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  #201  
Old Posted Oct 30, 2005, 9:01 AM
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No easy fix seen for Zellers and Bay stores
Retail consultants say what's needed is a culture that will drive innovation
By KEITH MCARTHUR
Saturday, October 29, 2005 Page B2

If Jerry Zucker is going to be able to turn around Hudson's Bay Co., he will have to take some drastic steps to rethink the company's flagship Bay and Zellers brands, retail consultants said yesterday.

Like most department stores, the Bay is caught in a vice-grip with Wal-Mart Stores Inc. on one side and specialty chains such as Home Depot and Winners on the other.

And Zellers is having a tough time competing with the Wal-Mart onslaught.

David Gray, a retailing consultant at Sixth Line Solutions in Vancouver, says the brands require a complete rethinking that goes far beyond introducing new clothing lines and tinkering with store layout.

"It's not about the cosmetic outcome. It's not about saying the stores need to look different or the merchandise has to change," Mr. Gray said.

"I think right at the core of the business, there has to be some sort of change that builds in a structure and a process and a culture that will really drive innovation," Mr. Gray said.

Many observers expect that if Mr. Zucker is successful, he will break up the company and sell the pieces. But executives working for Mr. Zucker said yesterday that they like most -- but not all -- of HBC's current strategy.

HBC's management team has embarked on a five-year plan to expand its business.

Last year, some Bay stores introduced departments with designer products at discount prices, and its flagship Queen Street store in Toronto opened a grocery store.

The Bay also has an agreement with Federated Merchandizing Group -- the parent of U.S. department stores Macy's and Bloomingdale's -- that gives it the exclusive right to carry private brands such as Style & Co. in Canada.

Zellers has also introduced a number of exclusive brands including Cherokee, Alfred Sung Home and Stuff by Hilary Duff.

More recently, HBC began rolling out new-look Zellers stores with wider aisles, improved lighting and specialty areas such as grocery sections, enhanced cosmetic areas and takeout restaurants.

"The strategy's okay, but it needs to go beyond tweaking," said John Williams, a retail consultant at J.C. Williams Group.

"The concept needs reinvention. A department store is a grand old thing, but it doesn't excel at any one thing the customer wants."

Mr. Williams said he thinks Zellers is losing so badly to Wal-Mart that there's little hope for saving the brand. Instead, he expects Zellers to sell out, possibly to Target Corp., the U.S. retailing giant that specializes in "cheap chic" designer goods.

Mr. Williams thinks there's more hope for the Bay, but said there's no easy fix.

Department stores around the world are getting squeezed from the top and the bottom. Still, the size of the Canadian market prevents the Bay from being able to move too dramatically up-market, Mr. Williams said.

"There's not enough people in that income bracket to become a Bloomingdale's or a Nordstrum," he said.

"At the same time, they can't go down-market because the guys from Bentonville [Wal-Mart] will chew 'em up and spit 'em out. It's a very tricky situation."

All retail consultants seem to agree that HBC needs to get smaller. In particular, downtown Bay stores are far too large, with the Toronto Queen Street store occupying 809,000 square feet. "How do you fill one million square feet on Queen Street? How do you find enough fashion to go in there?" asked retail consultant Wendy Evans.

She says the Bay could move more upscale in some of Canada's biggest cities, and needs to do more in streamlining its product mix.

As for Zellers, Ms. Evans sees it becoming more like Target, which has thrived in the United Sates alongside Wal-Mart.

"To win against Wal-Mart is not what they want to do. They don't want to go head-to-head in terms of price and brand," Ms. Evans said.

Mr. Grey said that by taking HBC private, American businessman Jerry Zucker would be able to avoid the pitfalls of pleasing investors quarter by quarter and make the long-term investments necessary to reinvent the department store for a Canadian audience.

"At the end of the day, you have to ask: If a concept has played out its lifespan, is making some incremental changes really going to save you or is it just going to prolong the situation?"

Mr. Gray says HBC needs to recruit people from outside of the traditional retail ranks -- people with big ideas in areas such as marketing, technology and customer relationships.

"I think there is an opportunity to really rethink the department store. Wal-Mart obviously did that but you don't want to go out and just copy Wal-Mart."

Reinventing an icon

HBC's brands need to evolve to survive. While management is taking steps to turn the stores around, retail consultants say more drastic changes are needed.

HBC five-year profit and revenue

Sales ($billion)

2001: $7.3

2002: $7.4

2003: $7.3

2004: $7.3

2005: $7.1

Profit ($million)

2001: $90

2002: $47

2003: $85

2004: $60

2005: $60

The BayCategory: Department store targeting middle- to upper-income customers who are fashion and value conscious.

