The Canadian retailer said Thursday its e-commerce marketplace will operate as The Bay, while its 86 brick-and-mortar stores will operate as
HBC said the decision to create two separate businesses with distinct leadership will help accelerate the company's digital-first technology shift and elevate the shopping experience for customers online and in store.
But retail expert
"The department store sector within retail has very low valuations," he said. "They're weighted down because department stores have been branded as yesterday's business model. People are waiting for them to sort of eventually shrink and go under."
The valuation of a standalone e-commerce company would be much higher — and more attractive to investors, Winder said.
"If you chop off the department stores, the e-commerce company can command a much higher valuation," he said. "Suddenly you're playing in the same field as
Earlier this year, HBC sold a minority stake in
Private equity firm
The company said the 40 stores would operate separately as an entity referred to as SFA, which remain wholly owned by HBC.
The trend to separate a retailer's brick-and-mortar stores from its e-commerce stores mirrors a similar trend in retail a little over a decade ago when retailers separated their store operations from their real estate divisions.
"Real estate had a higher multiple at that point in terms of the valuation of the assets then if it was coupled with a retailer," Winder said.
HBC opened its website to third-party sellers in April, adding thousands of new brands and products to its online assortment.
The launch of the retailer's expanded online marketplace earlier this year set in motion a rapid expansion of its e-commerce business, positioning the company to gain significant market share, he said.
The retailer said its department stores will continue to play a critical role in the overall shopping experience.
"With stores in major cities across the country, Hudson’s Bay provides Canadians access to the product they need and want, while offering high-touch services that many others cannot," Drummond said in a statement.
The company said returns, exchanges, rewards points and credit cards will continue to be accepted both online and in stores.
This report by
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