Hudson's Bay Co (HBC) Releases Earnings Results, Misses Estimates By $0.49 EPS

Judith Bessette
Junho 20, 2017

Activist investor Land & Buildings says it's bought 4.3% of iconic Canadian retailer Hudson's Bay Co. and believes the stock is worth many times its current price based on its extensive real estate holdings, and the fund wants the company to take action to realize that value.

Shares of retailers and other consumer-services companies rose as traders bet there would be more merger activity in the sector.

The same day those cuts were announced Hudson's Bay Co. also said it was exploring options to take advantage of the value of its real estate holdings.

Litt added the retailer's real estate could be worth $35 per share, almost four times more than the stock's closing value on Friday. An activist investor is pushing the parent of Saks Fifth Avenue to consider strategic alternatives, including possibly taking the company private. The letter highlights the substantial untapped real estate value embedded in the Company.

Hudson's Bay's portfolio of assets is truly unique. 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.

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"The path to maximizing the value of Hudson's Bay lies in its real estate, not its retail brands", Jonathan Litt, co-founder of Land & Buildings, said in the letter. Or office? Or boutique retail stores the likes of Apple and Gucci?

"They could probably surface a few dollars quickly by just saying they're going to spin off [the real estate] and go ahead with that, but to get a quadruple in the stock price could be a five, six-year timeframe", said Rob Lauzon, Middlefield Capital's deputy chief investment officer, in an interview with BNN on Monday. In Canada, it has partnered with RioCan Real Estate Investment Trust in the RioCan-HBC Joint Venture. (The) restated a "neutral" rating on shares of Hudson's Bay Co in a research note on Wednesday, May 10th.

Litt noted that following the layoffs, "the next logical step is to aggressively move to monetize and redevelop the company's real estate, including some of its irreplaceable crown jewel locations". "However, other real estate executives speak highly of him", Litt said.

The activist investor says Hudson's needs to look at monetization options with its real estate and should consider insider go-private offers. The correct version of this news story can be viewed at https://transcriptdaily.com/2017/06/19/hudsons-bay-co-hbc-given-a-c28-00-price-target-by-bmo-capital-markets-analysts-updated.html.

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