Locations: 98 stores

Store size: Ranges from 16,000 square feet in Banff to 809,000 square feet in downtown Toronto.

New concepts

In 2002, entered into exclusive agreement with Federated Merchandising to stock clothing offered at Macy's and Bloomingdales.

In 2004, introduced "Style Outlets," smaller stores within the Bay featuring designer label merchandise at discount prices.

Zellers

Category: General merchandise store targeting women between 25 and 55 who shop frequently for staple clothing and household needs.

Locations: 298 stores.

Store size: Range from 48,000 square feet to 161,000 square feet with an average size of 97,000 square feet.

New Concepts:

In 2004, Zellers launched Hilary Duff's new line of merchandise "Stuff by Duff."

Zellers is renovating stores to a new prototype format with wider aisles, improved presentation and new product offerings.

Home Outfitters

Category: A kitchen, bed and bath superstore focused around everyday low pricing.

Locations: 47 stores.

Store size: Range from 27,000 to 42,000 square feet.
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  #202  
Old Posted Oct 30, 2005, 9:02 AM
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Oct. 29, 2005. 08:46 AM
Just what is Jerry Zucker's game?
DAVID OLIVE

What's his game?
Jerry Zucker is an unlikely saviour for a Canadian retailing icon that surely needs one. If Hudson's Bay Co. is to continue as a retailer.
When Zucker, a South Carolina merchant banker, first began accumulating his 18.8 per cent stake in HBC, his plan seemed merely to goose the value of his investment by raising hopes of an auction of the chronically ailing retailer.
That ploy didn't work. HBC's performance has continued to disappoint, and things are so bad the firm has chosen to no longer give "guidance" to the Street on anticipated future results. And no wonder: the company has consistently failed to meet its targets, quarter after quarter and quarter.
If its approach to merchandizing wasn't so unremarkable — it fits nowhere on the spectrum of the dull-but-safe Reitmans or the exotic Selfridges, which experiments with instore rock-concert halls and tattoo parlours — HBC could be a case history in anti-retailing. Analysts fault HBC for poor execution, as Zucker did yesterday. But how could the company not fail to execute on strategies that are so muddled in the first place?
HBC has two potential powerhouses — its Zellers discount chain and its Bay stores, both badly in need of rejuvenation. So, under the direction of chief executive George Heller, to what has HBC devoted its time? Why, going head-to-head with Home Depot, Restoration Hardware and their ilk with his fledgling Home Outfitters chain (a name that suggests a cross between a drapery store and a bait shop), a fledgling Designer Depot chain predestined to fail against an entrenched Winners; and, most recently and incredibly, an overhaul of its small-town Fields general stores, which account for all of 2 per cent of HBC's total revenues.
Meanwhile at Zellers, which accounts for about two-thirds of HBC's sales, a dawdling HBC has so far gotten around to renovating just 60 per cent or so of the discounter's outlets.
To mask its strategic miasma, HBC is unrivalled in summoning excuses: Volume is habitually sabotaged by unseasonably hot or cold weather. Back-to-school sales were slower than expected. Soaring oil prices will dampen pre-Christmas sales this year, Heller warned in August; and a new computer system has wreaked havoc with inventory controls.
Robert Johnston, frontman for the elusive Zucker, effusive in his praise of Heller two years ago, finally threw up his hands in despair in an interview a few months ago — a distant early warning of yesterday's bid which, if successful, could put Heller on the street.
There's no question that on some level, Heller, 57, has become delusional after six years at the helm. At the June annual meeting, he told reporters asking the inevitable question of how HBC means to counter the Wal-Mart threat that, "There have been the equivalents of Wal-Mart before and nobody remembers their names."
Let's assume for a moment that the world's largest corporation, with $288 billion (U.S.) in sales, doesn't up and disappear, as Heller seems to anticipate. What are Zucker's options then, as sole owner of HBC?
Game Plan A: With his Friday bid for all of HBC, Zucker triggers an auction, happily tendering his 18.8 per cent stake to the highest bidder. Well, good luck. The widely held HBC has for years been a sitting duck for reputable North American retailers who've found better things to do than take on the mess at HBC.
Game Plan B: Zucker, 55, follows through on his vow yesterday to take the reins at HBC and "enhance operational effectiveness and shareholder value."
Uh, no. With zilch merchandizing experience, Zucker is not about to succeed where Don McGivern, George Kosich, Bill Fields and George Heller have failed. He could recruit Paul Walters, a turnaround whiz at Sears Canada before leaving the company after stumbling with a failed Eaton's makeover. But HBC is such an incoherent congeries of good and lousy store locations across the entire country, and of promising and dud retail banners, that it could take even the Henry Ford of retailing at least half a decade to figure out how to make it all work.
Game Plan C: Bust up the 335-year-old company, parcelling out its 500-plus locations to expansion-minded Winners, H&M and Williams-Sonoma, and to U.S. retailers potentially interested in cracking the Canadian market, including Target and Crate & Barrel. But, alas, Zucker has not proved himself as an asset stripper, either, having steered his Polymer Group Inc. textile conglomerate into bankruptcy protection in 2002.
When Zucker first popped up on the Canadian scene in December 2003, I wished he was for real. HBC occupies too much of the retail landscape, taking up space from which more deserving merchants should be peddling their wares.
But judging from his cursory bid yesterday — not really a bid, even, but phrased more as an expression of interest — one can't help thinking he still isn't for real. There are people skilled in this game, scavengers like Wilbur Ross and Carl Icahn, who strike decisively and have their way with their prey rather than futzing about for two years as their investment languishes.
Zucker falls into the latter camp. I still don't think he's for real.
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  #203  
Old Posted Oct 30, 2005, 9:04 AM
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I don't know what will happen. If there is backlash to selling HBC to non-Canadian parties, and people boycott it, where can be go? I mean, Wal-Mart, Sears, basically the only general merchandisers are American as well. I think if they just sold Zellers, no one would have a problem. I think it's just the Bay that people wouldn't feel comfortable with.
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  #204  
Old Posted Oct 30, 2005, 5:28 PM
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Oct. 30, 2005. 10:04 AM
With a suitor on the prowl, time seems to be running out for the world's oldest continuously capitalist enterprise still in operation
DAVID OLIVE
BUSINESS COLUMNIST

