HBC FEELS HEAT
Imminent departure of CEO Jerry Storch gets response from activist investor,
Activist investor Land & Buildings is calling for a special meeting of shareholders at Hudson’s Bay Company following the announced departure on Friday of chief executive officer Jerry Storch.
“We are evaluating a number of proposals on which we believe the voices of shareholders should be heard — including the removal of directors from the board — and will announce the full slate of proposals and next steps in the Special Meeting process shortly,” according to a statement by Jonathan Litt, founder and chief investment officer, Land & Buildings Investment Management, LLC.
Late Friday afternoon, it was announced that Storch was stepping down as CEO at HBC to return to his advisory firm, Storch Advisors.
HBC also announced Friday that Richard Baker, governor and executive chairman of HBC, would resume the duties of CEO, a position he previously held on an interim basis.
That wasn’t enough for Land & Buildings, which has been calling on HBC to find ways to surface the value of the real estate in its holdings.
Hudson’s Bay real estate has been valued by the company at three times the current share price of $11.96, or $35 per share, according to Land & Buildings.
“It is typical for undervalued and struggling companies such as Hudson’s Bay to try to position the exit of top executives as a reason for investors to give them more time to right the ship — while choosing to ignore the fact that the true decision makers and those at the board level who have been complicit in the decision making remain in power. We believe this is what is happening at Hudson’s Bay,” according to the statement from Land & Buildings.
“In reality, executive chairman Richard Baker, who will be taking on the role of interim CEO, continues to call the shots.”
Land & Buildings bought into HBC in January. It holds about 4 per cent of shares. A minimum of 5 per cent of shareholders must vote to approve a special meeting.
Hudson’s Bay Company posted a net loss of $201million in the second quarter, but promised changes ahead. In September, it opened a Hudson’s Bay in Amsterdam, the first of 10 scheduled to open in the Netherlands this year. HBC responded to the Land & Buildings announcement with a press release.
“We are confident that our model of combining world class real estate assets with the company’s diverse retail businesses in North America and Europe is the right path for longterm value creation and we expect a substantial impact from our Transformation Plan in the second half of this year.
“Our management and board have deep expertise in retail, real estate and finance, and are highly qualified to oversee the successful execution of the company’s strategy.”
HBC also said it is actively evaluating the best use of its retail and real estate portfolio.