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

USA activist investor Jonathan Litt on Monday called for Canada's Hudson's Bay Co to consider going private and to monetize its vast real estate holdings, sending shares in the owner of Saks Fifth Avenue up 15 percent.

Hudson's Bay Co (TSE:HBC) issued its quarterly earnings results on Thursday, June 8th. "The path to maximizing the value of Hudson's Bay lies in its real estate, not its retail brands". Scotiabank restated a sector perform rating and issued a C$14.50 price objective on shares of Hudson's Bay Co in a report on Wednesday, April 5th. "In our view, the whole time the company's management has been struggling to navigate this complicated maze of [mergers and acquisitions] options, the answer lies in its own real estate portfolio".

"The board's responsibility is to maintain and grow the long-term value of the company". "Consider that the Saks Fifth Avenue store between 49th Street and 50th Street, across from Rockefeller Center, was recently appraised at C$16 (US$12) per share net of debt, and is likely one of the most valuable locations not only in Manhattan, but in the United States", the firm said. An activist investor is pushing the parent of Saks Fifth Avenue to consider strategic alternatives, including possibly taking the company private. The Company's retail portfolio includes approximately 10 banners, in formats ranging from luxury to better department stores to off price fashion shopping destinations, with over 460 stores. It urged Hudson's Bay to monetize its real estate portfolio, saying that it owns "rare diamonds in the rough that a real estate investor occasionally finds in its career".

Shoppers visit the redesigned designer boutique at the Saks Fifth Avenue flagship store, in New York City in this September 2016 photo.

"Hudson's Bay is a real estate company, full stop", the letter, signed by Land & Buildings founder and CIO Jonathan Litt, reads. Two years later it formed joint ventures with retail real estate investment trust Simon Property Group and RioCan Real Estate Investment Trust. Bill Mack, a highly successful real estate investor, is a substantial investor and Board member at Hudson's Bay. Even if its real estate is worth half of the company's estimates, shares would be worth twice as much as they are, Litt said.

Last week, at the company's annual general meeting, HBC chairman Richard Baker said that the company "will continue to strive to highlight the value" of its real estate assets, whether that be a sale or potentially engaging in a public listing.

Land & Buildings said HBC has pegged the value of its real estate at $35 a share.

HBC's stock, which has been under pressure over the past year or more, has spiked on news of Litt's letter and Land & Building's 4.3 percent stake.

  • Zachary Reyes