In its 335-year history, the Hudson's Bay Co. has never come so close to facing its demise as it does today.
The only thing that has spared it from being merged out of existence or dismantled by now, ironically enough, is the same chronically poor financial performance that has kept it unattractive to potential buyers among its peer retailers, and now makes it vulnerable to a scrapyard dog.
Respected merchant bankers, including Gerry Schwartz's Onex Corp. in Toronto and renowned U.S. buyout specialist Kohlberg Kravis Roberts, have kicked the tires at HBC, but neither they nor mooted buyers among America's retail giants, including Target Corp. and Federated Department Stores (owner of Macy's and Bloomingdales), have shown more than a passing interest in HBC.
Which leaves HBC open to the predations of Jerry Zucker, a secretive South Carolina merchant banker with no retail experience, who last Friday announced his intention to buy the 80 per cent or so of HBC shares he does not already own.
Zucker began accumulating HBC shares two years ago in hopes of putting the company in play, but while his mere arrival and the prospect of a bidding war for HBC did generate a nice bounce in the stock, no bidding contest materialized, and HBC's financial performance has continued to disappoint.
So Zucker has taken the next step of attempting to buy the whole company — only the beginning of what is probably the last chapter in the history of the world's oldest continuously capitalist enterprise still in operation.
HBC once held sway over a region 10 times the size of the Holy Roman Empire at its height, and exerted more influence in shaping North America than peers like the East India Co. did in India and China.
The bravado of HBC explorers like Samuel Hearne, the first white man to reach the Arctic Ocean, is legendary; they eventually laid claim to three million square miles, or one-quarter of North America's land mass, spanning the Far North to San Francisco. Their presence discouraged American settlement of present-day Western Canada; and three HBC trading posts — Fort Garry (Winnipeg), Fort Edmonton, and Fort Victoria — became provincial capitals.
But HBC, like the CPR and Canada's early banks, recruited heavily from Scotland, which in the view of the definitive HBC biographer Peter C. Newman explains the primacy of prudence over commercial zeal that ultimately led to HBC's current vulnerability.
"The original implanting of that special [Scottish] mentality within the Canadian psyche, a combination of creative deference and cautious progressive pragmatism, is the Hudson's Bay Co.'s most pervasive legacy," Newman wrote in Company of Adventurers (1985), the first installment of his three-volume history of HBC.
"This orderly attitude, rooted in collective survival rather than individual excellence, still colours what most Canadians do and, especially, don't do."
By the time HBC sold its massive northern and western Canadian territories to the three-year-old Canada in 1870, the company was fast losing its relevance. A more entrepreneurially minded group of absentee owners at HBC headquarters in London might have better exploited the firm's considerable remaining oil and gas, real estate and liquor distribution assets. But they chose instead to sell majority interests in most of their operations — trading posts and urban stores excepted — to savvy outsiders, and retain only a passive minority stake.
Yet even as the great firm was rapidly shrinking, a complacent, debilitating arrogance dating from HBC's glorious past lingered.
"The Hudson's Bay people used to tell me how proud they were to be the oldest company in the Western hemisphere," Newman quotes L.F. McCollum, the American oilman whose Continental Oil bought a majority stake in and took control of Hudson's Bay Oil and Gas Ltd. "And I'd tell them, `So what? What have you done? Continental Oil [now ConocoPhillips] is only 25 years old and our assets are worth 10 times as much as yours, so please don't brag to me." (HBC has assets today of $4 billion Canadian; ConocoPhillips has assets of $93 billion U.S.)
