Iconic New York department store offloaded for $2.7b
No one is snickering any more. On Monday, Mr Baker's Hudson's Bay Co announced that it had agreed to buy Saks, one of the oldest and most revered names in luxury retailing, for $US2.4 billion ($2.7 billion).
The acquisition would create a retail behemoth and cap an extraordinary run of deal making by Baker. The combined company would own 320 locations, 179 of which are full department stores. It had combined revenues of about $US7 billion in the 2012 fiscal year.
Mr Baker has largely avoided the follies of other investors who have got into the retail business. He brought in experienced managers (including a handful formerly of Saks), invested in store makeovers and left most of the merchandising decisions to merchants.
Mr Baker's bid for Saks prevailed over a number of other suitors. Among those who explored a deal were Kohlberg Kravis Roberts and the Qatar Investment Authority, a sovereign wealth fund of the Middle Eastern emirate.
While industry experts once questioned whether department stores would stay relevant, with online competition, analysts said Saks' prime locations, like Fifth Avenue in New York, held up well.
"No tourist wakes up in New York and says: 'You know what I'm going to do now? I'm going to log on to the internet and shop'," said Faye Landes, a retail analyst at Cowen.
Frequently Asked Questions about this Article…
Hudson's Bay Co agreed to buy the luxury retailer Saks for US$2.4 billion (about $2.7 billion), creating a much larger retail group by combining the two companies.
The combined company would own 320 locations, including 179 full department stores, and had combined revenues of roughly US$7 billion in the 2012 fiscal year.
Observers point to Baker's track record: he bought Lord & Taylor at the market peak in 2006, hired experienced managers (including former Saks executives), invested in store makeovers, and mostly left merchandising decisions to merchants — moves that helped avoid common retail mistakes.
Other suitors that explored a deal for Saks included private equity firm Kohlberg Kravis Roberts (KKR) and the Qatar Investment Authority, a sovereign wealth fund.
While analysts have questioned the relevance of department stores amid online competition, the article notes that prime retail locations — such as Saks’s Fifth Avenue store in New York — have held up well and continue to draw in-person shoppers, including tourists.
Baker typically brings in experienced management teams (sometimes from the acquired company), invests in store refurbishments, and allows merchants to handle merchandising, a combination intended to stabilize operations and customer appeal.
The acquisition created a retail behemoth with hundreds of locations and multi‑billion dollar revenues, illustrating how consolidation can build scale in a challenging retail environment and potentially preserve value in prime real estate assets.
The transaction highlights investor interest in high‑quality retail real estate and iconic store locations, suggesting that well‑located department stores can remain valuable even as online shopping grows.
Call 1300 880 160
Start a chat
Schedule a call
