Shares of Hudson’s Bay Co. (TSX:HBC) were down 3.45% in early afternoon trading on June 25. The stock has surged 24.5% month-over-month. Investors responded well to news that the company would seek to sell off more assets following its disappointing first-quarter earnings release.
Hudson’s Bay reported a $400 million loss in the first quarter. However, the online fashion retailer Rue La La announced that hit would purchase Gilt from Hudson’s Bay, with the latter also declaring that it would close an additional 10 Lord & Taylor locations through 2019. Hudson’s Bay also has plans to dedicate more resources to Saks Off Fifth.
On June 21 activist investor Land & Buildings resumed its pressure on Hudson’s Bay leadership to monetize its valuable real estate holdings. This dispute led to the departure of former CEO Gerald Storch last year. Storch had warned that selling off assets could be a “slippery slope” that would be difficult to come back from. Hudson’s Bay followed his departure with the sale of the property that holds its Lord & Taylor stores.
Land & Buildings founder Jonathan Litt has said that Hudson’s Bay shares could push over the $30 mark in value with a proper utilization of its assets. Litt has also delivered criticism over the $54.8 million pay package for executive chairman Richard Baker. Hudson’s Bay will continue to face pressure as its retail operations lag. Investors should seek out other options in retail this summer.
