Hudson’s Bay Company launches Netherlands push

The Hudson’s Bay Company is to expand in Europe, in a push that would make it the largest department store chain in the Netherlands within two years.

North America’s oldest private company, which was founded as a fur trader in 1670, said on Tuesday that it would launch in a third European country with the opening of up to 20 department stores across the Netherlands from next year.

The Dutch expansion follows a multibillion dollar acquisition spree by HBC that has helped it grow into a global company with more than 460 outlets and which is expected to generate in excess of C$15bn (US$11.6bn) in revenues this year.

HBC, a household name in Canada where it has 90 department stores, was taken over by Richard A. Baker in 2008. The US private equity investor transformed the business by purchasing, and then expanding, US chains Lord & Taylor and Saks Fifth Avenue. Mr Baker’s strategy has been to acquire high-end brands, then combine them as a “store within a store” concept.

HBC made its first foray into Europe last year, paying €2.3bn to buy Galeria Kaufhof, the oldest department store chain in Germany. The acquisition gave it a prominent presence in nearly every large city in the country, along with 16 Inno stores in Belgium. HBC is in the process of opening up to 40 Saks Off 5th stores, the luxury off-price division of Saks, in Germany.

Its expansion comes after a number of North American retailers have tried but failed to penetrate the European market. Walmart acquired discount stores Wertkauf and Interspar in 1997 but after nine years it conceded defeat, sold 85 stores to Metro AG and incurred a loss of $1bn.

But Mr Baker, HBC’s executive chairman and governor, told investors last month that he viewed HBC’s transformation in Canada as a model for expansion elsewhere. 

When Mr Baker took over HBC, it had experienced negative or flat same-store sales for the previous 20 years. In the past six years, he noted, comparable store sales had risen a cumulative 38 per cent.

Key to success in Canada was weak competition, a trait Mr Baker said he had also identified in the Netherlands. A typical US town, he told the Financial Times on Tuesday, might have “six big department stores all within one crossroads”. But in the Netherlands, he said, there was just one luxury-speciality retailer, De Bijenkorf, but no direct competition in the premium market. “Not six or seven; none.”

Mr Baker added that he had been studying the Dutch market for the past decade, but the opportunity to expand only arose when Vroom & Dreesman, the largest department store group in the Netherlands, declared bankruptcy late last year and closed more than 60 stores.

HBC had considered an acquisition of V&D, but Mr Baker had deemed it “not fixable” after “too many years” of decline. “We went in a different direction,” he added.

The 20 Netherlands stores are expected to create 2,500 retail positions and 2,500 construction jobs. HBC said that it had secured a number of long-term leases and was in the process of finalising others. The Dutch stores will be the first Hudson’s Bay-branded store to operate outside of Canada.

HBC said €300m would be spent on the stores, many of which will be former V&D outlets. But the refits would “primarily” be funded by landlords, not HBC.

“This is yet another example of HBC proactively addressing opportunity,” said Patricia Baker, analyst at Scotiabank. “With the leading chain in the market V&D bankrupt, HBC struck a great deal with the landlords for good high street locations.”