E-Commerce Retailer Le Tote Acquires Department Store Chain Lord & Taylor for $100M
NEW YORK CITY — Le Tote, an online clothing rental subscription service based in San Francisco, has entered an agreement to acquire Lord & Taylor, a New York-based clothing department store chain previously owned by Canadian retail group Hudson’s Bay Company (TSX: HBC).
Le Tote will assume responsibility of Lord & Taylor’s 38 brick-and-mortar stores, digital channels and inventory. In addition, HBC will receive an equity stake in Le Tote, two seats on the company’s Board of Directors and certain rights as a minority shareholder. The transaction is expected to close before the start of the 2019 holiday season.
Le Tote will pay Toronto-based HBC $75 million in cash upon closing as well as a promissory note of $25 million, payable after two years. Helena Foulkes, CEO of HBC, said the company will focus on its other brands, Saks Fifth Avenue and Hudson’s Bay.
“We’re excited to have reached an agreement with Le Tote that creates a new model for Lord & Taylor, bringing together fashion rental subscriptions with traditional retail,” Foulkes said. “Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord & Taylor, its loyal customers and dedicated associates. For HBC, this transaction builds upon our previous bold actions, further enabling us to focus on our greatest opportunities, Saks Fifth Avenue and Hudson’s Bay.”
Le Tote’s business model allows customers to rent women’s clothing and accessories for a flat monthly fee. Subscribers can choose to keep the items as long as they want, then either purchase them at a discount or send them back. Le Tote expects to extend employment offers to the majority of Lord & Taylor associates.
“Since founding Le Tote, it’s been our mission to push the boundaries of retail,” says Rakesh Tondon, Le Tote’s CEO and founder. “We’re excited to bring Le Tote together with Lord & Taylor, a storied brand that has stood for quality, style and service for nearly two centuries.”
Under the terms of the agreement, HBC and Le Tote will have to the option to reassess the Lord & Taylor network starting in 2021. At this time HBC may retain select Lord & Taylor stores, possibly redeveloping them into mixed-use properties.
Earlier this year, coworking giant WeWork acquired Lord & Taylor’s headquarters and flagship store, the Lord & Taylor Building in Manhattan, from HBC for $850 million.
In 2006, Federated Department Stored Inc. sold the Lord & Taylor chain to New York based NRDC Equity Partners, a joint venture between Apollo Real Estate Advisors and National Realty & Development Corp., for nearly $1.2 billion. The sale included 48 brick-and-mortar stores, including the Lord & Taylor Building. NRDC acquired HBC in 2008 for an undisclosed price and positioned Lord & Taylor under it.
Founded in 1670, HBC claims to be the oldest company in North America. The Toronto-based company’s portfolio previously spanned 350 stores staffing more than 45,000 employees around the world.
— Alex Patton