In a deal that’s all about the location, location, location of bricks and mortar –- particularly on Manhattan’s Fifth Ave. -- the Hudson’s Bay Company has apparently emerged as the winning bidder for Saks Inc., a retail brand that still exudes swank despite ill-advised efforts to appeal to shoppers punching up shopping apps to save a few bucks on a blouse.
“No tourist wakes up in New York and says: ‘You know what I’m going to do now? I’m going to log on to the Internet and shop,’” Faye Landes, a retail analyst at Cowen, tells the New York Times’ Peter Lattman and Stephanie Clifford.
“The [$16 per share] deal is a 30% premium to Saks’ closing stock price on May 20, the day before The Post exclusively reported the company had hired Goldman Sachs to explore a possible sale, Saks CEO Steve Sadove noted in a written statement Monday,” James Covery exclusively writes in the -– you guessed it –- New York Post.
“Saks has lagged behind its peers, Neiman Marcus and Nordstrom,” the AP’s Anne D’Innocenzio and Michelle Chapman point out. “After getting battered by the Great Recession, Saks discounted heavily to bring shoppers back. That move hurt the chain’s image.”
Richard A. Baker, the CEO of Hudson’s Bay, is featured in much of the coverage. Variously referred to as “dapper,” “boyish” --- and even compared to the comic-strip character “Richie Rich“ in the Wall Street Journal –- his appears to be a tale of ongoing exoneration.
Despite some initial skeptics, “he has largely avoided the follies that have plagued other investors who have gotten into the retail business,” Lattman and Clifford write in the Times.
“It seems like a smart move and a continuation of everything Richard Baker has already done,” Marvin Traub Associates president tells Bloomberg’s Cotten Timberlake and Lauren S Murphy.
“Hudson’s Bay will benefit from adding ‘the luxury counterpart’ to its lower-priced Hudson’s Bay and Lord & Taylor chains,” they say, while “the combined nameplates can leverage their now-larger buying power with vendors of fashion priced below the highest designer level, he said.”
The Wall Street Journal’s Suzanne Kapner, Serena Ng and Sharon Terlep lede with the fact that the 47-year-old CEO grew up in Greenwich, Conn., “watching his father develop shopping malls” and now “is buying the companies that fill them up.”
Indeed, Baker’s dad, Robert, founded National Realty & Development Corp., which Baker joined after attending Cornell University’s School of Hotel Administration. NRDC Equity Partners, which includes several other partners outside the family, purchased Lord & Taylor against Robert’s initial advice, according to the WSJ coverage, and then bought Hudson’s Bay Co. in 2008.
The Los Angeles Times’s Tiffany Hsu, on the other hand, doesn’t mention Baker at all and takes a decidedly different approach in her lede: “Luxury retailer Saks Inc. is going Canuck …,” she writes.
Articles have referred to the “synergies” between the Lord & Taylor brand, which was acquired by Hudson’s Bay in 2006, and Saks but Baker himself seems to see it as more of a handoff. “Where Lord & Taylor ends is where Saks begins,” he said yesterday.
Lattman and Clifford press the original point before eventually yielding to Baker’s. They observe that both retailers stock “midprice” clothing brands such as Catherine Malandrino. “But while those goods, which generally cost $300 to $500, represent the top of Lord & Taylor’s offerings, they are near the bottom of Saks’ price range,” they write.
“Together, Saks and Hudson’s Bay will create a business that spans luxury, mid-tier and outlet retail categories, with 320 stores total. The Canadian company said it expects roughly $97.3 million in cost savings over three years,” Hsu points out.
After examining all of the real estate implications of the transaction –- including the possible creation of a Real Estate Investment Trust and likelihood of swapping Lord & Taylors for a Saks in unprofitable locations -- The Week’s Carmel Lobello cautions that “it’s not just a real estate deal.
“Baker plans to renovate Saks stores and to make the brand ‘luxurious’ again -- a branding effort it has struggled with ever since it began offering steep discounts during the recession,” she writes. “He also plans to open seven Saks Fifth Avenues and 25 Off Fifth outlet stores in Canada.”
The sale not quite in the bag. “The deal is subject to a 40-day ‘go shop’ period where Saks can seek other offers,” reports Reuters’ Phil Wahba and Solarina Ho. “There is a reasonable chance that another bidder emerges for Saks,” The Maxim Group writes in a note posted on Barron’s this morning.