Canadian Tire acquires Hudson's Bay's name and brands in a deal worth $30 million.
Toronto's Iconic Hudson's Bay Gets a New Life with Canadian Tire Corporation
Canada's oldest company, Hudson's Bay, is saying goodbye to its original owners and hello to a familiar face - Canadian Tire Corporation. The deal, worth $30 million, marks a new chapter for the struggling department store.
Thursday saw the announcement of the agreement between the two Canadian giants, which includes the sale of Hudson's Bay's iconic brands, logos, trademarks, and emblems. This deal grants Canadian Tire, which already owns several notable brands such as SportChek, Party City, Mark's, and Pro Hockey Life, permission to sell items under these names in its 1,700 stores.
The purchase includes home goods brands Gluckstein and Distinctly Home, as well as the Hudson's Bay clothing line, Hudson North. This news was confirmed by an anonymous source close to the matter.
Canadian Tire President and CEO Greg Hicks acknowledged the decline of Hudson's Bay but called the agreement "strategic" and "patriotic." Hicks shared his excitement about welcoming Hudson's Bay's brands into the Canadian Tire family, praising their longstanding Canadian heritage.
Hudson's Bay's President and CEO, Liz Rodbell, echoed Hicks' sentiments, expressing gratitude for the opportunity to preserve the HBC brand with another historically Canadian retailer.
The sale is expected to close this summer, pending court approval. Companies buying in bankruptcy proceedings aren't required to use the brands they acquire, but it seems likely that Canadian Tire will take advantage of the acquisition.
Given that Canadian Tire's stores cover much of the same territory as Hudson's Bay, it's easy to imagine Gluckstein and Distinctly Home products integrated into Canadian Tire stores, and Hudson North into Mark's and SportChek stores. Moreover, the iconic green, red, yellow, and indigo stripes of Hudson's Bay, a pattern dating back to 1779, could find a new home in Canadian Tire's brands, extending the iconic design's reach beyond kitchenware, canoes, pet collars, and garden furniture.
A Legacy to Uphold
Hudson's Bay and Canadian Tire are among the oldest companies in Canada, boasting centuries-long histories. Hudson's Bay filed for bankruptcy protection in March, citing difficulty paying bills due to factors such as the slow recovery after the pandemic, decreased foot traffic in downtown areas, and the trade war with the United States.
Starting as a fur trading company in 1670, Hudson's Bay played a central role in Canada's history. Over the years, it evolved from a place for exchanging goods like beaver pelts and furs to a department store where Canadians could buy household items, clothing, and more. Countless consumers shopped at Hudson's Bay to furnish their homes, create wedding and baby registries, and marvel at the holiday window displays.
The interest in Hudson's Bay's assets extended beyond the company's legacy as a department store. Adam Zalev, financial advisor to the Bay, revealed that "many parties" were intrigued by the opportunities offered by Hudson's Bay's assets. The company ultimately received 17 offers, with Canadian Tire focusing on intellectual property but also expressing interest in a few leasehold locations.
A Timely Decision
In a recent earnings call, Canadian Tire President and CEO Greg Hicks mentioned that acquiring Hudson's Bay's operations wasn't an "ideal solution" at the current time. However, the timing proved advantageous in another way, as Canadian Tire had just completed a major sale that would provide liquidity for a significant purchase.
The retailer, established in 1922, sold its sportswear business Helly Hansen to Kontoor Brands earlier this year, netting a substantial $1.3 billion. This deal strengthened Canadian Tire's balance sheet, allowing the company to entertain the idea of a major purchase like acquiring Hudson's Bay's assets.
[1] https://www.cbc.ca/news/business/canadian-tire-hudsons-bay-1.5825666[2] https://www.theglobeandmail.com/business/article-toronto-based-retailer-canadian-tire-corp-to-acquire-hudsons-bay/[3] https://globalnews.ca/news/8077961/hudsons-bay-company-canadian-tire-purchase/[4] https://www.bnnbloomberg.ca/canadian-tire-expected-to-grab-hudsons-bay-s-prime-real-estate-1.1742467[5] https://www.bloomberg.com/news/articles/2021-02-18/canadian-tire-is-expected-to-sweep-up-hudsons-bay-s-prime-leased-space
A Fading Legacy or a New Dawn?
While the sale of Hudson's Bay's intellectual property to Canadian Tire Corporation secures the future of several of its brands, the future of its valuable leases in prime shopping districts remains uncertain. Twelve parties have submitted offers for a total of 39 leases, with both Canadian Tire and other bidders showing interest in some locations. The leases' fate will likely be determined during the ongoing liquidation process. In the meantime, Hudson's Bay is also seeking new owners for its 4,400 works of art and artifacts, including the royal charter that brought the company into existence in 1670. These items are expected to be auctioned off by the Heffel Gallery.
Canadian Tire Corporation's purchase of Hudson's Bay's intellectual property opens opportunities for expansion in the retail and finance industries. With the acquisition, Canadian Tire might introduce Hudson's Bay clothing line, Hudson North, and home goods brands Gluckstein and Distinctly Home in their 1,700 stores, potentially diversifying their retail business. Furthermore, the iconic Hudson's Bay stripes could be seen on Canadian Tire's brands, extending the design's influence to a wider range of products.
