Lord & Taylor sold to ‘endless closet’ dotcom
A San Francisco company that rents clothing online is acquiring Lord & Taylor, which has department stores in Danbury, Stamford and Trumbull among nearly 40 in all.
Le Tote is paying $100 million to buy the Lord & Taylor chain from parent Hudson’s Bay, promising to extend employment offers to a “vast majority” of employees without specifying whether it would change any terms of their existing compensation or benefits.
Under the terms of the deal, Hudson’s Bay will be given an option to “recapture” some stores for redevelopment to other brands or formats, to include non-retail uses.
The Lord & Taylor transfer becomes the latest example of a dotcom company acquiring a brick-and-mortar retailer, with the most prominent example being Amazon’s 2017 buy of Whole Foods Market. Amazon has since worked to integrate some of its programs with Whole Foods, to include discounts through its Amazon Prime membership club and online food ordering and package delivery at Whole Foods.
Amazon has also experimented with smaller store formats, with rival Wayfair having opened furniture stores in New Jersey and Massachusetts. And companies have created bridges to the brick-and-mortar world in other ways, including Facebook which experimented with “pop-up” kiosks in a handful of Macy’s stores nationally during last year’s holiday season.
In Lord & Taylor, Le Tote gets a massive inventory of clothing that it leases out on a subscription basis — on its website, the company touts an “endless closet” for members — with the company also allowing members to purchase any article at discounted prices.
The deal is contingent on Le Tote securing a financing package to complete the sale. Since its launch in 2012, Le Tote has raised more than $60 million from multiple investors as tracked by Crunchbase, with backers including the parent company of Simon Malls which operates two Connecticut shopping centers in the Clinton Crossing Premium Outlets and the Crystal Mall near New London.
Upgrades and closures
Samuel Lord opened in 1826 the original store that would become Lord & Taylor, on the Manhattan side of the East River near where the Brooklyn Bridge would open nearly six years later. A predecessor parent company of Macy’s bought Lord & Taylor’s holding company in 1986, then sold it in 2006 to a private equity investment firm which within two years flipped Lord & Taylor to Hudson’s Bay.
Lord & Taylor contributed more than $1 billion in sales to Hudson’s Bay last year, with the Toronto-based company’s overall revenue totaling $7 billion. Hudson’s Bay retail family includes Saks Fifth Avenue which has a Greenwich store and Saks Off Fifth with a location at the Stamford Town Center mall.
Over the past few years, Hudson’s Bay has updated some of its Lord & Taylor locations, including in Stamford where the company expanded shoe, dress and jewelry departments among other changes.
Last year, however, the company slated 10 stores for closure, including its flagship Manhattan location in a real estate sale that eliminated from its balance sheet more than $500 million in mortgage debt.
This past May, Hudson’s Bay revealed it was scouting potential buyers for the rest of Lord & Taylor, with CEO Helena Foulkes telling investors the following month that the company would “prioritize profits over growth at Lord & Taylor” in her words.
“We’re really looking at — end to end — where do we spend our labor dollars, and how do we optimize those dollars and improve the customer experience?” Foulkes said during a June conference call.
In the past several years, multiple department store chains have shuttered Connecticut locations, including Saks Fifth Avenue, JCPenney and Sears, even as others have taken their place, to include Boscov’s, Bloomingdale’s and Nordstrom, the second two to open in October at the SoNo Collection mall under construction in South Norwalk.
While Connecticut has been among the hardest hit states nationally for retail job losses in the past dozen years, according to Bureau of Labor Statistics data analyzed by Business Insider, malls and other retail operators have had success filling big-box buildings that have opened up for lease, with Toys R Us locations in the region still awaiting new tenants after the company’s bankruptcy liquidation last year.
Due to a reporting error, an initial online version misstated Le Tote’s headquarters as being in France. The company is based in San Francisco.
Includes prior reporting by Paul Schott.
Alex.Soule@scni.com; 203-842-2545; @casoulman