Hudson’s Bay, which dates back to 1670 when it was founded as a fur-trading venture, seeks to sell shares in an initial public offering (IPO) after “executing a transformation” and “revitalization” of its stores, Hudson’s Bay said in a regulatory filingearlier this week. Last time its stock traded in Toronto Stock Exchange was in 2006.
The centenary retailer owns the US fashion store chain Lord & Taylor and The Bay department stores in Canada, has however not disclosed the amount to be raised or the share price for its intended flotation.
As per published in ‘The Globe and Mail’, the deal will be led by RBC Capital Markets, BMO Capital Markets, CIBC and BofA Merrill Lynch. However, according to the ‘Edmonton Journal’, neither the price nor the number of shares to be sold have been disclosed so far. Nevertheless, HBC has shown its intentions to pay a quarterly dividend with a target payout ratio of 20 to 25 percent of expected net earnings, advanced the Canadian journal.
As per the company’s filings, retail sales have grown seven per ent year-over-year for the first 26 weeks of this year, with 1.76 billion dollars in sales until July 28. HBC said it plans to focus on high-growth sales categories such as women's clothing, men's wear, handbags, jewellery, accessories, footwear and cosmetics by dedicating more floor space to those items, adding new brands and ramping up its own private label brands such as its HBC signature line — known for the iconic Hudson's Bay stripes.
Jennifer Radman, a portfolio manager at Caldwell Investment Management, said to Bloomberg a rare Canadian retail asset like HBC could fetch "huge demand" from investors, though stock markets are still volatile. "A lot of investors, they buy stocks based on what they know, so I think from that standpoint there will be a lot of demand, regardless of the valuations that are placed on the stock," she said.
Oldest Canada’s retailer
Hudson’s Bay filed a preliminary prospectus for an initial public offering of its shares Wednesday, six years after its last trading on the Toronto Stock Exchange over six years ago. In 2006 Jerry Zucker bought it and took it private, passing away not much later and leaving the chance to New York-based NRDC Equity Partners, which acquired the company in 2008 for 1.1 billion dollars from Zucker's widow.
Now, four years after the acquisition, the retailer is ready to go trading publicly again. "Our investments in Hudson’s Bay since July 2008 have enabled us to add new, sought after brands and Hudson’s Bay is becoming a fashion authority in Canada," it said earlier in October, when the news of their seek for a buyer went public.
The company, which plans to use the proceeds of the offering to repay debt, said it has improved sales productivity and earnings growth, partially through a capital investment of more than 420 million dollars since 2009, but added it has more work to do, reported Bloomberg.
‘The Star’ reviewed HBC’s figures, revealing that same store sales for the entire company jumped 3.7 percent in 2011, while Hudson’s Bay same store sales jumped 6.8 percent last year (nearly three times the 2.2 percent jump reported in 2010). Operating profit in 2011 for the company was 57.3 million dollars, down from 88.1 million a year earlier.
HBC estimates that sales in the department store segment generated 212 billion dollars last year in North America alone – accounting for almost 9 per cent of all retail sales in 2011. Nevertheless, its H1 is not that positive, as for the first half of this year the company is seeing a net loss of 148 million Canadian dollars.