TORONTO — The restructuring process Hudson's Bay kicked off Friday will likely see Canada's oldest company shrink as it works to stay alive.
According to a source familiar with the matter, the department store company is looking at closing around 40 of its 80 stores, although that number could change.
The person was granted anonymity because they were not authorized to speak publicly on the discussions.
Hudson's Bay did not comment on whether it will close stores, but in a statement last week, its president and CEO Liz Rodbell framed the company's impending restructuring as a "very difficult" but "necessary" step.
Precisely how many stores will land on the chopping block will be decided as creditor protection proceedings involving the company wind their way through the Ontario Superior Court of Justice in the coming weeks.
The company dating back to 1670 hopes to use those proceedings to restructure and streamline operations so it can stay in business, rather than opting for a bankruptcy, which would shutdown the firm.
The same process has been used in recent years by retailers including Mastermind Toys, The Body Shop Canada, Ricki's and Cleo. They all continue to operate today — though under different ownership — but closed stores through their creditor protection process.
It's not unusual for retailers under creditor protection to take such a step because it's one of the easiest ways to stabilize a company, said Dina Kovacevic, editor of the Insolvency Insider newsletter.
She thinks it is likely Hudson's Bay and its advisers will figure out which of its 80 stores are least profitable and work to liquidate them, providing some breathing room to the higher performing locations.
"It's not that the company will cease to exist, but it will likely downsize and some stores will likely be closed," she said.
"There may be some liquidation sales, and the company will realign around some stronger performing locations."
Such a move would allow Hudson's Bay to take advantage of its most valuable asset: its real estate.
The company's stores tend to be located in high-profile shopping districts and malls, making them more attractive to potential buyers. However, their massive size poses a challenge for landlords who know few retailers need as much space as a department store and might have to break the sites up to find a new tenant.
If Hudson's Bay looks to reduce its footprint, Liza Amlani, the co-founder of the Retail Strategy Group, said shoppers will likely see liquidation sales where everything from inventory to store furniture would be sold off.
But closing some stores won't be a cure-all.
To keep the company alive and even chart a resurgence, executives will need to develop a whole new way of thinking, said Jenna Jacobson, an associate professor at Toronto Metropolitan University focused on retail.
"It's not just about cutting costs, it's really about revisioning what a strategic plan could be to adapt to the challenges that are present in this evolving retail landscape," she said.
Amlani agreed.
"If such a commitment exists, then we need to back to basics and enrol in 'Retail 101,'" she said in an email.
"That means executives need to start by shopping their own business. Go into store and see what the experience is like for the customer. The areas of improvement will become apparent very quickly."
Retail analysts have long noted Hudson's Bay locations were looking tired and drawing little traffic as shoppers dropped cash online or at other retailers offering a more exciting in-store experience.
In filing for creditor protection Friday, it blamed its woes on subdued consumer spending, trade tensions between the U.S. and Canada and post-pandemic declines in downtown store traffic.
The situation has become so bad that Jennifer Bewley, the chief financial officer for Hudson's Bay's parent company, said in a court filing the business is having trouble making payments to landlords, service providers and vendors and has had to defer certain payments for many months.
On Friday, Bewley said a landlord "unlawfully locked" Hudson’s Bay out of a store located in Sydney, N.S. and a team of bailiffs attempted to seize merchandise from a location it runs in Sherway Gardens, an Etobicoke, Ont., mall.
She warned the company would be days away from failing to meet payroll obligations it has for its 9,364 employees, if it doesn't receive more funding.
The details didn't surprise Kovacevic. Hudson's Bay's decline is being mirrored across filings she's seen from all kinds of retailers now grappling with how COVID-19 scuttled their traffic and sales.
However, Hudson's Bay attributing some of its troubles to the trade war between the U.S. and Canada stood out.
It's the first instance she's seen of the trade tensions figuring into a creditor protection filing in Canada so far.
Kovacevic expects more to follow, but said she doesn't think it's fair for Hudson's Bay to be blaming the tariffs for its situation.
"I think maybe it was just the final nail in the coffin," she said. "But I think HBC was likely heading in this direction anyways."
This report by The Canadian Press was first published March 10, 2025.
Tara Deschamps, The Canadian Press
