Activist investors are calling for Hudson’s Bay Co (TSE:HBC) to sell off its most prized real estate, believing the stores themselves being valued higher than the company as a whole.
Land and Buildings Investment Management of Stamford, Connecticut, wrote in a public letter that the company’s Manhattan store is more highly valued than the entire company when you consider the current stock prices. As such, it is advocating for a sell-off of real estate assets in order to bolster stock prices and reduce the budget disparity.
The letter goes on to call HBC a “real estate company, full stop. If there is a smarter and better use of any or all of the locations, stores should be closed and redeveloped and put towards their optimal use.”
Land and Buildings Investment Management owns about 4.3% of HBC’s equity.
This move comes after HBC recently announced that it would cut 2000 jobs in order to make up to $350.0 million annually to help keep the business afloat. This includes the $75.0 million in savings that HBC announced in February.
“We are reallocating resources to accelerate the opportunity we see online, as we run our brick and mortar operations more efficiently,” Richard Baker, governor and executive chairman of HBC, said in a statement.
“Our team is taking the right steps to optimize our North American business and create efficiencies by leveraging the scale of our company. At this critical moment of change in the retail industry, I believe in the future of our all-channel model and we are adapting to meet the evolving needs of our customers.”
HBC, much like other retailers, has been hit hard by the rise of e-commerce and the company’s inability to replicate its sales numbers online.
While many other companies are going bankrupt, selling stores, and otherwise taking measures to counteract the retail downturn, Hudson’s Bay Company would have to sell several of its top real estates locations in order to make up the difference in the budget, which would effectively spell the end of the company as a big-name retailer, despite the company having survived for over 300 years.
“U.S. investor urges HBC to sell off ‘crown jewel’ locations,” CTV News, June 19, 2017.
“HBC Announces Transformation Plan for North American Operations to Deliver Best-in-Class All-Channel Customer Experience,” BusinessWire, June 8, 2017.