Hudson’s Bay Co. has entered into a deal to sell Lord & Taylor to fashion rental service Le Tote.
The retail group has announced on Wednesday that the San Francisco-based company would acquire the storied department store chain for 99.5 million Canadian dollars ($75 million) in cash upon the transaction’s closing, expected before the start of the 2019 holiday season.
As part of the agreement, Le Tote will own the Lord & Taylor brand and its intellectual property as well as take over operations of 38 stores, the retailer’s digital platforms and inventory. The deal also includes a secured promissory note for $CA33.2 million ($25 million) after two years.
“We’re excited to have reached an agreement with Le Tote that creates a new model for Lord & Taylor, bringing together fashion rental subscriptions with traditional retail,” HBC CEO Helena Foulkes said in a statement. “Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord & Taylor, its loyal customers and dedicated associates.”
Under the terms of the deal, HBC will receive an equity stake in Le Tote, on top of two seats on the company’s board of directors and rights as a minority shareholder. The acquisition would allow the group to focus its resources on North American operations, including its better-performing banners, Saks Fifth Avenue and Hudson’s Bay. (HBC first revealed in May that it was exploring “strategic alternatives” for its Lord & Taylor business.)
The move also marks a big win for the broader sharing economy, as a younger generation of consumers express concerns about ethical and environmental issues as much as they seek a good deal. A number of retailers including New York & Co., Express, Ann Taylor and Urban Outfitters parent URBN have already capitalized on the market by launching their own rental subscription platforms.
“We’ve strived to lead the charge in developing innovative, intuitive, value-driven ways for customers to engage and consume,” said Le Tote CEO Rakesh Tondon. “With this [Lord & Taylor] acquisition, we continue our journey in creating the future of retail.”
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