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HBC Announces Transformation Plan for North American Operations to Deliver Best-in-Class All-Channel Customer Experience
- Expected to Generate More than
$350 Millionin Annual Savings when Fully Implemented
- Transformation Focuses on Streamlining Operations, Increasing Efficiencies and Leveraging Scale
- Dedicated Leadership Teams Formed to Focus on Hudson's Bay in
Canadaand Lord & Taylorin the U.S.
- Plan Includes a Reduction of Approximately 2,000 Positions in
North Americato Create a Flatter, More Nimble Organization
Through streamlining operations, increasing efficiencies and leveraging scale, the Company currently anticipates realizing more than
The HBC Transformation Plan is designed to increase operational synergies, sharpen capabilities and reduce expenses, including:
- Creating two distinct leadership teams, one focused on Hudson's Bay and one dedicated to
Lord & Taylor, to drive market-specific strategies. The Hudson's Bay leadership team will focus on accelerating plans to build upon its successful transformation in Canada, while the Lord & Taylorleadership team will focus on increasing the pace of change at that U.S.banner, with an emphasis on driving digital opportunities while operating its stores more efficiently.
- Integrating digital functions throughout the organization to develop and maximize the impact of all-channel solutions for marketing, operations and technology in order to deliver the most seamless in-store and online experience for HBC's customers.
- Realigning resources including IT and Digital, Store Operations & Visual Merchandising, Buying & Planning and Marketing to increase efficiencies and leverage scale, with world-class centers of excellence that support banners while preserving differentiation among the businesses.
- Optimizing in-store service and enhancing sales training for store associates to better serve HBC's customers.
- Reducing our employee base by approximately 2,000 positions, including those previously announced in February, which will flatten the organization by removing layers to make HBC more nimble and streamline the decision making process.
- Fully leveraging the size and scale of the Company to optimize procurement and generate additional savings.
Actions announced today within HBC's North American business include:
With this shift,
The Company is fully integrating HBC Digital throughout the business so that strategic decisions are made holistically around a seamless in-store and online shopping experience, further supporting HBC's all-channel retail model of the future.
As a result, Digital Technology joins the Company's broader IT organization to form the HBC Technology group, integrating store technology with online platforms into one Center of Excellence to better meet customer needs today and in the future. Additionally, the plan will eliminate overlap in responsibilities and allow for greater leverage with suppliers.
In addition, Digital Marketing is now part of the Company's
Digital Operations is now part of the Company's Logistics and
HBC is currently in the process of realigning in-store sales coverage across its North American banners to better serve its customers, including implementing additional training for its store-based associates in order to enhance customer interactions. Currently, these new programs have been successfully piloted in 10 stores, and HBC expects to roll out these changes to the rest of its store network in
HBC's buying and planning teams have been restructured, reducing layers, harmonizing roles and expanding responsibility. This more flexible merchant organization enables agile decision making, clarity of responsibilities, efficient operations, and greater accountability across the organization. As part of this, the Company is developing distinct career paths to foster talent growth and movement throughout the organization.
Marketing support functions at HBC, including Digital Marketing, have now been centralized to allow for cohesive all-channel marketing development across all of HBC's banners. This
Over the next 12 months, the Company expects to identify opportunities to leverage the size and scale of its business to generate significant savings. This includes aligning purchasing contracts across banners, decreasing the number of vendors, and consolidating the Company's purchases in areas like media, services and supply chain.
Other Key Leadership Changes
As previously announced, a search for a Chief Financial Officer is underway.
The attached infographic outlines the Company's streamlined operations structure.
HBC is a diversified global retailer focused on driving the performance of high quality stores and their all-channel offerings, growing through acquisitions, and unlocking the value of real estate holdings. Founded in 1670, HBC is the oldest company in North America. HBC's portfolio today includes formats ranging from luxury to premium department stores to off price fashion shopping destinations, with more than 480 stores and over 66,000 employees around the world.
HBC's leading banners across North America and Europe include Hudson's Bay, Lord & Taylor, Saks Fifth Avenue, Gilt, Saks OFF 5TH, Galeria Kaufhof, the largest department store group in Germany, and Belgium's only department store group Galeria INNO.
HBC has significant investments in real estate joint ventures. It has partnered with Simon Property Group Inc. in the HBS Global Properties Joint Venture, which owns properties in the United States and Germany. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture.
Certain statements made in this news release, including, but not limited to, the anticipated benefits and annualized savings from HBC's Transformation Plan and potential additional productivity enhancements, the Transformation Plan's ability to increase synergies, sharpen capabilities and reduce expenses, the ability to execute key components of the Transformation Plan, including creating dedicated leadership teams for each of Hudson's Bay and
Despite our plans and objectives, we may not be able to successfully achieve our anticipated savings from the Transformation Plan or fully realize its underlying objectives, including those which seek to increase operational synergies, sharpen capabilities and reduce expenses. The Transformation Plan is based on current market conditions and reasonable assumptions, estimates, analyses, beliefs and opinions of our management, including, but not limited to certain macro-economic factors, such as currency rates, as well as labor, raw material and other input costs remaining at or near current levels, which our management believes to be relevant as of the date hereof, but are subject to inherent risks and uncertainties, which give rise to the possibility that our assumptions, estimates, analyses, beliefs and opinions may not be correct and that our expectations, goals and initiatives will not be achieved. The Transformation Plan may also be adversely impacted by a wide range of factors, many of which are beyond our control. Such factors include those relating to foreign exchange rates, labor issues or wage increases, liquidity, competition, cost of raw materials and commodities, unanticipated expenses, economic conditions (including inflationary risk), the performance of third parties (including suppliers), the implementation and integration of such initiatives into the Company's other activities and processes as well as the adoption and acceptance of these initiatives by our customers, suppliers, employees and personnel.
For more information on the risks, uncertainties and assumptions that could cause HBC's actual results to differ from current expectations, please refer to the "Risk Factors" section of HBC's Annual Information Form dated
The forward-looking statements contained in this news release describe HBC's expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
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