Hudson’s Bay reveals details on Kaufhof deal

kaufhof_aussen_alex_02_320Hudson’s Bay, from next Thursday new owner of the German and Belgian Galeria Kaufhof and Sportarena stores, has revealed details of how the Canadian retail group wants to re-invent the department store chain.

According to Wirtschaftswoche, Hudson’s sees a need to improve Kaufhof’s online business which currently contributes only 2 percent of the retailer’s sales. Just over a third of the 600,000 items offered in the brick-and-mortar outlets are available online. The banners that Hudson’s runs in North America make more than 10 percent of their sales via the internet.

Major adjustment of the offer

Another strategic goal of Hudson’s is to sell more of the brands which have been successfully carried in the group’s outlets on the other side of the Atlantic. The Canadian company especially aims to position its own higher price brand Saks Fifth Avenue and, more importantly, the low-priced label Saks Off 5th in the Kaufhof stores. The new owners also want to improve the Kaufhof range of shoes, cosmetics and accessories.

Transfer of real estate to a new company

It is interesting to see how Hudson’s Bay plans to re-shape Kaufhof to make it profitable. It founded, along with Simon Property Group as a junior partner, a joint venture which will take over the bulk of the real estate that Kaufhof owns. The new company, Simon-HBC JV, will act as landlord for most of the Kaufhof outlets. To make it profitable, it has already increased the leases which Kaufhof will have to pay. It was said that the move would mean extra expenses for the department store operator worth some €48 million annually. Hudson’s has applied this strategy of splitting operational business and real estate before, notably during its acquisition of the Lord & Taylor U.S. department stores back in 2006.


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