Hudson’s Bay department stores in the Netherlands are back under control of…HBC Europe. Just nine months ago, the Holland chain was became part of a new company that was formed when HBC Europe (owner of the German Kaufhof department store chain) and Sigma Retail (owner of the Karstadt department store chain) merged.
FIRST OWNER CHANGE FOR DUTCH STORES
In that transaction, HBC Europe became minority owners in the new entity, Galeria Karstadt Kaufhof, and Sigma majority owners (51.1% vs 49.9%). The deal included the Netherlands’ Hudson’s Bay stores and Saks Off 5th stores.
SAKS OFF 5TH STORES CLOSED
During the nine month span that Sigma management were in control of the new entity, two additional Hudson’s Bay stores (already planned and being worked on) were opened in Amstelveen and Utrecht, while all of the Saks Off 5th stores in Germany and two Netherlands Saks Off 5th stores (Amsterdam and Rotterdam) were closed down.
NEW OWNERSHIP CHANGE
With the announcement earlier this week, HBC Europe will sell its entire interest in the Galeria Karstadt Kaufhof entity to Austria-based Sigma Retail for $1.5 billion in cash plus take ownership of the 15 Hudson’s Bay department stores in Holland. Sigma therefore will no longer have any interest in the Dutch retail stores.
As the Hudson’s Bay Netherlands chain has been highly unprofitable since first opening its doors in Fall 2017, questions remain about its future. It’s clear HBC Europe did not agree to take back ownership of the Dutch chain because it saw future profitability, but rather to secure the rest of the deal which will see it completely exit the German market with a sizable amount of cash to pay down corporate debt back in Canada. It was known back in September that the Sigma group did not want the Netherlands’ operations included in the original deal and relented only after HBC pulled out of the advanced merger negotiations over the issue. But ever since the deal closed, top Sigma management publicly questioned HBC’s lack of extensive research prior to making the decision to open an entire chain of department stores in the Dutch marketplace.
FUTURE OF DUTCH STORES QUESTIONABLE
Staying the course is not a valid option for the Hudson’s Bay stores in Holland, as they continue to bleed money. Two different scenarios could play out… Hudson’s Bay could close the most unprofitable stores thus substantially reducing its footprint in the Netherlands or it could attempt a second coming by downgrading its merchandise assortment to a level on par with that which was offered by the former V&D department store chain, thereby filling a void which still exists in the Dutch marketplace.
The question is whether Hudson’s Bay could feasibly make a good first impression on a second attempt?