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Will a buyer step up for Lord & Taylor?
Lord & Taylor may have survived as a business for nearly two centuries, but the retailer hasn’t thrived for decades. Now, it’s up for sale. HBC, Lord & Taylor’s parent company, announced yesterday that it intends to pursue strategic alternatives for the department store retailer “including a possible sale or merger.”
HBC is looking to offload Lord & Taylor to cut costs and concentrate on properties such as Saks, which show greater promise.
“Lord & Taylor is a storied brand that has stood for quality, style and service for many years and serves a highly engaged, loyal customer base through a dedicated team of associates,” said Helena Foulkes, HBC’s CEO, in a statement. “Throughout the review, Lord & Taylor remains committed to serving customers across our stores and digital channels.”
The chain, which currently operates more than 40 stores in the northeastern U.S. and the mid-Atlantic states, has struggled to keep its business on the right path since before Federated Department Stores sold it to NRDC Equity Partners in 2006. NRDC later acquired Hudson’s Bay Co., now HBC, in 2008.
More recently, Lord & Taylor has made headlines for closing its flagship store at 38th St. and 5th Ave. in Manhattan. HBC sold the 11-story building, which opened in 1914, to WeWork for more than $850 million.
The department store has also partnered with Walmart to sell goods as part of that retailer’s plan to create an online mall that goes beyond its namesake banner and other company-owned brands, including Bonobos, Eloquii, Jet.com, ModCloth, Moosejaw and Shoebuy.
Discussion Questions
DISCUSSION QUESTIONS: Do you think Lord & Taylor will generate a lot of interest as a possible acquisition for other retailers or investment firms? What will it take to put the department store chain on solid footing with growth potential going forward?
Poll
BrainTrust
Carol Spieckerman
President, Spieckerman Retail
Anne Howe
Principal, Anne Howe Associates
I doubt that Lord & Taylor will generate much interest beyond their real estate holdings. At 40 stores, the business isn’t large enough to attract interest from private equity, or probably anyone else. Furthermore, given their challenged business results, an acquisition would be dilutive, making it even less attractive. The department store category across the board is challenged, and so this is hardly just about Lord & Taylor – the future looks pretty bleak for Lord & Taylor from my perspective.
Lord & Taylor competed with Bon Ton who bowed out last year. I don’t see a compelling reason to buy the chain but expect to see someone buy the intellectual assets if not the buildings.
While Lord & Taylor might not be as dilapidated as some American department stores, it has a weak brand image and very few distinguishing features. Put that alongside the fact it is in one of the most challenging parts of the retail market, and it makes it a very unattractive buy. Especially so as Hudson’s Bay has sold off prime assets, such as the NYC store.
One way to encourage a sale would be to offer it at a knockdown price. However, I doubt HBC would be willing to countenance that.
A deal would have nothing to do with what Lord & Taylor was or is today. What can it be, what does it have to be five to 10+ years from now? Who has both the check book and vision to do this deal?
Lord & Taylor is a brand, but not necessarily one that must literally translate into brick-and-mortar. With its strange-bedfellows digital partnership with Walmart already in place, perhaps Walmart will make a fire-sale attempt at adding another asset to its portfolio. The Lord & Taylor banner could give Walmart permission to forge more high-end brand alliances at arms length from the mothership.
Smart thinking Carol.
That’s a pretty good idea. And Lord & Taylor has gobs of real estate in valuable areas, and that counts for something.
Brilliant. I think you’re right!
I fear things do not look good for Lord & Taylor. The company has been sold and neglected these last several years. What do we hear or see about the “new” Lord & Taylor? Nothing! For all intents and purposes, the store is just as it was in the 1980s when department stores ruled — without much change for today’s world.
It’s sad because once again those driving the business focused primarily on short term success without much focus on the future. Now it’s probably too late. The department store days of the past are over, so without a new concept, technology and good reasons for customers to shop, the likelihood of survival is slim. Lord & Taylor may be sold, most likely to the wrong company. In a few years, we’ll be writing about another company going out of business and what they should have done. It really is very sad.
