Stamford hedge fund pressing for Saks changes

October 24, 2017 GMT

STAMFORD — Hedge fund Land and Buildings said this week it planned to call a special meeting of shareholders of Hudson’s Bay Co. as it continues to press for reforms to the embattled retail company.

Land and Buildings’ move followed the announcement last week of the departure of Hudson’s Bay CEO Jerry Storch. The Brampton, Canada-based company — whose portfolio includes the Saks Fifth Avenue, Lord & Taylor and Saks Fifth Avenue Off 5th stores — has faced major instability in recent months. It announced earlier this year it would eliminate 2,000 positions in North America as part of a restructuring plan. The company has also reportedly explored mergers with Macy’s and Neiman Marcus.

“It is typical for undervalued and struggling companies such as Hudson’s Bay to try to position the exit of top executives as a reason for investors to give them more time to right the ship — while choosing to ignore the fact that the true decision makers and those at the board level who have been complicit in the decision-making remain in power,” Jon Litt, Land and Buildings’ founder and chief investment officer, said in a statement Monday. “We believe this is what is happening at Hudson’s Bay.”

A message left Monday for Hudson’s Bay was not immediately returned.

Litt said his firm is exploring a number of scenarios, including the ouster of the board directors. He said he did not have confidence in the board to pursue meaningful changes and also criticized interim CEO Richard Baker.

“Baker has been stonewalling Land & Buildings and the investment community regarding a plan to unlock the value of the real estate embedded in the company,” Litt said. “We have called on Hudson’s Bay to be more open with shareholders about its plan for addressing its massive undervaluation and for the company to take decisive action. With its real estate valued at three times the current share price, Hudson’s Bay today is a real estate company, full stop.”

Based on the value of its real estate-portfolio — most of which it owns — Hudson’s Bay should consider becoming a private company, Litt argued.

“Unlike Nordstrom, who is a retailer with real estate representing only a fraction of the current stock price, and thus would have any go-private transaction be based on financing the retailer, Hudson’s Bay real estate has been valued by the company at three times the current share price of (Canadian) $11.96, or $35 per share in real estate value,” Litt said.

Hudson’s Bay’s area properties include Lord & Taylor stores in Stamford, Trumbull and Danbury, and an Off 5th store in the Stamford Town Center mall. The Stamford Lord & Taylor store completed a two-year renovation late last year.

Saks stores in Greenwich include 10022-Shoe, The Collective for contemporary fashions and The Vault for jewelry, as well as a main store.

Land and Buildings, which is based in Stamford’s Landmark Square complex, is also an activist shareholder of Taubman Centers, the company that owns the Stamford Town Center and 20 other malls in the U.S. Litt ran unsuccessfully in the Taubman board election earlier this year, but Land and Buildings has continued to push for changes at the Bloomfield Hills, Mich.-based company.

pschott@scni.com; 203-964-2236; twitter: @paulschott