Historic Retailer Seeks Landlord Assistance Amid Restructuring

THUNDER BAY – Canada’s oldest retailer, Hudson’s Bay, is fighting for survival as it seeks financial relief from landlords to keep approximately 40 of its 80 stores open. The retailer, which recently secured court protection under the Companies’ Creditors Arrangement Act (CCAA), is facing a severe liquidity crisis that left it unable to pay rent, vendors, and even employees.

Many major retailers, HBC, Sears, and the Eaton’s stores across Canada have all faced serious challenges. Sears and Eatons were long-standing Canadian retailers, with large retail footprints across Canada.

Seeking Landlord Concessions to Stay Afloat

Sources indicate that Hudson’s Bay Company is negotiating with mall owners to waive rent temporarily and provide financial contributions to maintain operations. The company has struggled with declining sales and reported a $329.7-million net loss for the fiscal year ending January 31, 2025.

The outcome of these discussions will determine how many stores remain open, with a court hearing set for March 17 to approve a liquidation plan for some locations and extend the CCAA process.

Landlord Challenges and Potential Store Closures

Hudson’s Bay, a major anchor tenant in many Canadian malls, holds valuable lease agreements, often paying below-market rent. In past negotiations, the company has leveraged these agreements to secure payments from landlords in exchange for allowing mall redevelopments.

If Hudson’s Bay closes a significant number of locations, landlords could struggle to fill large retail spaces, as seen with past closures of Sears Canada, Target Canada, and Nordstrom Canada. Such closures also threaten smaller retailers, whose leases often depend on the presence of an anchor tenant to drive mall traffic.

Underinvestment in Stores and E-Commerce Struggles

Hudson’s Bay’s financial woes are partly due to underinvestment in brick-and-mortar operations. Customers have reported deteriorating store conditions, including broken escalators, understaffed locations, and declining upkeep. Meanwhile, a $130-million investment in e-commerce expansion (2021-2022) failed to deliver the expected financial returns.

Outstanding Debt and Tense Landlord Relations

Hudson’s Bay currently carries over $1.1 billion in secured debt, including:

• $176 million remaining on a $200-million loan from Cadillac Fairview, a key landlord.
• $724.4 million in mortgage debt.

Tensions between the retailer and its landlords have escalated.

On March 7, Hudson’s Bay was locked out of its store at Mayflower Mall in Nova Scotia, and bailiffs attempted to seize merchandise at CF Sherway Gardens Mall in Ontario.

Local Impact in Thunder Bay

In Thunder Bay, Superior Strategies, a locally owned Indigenous business is one of the creditors who face an uncertain possibility of collecting the money they are owed.

Superior Strategies and its Warrior Office division supplied thermal printer rolls to Hudson’s Bay in October 2023. Mr. Thompson fronted $55,000 in supplier costs to fulfill the order, expecting payment of $79,361 (including tax) from the retailer.

“I thought they were going to make good, based on the letter I got,” says Thompson. “It’s had a pretty significant impact on our business.”

Last week, just days after Hudson’s Bay assured Mr. Thompson that a payment plan was in the works, the retailer entered proceedings under the Companies’ Creditors Arrangement Act (CCAA)—a move that freezes payments to vendors while the company restructures.

Jason Thompson, owner of Superior Strategies Inc., had high hopes when Hudson’s Bay Co. first reached out to his Thunder Bay-based office supplies business in 2023. But instead of securing a major client, he’s now facing more than $80,000 in unpaid invoices, as the iconic Canadian retailer enters creditor protection and delays payments to suppliers.

Mr. Thompson, a member of the Red Rock Indian Band, says the financial strain on his Indigenous-owned business has been significant. Despite repeated assurances from Hudson’s Bay that payment was coming—including as recently as last week—the company has now suspended creditor payments as it navigates a financial crisis.

Thompson tells NetNewsLedger, “I don’t believe HBC acted in good faith any time during our discussions even after our deal was solidified“.

Future of Hudson’s Bay in Doubt

As the retailer scrambles to secure financial backing and restructure operations, its future remains uncertain. The upcoming court hearing will determine whether Hudson’s Bay can successfully realign around high-performing locations or if further closures are inevitable.