leases in valuable locations that they could sublet.
6 stores is way more manageable than 96. If they upkeep those stores with working escalators and keep only the departments that do well, I can see them surviving through this long enough to sell to a Canadian company like Loblaws that sees value in the “Canadian heritage” brand. The HBC Stripes business alone could be viable.
Northern Light
Superstar
At close to full market value.........less if marked down.
There's a pecking order for debt.....for the most part, the vendors are not at the top of the list......debt is ~1B
For the most part, only if a judge lets them. The landlords have wording in many leases placing limitations.
Maybe.
nightstreak
Active Member
I thought that was wholesale. Let me see if I can find the document I read that in on one of my late night rabbit hole deep dives.
The judge seems very aware of the loss to Canada. I found it unusual for him to express his sympathy in that way. You see it in how careful he’s being to keep a path open for saving the company.
With that in mind, I think there’s awareness that they have to preserve supplier relationships otherwise this whole process is moot. The secured debt can be restructured as long as the company exists. Not having any suppliers dooms the company and nobody gets paid.
I’m not a lawyer, so I don’t know what levers can be pulled, only that I think the judge is being very pragmatic.
Despite all this, there’s no saving thousands of jobs, including other businesses dependent on the Bay as an anchor tenant in malls across the country. That’s the saddest part in all of this.
nightstreak
Active Member
Update: I had misremembered @Northern Light . The Bay holds $315 million in inventory on its balance sheet. That is wholesale. So if they sell their on hand inventory at just above cost, they pay one third to one half of their total debt. Their supplier debt is about $500M so we’re getting close to making the numbers work.
My interest (besides the nostalgia) is in the economy. I’m trying to wrap my head around the cascading effects. 10,000 jobs at Hudson’s Bay to start. Then you have 2000 suppliers owed half a billion dollars, dozens of those business could collapse, taking with them more jobs. Then lastly the empty malls, taking out those businesses too.
I can see why the judge is being so cautious here. If there ever was a time for the government to bail out a private business, this might be it. Why do governments bail out airlines and sports arenas but not a Canadian heritage icon with huge economic implications?
My interest (besides the nostalgia) is in the economy. I’m trying to wrap my head around the cascading effects. 10,000 jobs at Hudson’s Bay to start. Then you have 2000 suppliers owed half a billion dollars, dozens of those business could collapse, taking with them more jobs. Then lastly the empty malls, taking out those businesses too.
I can see why the judge is being so cautious here. If there ever was a time for the government to bail out a private business, this might be it. Why do governments bail out airlines and sports arenas but not a Canadian heritage icon with huge economic implications?
Northern Light
Superstar
I would love to see a viable version of the company saved..........but it will require new owners, and lots of capital.
Fingers Crossed.
Monarch Butterfly
Superstar
Hudson Bay started out by bartering their goods. After trapping during the fall and winter when beaver pelts were of the highest quality, in the summer months, Indigenous peoples travelled to these trading posts to barter furs for manufactured goods such as metal tools, guns, textiles and foodstuffs. The now-iconic point blanket was one such item bartered for furs.
Walmart gets their dry goods from the Far East, then sell them at a cheaper price. Taking employment away from Canadians but paying the workers in the Far East at cheap low wages.
That's why I avoid shopping at Walmart, unless I have to.
Department stores like Eaton's, Simpsons, and The Bay used to get their dry goods locally. The factories on Spadina Avenue supplied many of the clothes that they sold.
Walmart gets their dry goods from the Far East, then sell them at a cheaper price. Taking employment away from Canadians but paying the workers in the Far East at cheap low wages.
That's why I avoid shopping at Walmart, unless I have to.
nightstreak
Active Member
Me too. I don't think The Bay has much of a chance if they're still run (into the ground) by the US equity firm that caused these issues to begin with.
Who other than Loblaws would be suited to take over? Someone on Reddit mentioned Canadian Tire. It's crazy enough that it might work.
Richard White
Senior Member
nightstreak
Active Member
Oh yeah, why didn't I think of that? It's the most obvious, you're right. Is Simons liquid enough to acquire The Bay? Then again, neither Sears nor Eatons exists anymore so maybe Simons isn't looking to repeat the mistake.
matrix
Active Member
Simons knows better than to do that.
matrix
Active Member
Insane that Hillcrest used to have two Bay locations as anchors... "Fashion Store" and "Homestore and Mens". I think the Fashion Store replaced Simpsons when they bought them out. Homestore was replaced by other anchors after they renovated the Fashion Store space in mid-2010s. $125 million it cost them! Would be funny if that's why they want to keep this store from shuttering. The same architecture design firm had also designed the Yorkdale location which completed renovation a year later. Both renovations at Oxford malls, both steering clear of liquidation... Coincidence? Probably. Just thought it was interesting.
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