Hudson’s Bay cuts 1,000 jobs
A person walks past the Hudson's Bay Company sign in downtown Toronto on Wednesday. Canada's oldest company is cutting 1,000 jobs in Canada, or about five per cent of its full-time workforce, as part of a corporate restructuring to improve efficiency and lower operating costs.
Canada’s oldest company Hudson’s Bay Co. is cutting 1,000 jobs in Canada, or about five per cent of its full-time workforce, as part of a corporate restructuring to improve efficiency and lower operating costs.
The Toronto-based retailer said Wednesday the cuts, as well as other streamlining moves, will save it about $150 million this year.
“We believe this new structure will allow us to better compete during these challenging economic times and ensure our long term success,” chief executive Jeff Sherman stated.
“These changes allow us to be more responsive to customer needs and expectations while at the same time aggressively implement our business strategy in order to grow sales and earnings.”
Wednesday’s streamlining announcement follows a corporate reshuffle last month that creates a shared services group designed to provide finance, IT, supply chain and logistics and central operations to all Hudson’s Bay businesses in North America.
The cuts also reflect a tough economic environment for North American retailers, who have been hurt by the recession in the United States and Canada and reduced consumer spending.
Wednesday’s streamlining is one of the first major moves made by Sherman to revitalize the company, an iconic Canadian retail brand that has generated sluggish returns for several years and faced cutthroat competition from big-box chains such as Wal-Mart Canada (NYSE:WMT).
Sherman, who once was CEO of the Limited Brands chain, the retail giant behind Victoria’s Secret, and at Bloomingdales, took over Hudson’s Bay in 2008 after the company was sold to New York-based NRDC Equity Partners.
Information about the impact on the Bay and Zellers stores in Red Deer was not provided, but a spokesperson with Hudson’s Bay said the majority of positions cut were administrative. She added that jobs lost at the store level were “minimal” and “back of house functions.”
NRDC owns Lord & Taylor and other U.S. retail companies.
John Williams, senior partner at Toronto-based retail consultant JC Williams Group, said the job cuts are also likely a result of the disappointing holiday sales period.
Williams also said the first quarter of the year is historically the worst in the retail industry.
“Things were tough in November and December and it’s going to remain that way for a period of time,” he said.
Williams said department stores are already being squeezed by Wal-Mart and other discount retailers. Add to that a worsening recession and it’s not surprising to see cuts in the retail sector.
“I don’t think it will be a V-shaped turnaround either,” said Williams. “There is too much going wrong in too many places in the economy.”
Wendy Evans, president of Evans and Co. Consultants Inc., said the Bay “has too much space” in the department store end of the industry.
“With fairly low productivity, and add a recession on top of that, you have to cut costs,” Evans said.
“If there are fewer consumers, then there can be fewer staff.”
Hudson’s Bay said the staff reductions affect five per cent of the company’s full-time Canadian workforce, and will include both administrative positions in its new shared services group, as well as store positions.
A spokesman for the company said the cuts are taking place at the company’s Bay, Zellers and Home Outfitters locations across Canada. Layoff notices were delivered Wednesday, he said.
The company said the changes will not impact customer service levels.
Sherman said the restructuring will leave the retailer “better positioned to succeed in the long term.”
Sherman took the top job at Hudson’s Bay last summer, replacing Rob Johnston, who stepped in earlier last year after the death of former owner Jerry Zucker, who bought HBC less than two years earlier.
Zucker’s widow sold the chain to the New York based retail investment group.
The Hudson’s Bay Co. was incorporated in 1670 and is the oldest commercial corporation in North America. It owns more than 600 The Bay, Zellers and Home Outfitters stores in Canada and employs about 60,000 people full- and part-time.
The company’s U.S. operations include Lord & Taylor, an upscale specialty retailer with 48 stores in nine states and Creative Design Studios.
After the sale to NRDC, the new owners formed Hudson’s Bay Trading Co., which is the umbrella firm that will cover both the Hudson’s Bay Co. brands as well as Lord & Taylor and its entities.
Wednesday’s announcement comes two days after American department store chain Macy’s Inc. said it will eliminate 7,000 jobs, or about four per cent of its workforce to save about US$400 million annually starting in 2010.
Last month, Macy’s announced that it would close 11 stores, affecting 960 employees. The Cincinnati-based company currently employs about 180,000 people across the U.S.