The big news in the luxury retail sector is that Hudson’s Bay Co. is acquiring Saks Fifth Avenue in a deal estimated to be worth $2.4 billion. Hudson’s Bay is perhaps the oldest company operating in North America. The company was founded in 1670 as a trading firm for furs and other goods. Over the centuries it has grown into Canada’s biggest department stores chain operating from 90 locations in the country. The company is now owned by Lord & Taylor which is an upscale retailer in its own right. Post acquisition the combines entity will have 320 stores in some of the biggest and most populous cities in the U.S. and Canada.
Seven Saks Fifth Avenue Stores Will be Opened in Canada
The Canadian chain which is already catering to well heeled shoppers will now have a brand aimed at an even more affluent clientele. Saks has customers who are comfortable paying $800 for a Christian Louboutin heels or a couple of thousand dollars for Gucci handbags. Richard Baker, CEO of Hudson’s Bay explained that the primary motive behind the acquisition was to bring the luxury brand Saks to Canada. According to immediate plans the company will open seven Saks Fifth Avenue stores and 25 Off Fifth outlet stores in Canada. A new website is also being planned specifically aimed a Canadian audience. Hudson’s Bay will then be in a position to offer its consumers an unprecedented range of retailing categories and shopping experiences.
Saks Unable to Bounce Back to Its Peak of 2008
The global market for luxury seems to be unaffected by the uncertainties of the economic environment. The growth in the global luxury market was 10% whereas in North America it was 12%. However, Saks has been unable to cash in on this growth and has lagged behind its peers in the luxury sector. Last year they had grown by only 4% to reach a turnover of $3.15 billion which is still lower than their peak of $3.28 billion they had achieved in 2008. Hudson’s Bay wants to revamp the Saks stores to make them more luxurious. The perception is that the shopping experience Saks provides falls short of those offered by Nordstrom and Neiman Marcus. Saks will benefit by being part of a larger group but will continue to operate as a separate company from its headquarters in New York.