Baker’s big Saks deal sets up looming luxury battle

MARINA STRAUSS - RETAILING REPORTER
The Globe and Mail

U.S. real estate mogul Richard Baker’s deal to bring New York-based Saks Fifth Avenue into the Hudson’s Bay Co. fold sets the stage for a high-end retailing battle with rival Holt Renfrew & Co. for the increasingly discriminating Canadian consumer.

Since taking over HBC five years ago, Mr. Baker has probably pushed the retailer through more change than it has experienced in any chapter of its 343-year history. He has hired new top executives to oversee initiatives that have included dumping dozens of fashion lines for trendier looks and the sale of discounter Zellers leases to Target Corp., which laid the groundwork for that U.S. giant to arrive and shake up the entire Canadian retail landscape.

Mr. Baker’s latest move – HBC’s $2.4-billion (U.S.) agreement to acquire New York-based luxury rival Saks Inc. – promises to further alter the retail terrain as he prepares to introduce the prestigious Saks brand to Canada, as well as the company’s Off Fifth discount sister chain. Moreover, the deal will introduce Saks’ e-commerce site here at a time when Holts, which dominates Canada’s premium market, has yet to move into the burgeoning online market.

“In a very short period of time, we are going to again transform the Canadian retail landscape,” Mr. Baker, HBC’s governor (chairman) and chief executive officer, said in an interview on Monday after unveiling his all-cash $16-a-share Saks agreement. 

“This has been our vision from the beginning.”