Unfortunately, this will likely be another storied brand that will fade into the lore of retail. I don’t see a compelling reason for another operator to want to pay a premium for a department store brand that hasn’t kept up with changing consumer tastes.
At this point the locations are probably worth more than the L&T brand itself. (After all, if the Manhattan location wasn’t sustainable, is the business model still relevant?) Von Maur might have a need for more sites and a bigger footprint in Chicago and Detroit, and Dillards in particular ought to take advantage of some key Northeast and Mid-Atlantic locations.
That is brilliant! I am unaware of how dire things at Dillard’s are, but the L&T store portfolio includes some very nice locations and this would be a terrific opportunity for Dillard’s to get into some new markets — if they have the wherewithal. Great possibility!
Dillards should however not over pay for L&T. That would be a terrible and costly mistake. The price would most certainly have to be “right.” It would be better to wait and be patient for Lord & Taylor to fail completely, then they could potentially swoop in and get locations without the difficulty of closing bad locations/underperforming stores.
Lord & Taylor certainly has a storied history, and has been one of the iconic retailers of the last 100 years. However the current situation is not as promising. The brand, which is part of HBC’s portfolio of banners, has not had a good run for quite a while now.
HBC in addition to being a multi-banner retailer, has also invested in the retail real estate holdings. By selling the storied 5th Avenue flagship store, HBC has shown that the Lord & Taylor brand is on the market.
The Lord & Taylor brand’s sense of purpose has been diluted over the years. It’s not quite a luxury department store, nor is it a discount off-price location either. The future is not bright as they are in the dreaded middle ground of retail, which historically has been the place to avoid.
When a fashion stalwart shuts down the NY flagship, the writing is on the wall. Shut it down and move on. Let’s not re-visit the Sears situation!
I recall being most impressed on my first visit to a Lord & Taylor store in the greater Washington, D.C. region several decades ago. Today, the banner appears to be losing the fight for relevance in a fast changing retail scene. Consumers have greater choices and are redefining what constitutes convenience, value, and luxury.
Private equity firms look for depressed value with potential for significant and time-fenced return on investment. Alternatively, they seek to unlock value through asset breakup and a narrowed operational focus with minimal further discussion investments. At this point, I don’t anticipate a serious offer from a PE firm or another retailer, unless the deal’s financial terms reflect a fire sale.
This is called “circling the wagons.” Between HBC, Macy’s, etc, the end is nearing when you see consolidation after consolidation. One brand may survive, but then again, the tactic didn’t work so well for General Custer.
Why in the name of Mercury — the God of Commerce — can’t they figure out they should just merge it into Saks (as Saks, Lord & Taylor)? L&T, as I understand it, has a number of strong (~$100M ) locations in the NYC area, but it’s not strong enough to survive on its own … and it would be a shame to just give up a fast-approaching 200-year old heritage.
The lack of retail acumen in the ownership group, a concern a dozen years ago when this saga began, is showing.
Sad to see L&T disappear like other brands that blazed trails in their day, like Marshall Fields, Daytons and Sanger Harris. It’s likely they will be sold for their real estate assets and remaining internal expertise.
There probably isn’t a lot of potential buyers for the Lord & Taylor brand, as it has limited appeal. The real estate or leases may be of interest to some brands that want to expand or potentially Walmart, as a strategy to move into more upscale retail. Another potential buyer could be Amazon if they can get a great deal on the locations.
Lord & Taylor is an American retail icon. L&T heralded and championed American designers in the mid 20th century and at that time was “new and modern”
Lord and Taylor is the last and only surviving carriage trade store! All other Carriage trade stores are gone, passed into history.
I am certain that no one knows that L&T is the last carriage trade store — and no one cares!
The day of L&T sadly has long passed. It has some very nice locations and store properties — that is it’s value now — and I am SURE there are some bright smart people working for the company, along with many other hard working people who will sadly lose their jobs!