Hudson’s Bay hasn’t paid millions of dollars in rent
Experts hear alarm bells, but the iconic retailer denies it’s in financial distress
Is Hudson’s Bay in trouble? There are certainly signs that it could be.
The 350-year-old retailer, whose parent company was taken private on March 3, just a week before COVID-19 hit Canada with its full force, has been hit hard by the pandemic lockdown, as have many retailers.
But unlike most other retailers, the Hudson’s Bay Company (HBC) seems to have adopted a policy of stiffing its landlords in malls and plazas across the country.
In fact, in the eight months since the pandemic shutdown, HBC hasn’t paid any rent at all to eight landlords in Ontario, Quebec, British Columbia and Florida, according to legal filings. HBC has leases valued at $20 million a month across 21 locations in North America.
Industry onlookers see this as a sign the company may be in financial distress, spurred by the extraordinary struggles the pandemic has imposed on retailers of non-essential items, which depend on customers visiting their bricks-and-mortar stores.
“Anytime a big company is not paying rent it’s not really a positive sign because they put themselves at risk of losses and potentially some severe legal issues that entail significant financial expenses,” said David Soberman, a professor of marketing at Rotman School of Management at the University of Toronto. “Companies try very hard to avoid that situation.”
HBC says the issue of unpaid rent is not an indication of any financial distress. In a statement to the Star, Ian Putnam, president & CEO of HBC Properties and Investments, said the company has “more than ample liquidity to continue to fund our business,” and that it has “taken prudent steps to manage our expenses and have been working with vendors and landlords on reasonable accommodations for this unusual and challenging time.”
HBC also received assistance from the federal wage subsidy program, which, according to a company source who was not authorized to speak publicly, helped the company “retain associates and partially mitigate the significant reduction in traffic to malls and downtown locations and the subsequent loss in revenue.” The company also has a “stable” line of credit for liquidity, the source said.
HBC’s tense relationship with its landlords, however, presents a much starker image of its financial status: it shows a large retailer that is not meeting its most basic expense.
Quebec landlord Cominar Real Estate has filed three eviction notices against the Hudson’s Bay Company (HBC) for failing to pay millions of dollars in rent since April in three mall locations. Similar legal notices have been filed against HBC by 713949 Ontario Limited, owner of St Laurent Shopping Centre in Ottawa; 585562 B.C. LTD, owner of Sevenoaks Shopping Centre in Abbotsford, B.C.; Revenue Properties Company Limited, owner of Centrepoint Mall in Toronto; Morguard Corporation, owner of Bramalea City Centre in Brampton, as well as four other locations in Ottawa and Toronto, and Smart-Centres REIT, which is seeking a total of