HBC still clings to the status of Canada's largest chain of department stores. And, particularly in Western Canada, where its retail roots are deepest, commands a degree of patriotic loyalty.
But in recent decades, HBC has been reduced to a motley collection of some 500 stores under about half a dozen banners, none a leader in its retail segment, and all fighting a losing battle for market share against interlopers like Wal-Mart, Gap, Williams-Sonoma, Winners and Talbots, and homegrown rivals Reitmans, Roots, Sleep Country and Mountain Equipment Co-op.
It is HBC's misfortune that traditional department stores have been losing favour for years. The demise of Gimbels, Marshall Field, Filene's, B. Altman and Bonwit Teller is some indication of what HBC's mid-market Bay stores are up against.
Remarkably, HBC's fortunes have continued to slide despite the demise of rival Eaton's and the intensive-care status of Sears Canada, in addition to HBC's own contribution to the thinning of the ranks with its acquisitions of Morgans, Simpsons, Zellers, Towers and Woodwards, among others.
That Wal-Mart Canada Corp., starting from scratch in Canada only a decade ago, now has revenues 76 per cent higher than HBC's $7.1 billion in sales, speaks to the failure of HBC to adapt to retail trends.
As recently as last June's HBC annual meeting, CEO George Heller seemed to dismiss Wal-Mart as, if not a passing fad, then a phenomenon that HBC would handily survive just as HBCers endured the rigours of the Franklin expedition (by resorting to cannibalism, among other things).
Heller's six-year tenure has been marked by incrementalism — gentle stabs at cost-cutting, better inventory control, the launch of niche banners like Home Outfitters and Designer Depot, and the occasional coup as when it wrested the Olympic-apparel franchise from Roots.
Meanwhile, though, HBC's true revenue engines, Zellers and the Bay, have languished. The respected Dayton-Hudson Co. of Minneapolis saw the light long ago, dumping all its banners save its youngest, discounter Target, around which it rebuilt the entire company to the point of taking that division's name for its own.
Like Target, Zellers could possibly hold its own against Wal-Mart in Canada were it to adopt Target's cheap-chic formula. Instead, even the modest remodeling campaign underway at Zellers, bearing no resemblance to the total reformulation that's actually needed, is only half-completed years after it began. Such is the effect of Heller's divided attention among his many banners.
Jerry Zucker, 55, is not a merchant but a conglomerateur with interests ranging from factories that make diapers for Procter & Gamble Co. to a 25 per cent interest in the minor-league South Carolina Stingrays hockey club. A math major and scientist by training, Zucker holds 280 patents, but not in the retail field.
The most likely outcome for HBC, assuming Zucker follows through with his offer to acquire HBC and is not trying once again to merely trigger a bidding war, is the installation of a Heller replacement who, to succeed, would have to reduce the firm to its essential parts — namely, Zellers — and remake it into a thriving retail concept like Target, Winners or H&M.
Failing that, Zucker will have to bust up the company and sell its lucrative credit-card operations, its land and leases.
That would be no tragedy. It would free up millions of square feet of selling space for merchant entrepreneurs more innovative and less risk-averse than successive generations of HBC managers.
John Wanamaker of Philadelphia, greatest U.S. drygoods merchant of his era in the early decades of the 20th century, foresaw endless possibilities within easy reach of any persistent striver. "The universe is sensitive to the merest touch and therefore it is possible to set wheels in motion that shall outrun the world," he said.
That was the bug that infected Sam Walton when he first pitted himself against the giant Sears, Roebuck, J.C. Penney and Kmart Corp. in 1962, leaving those rivals in his dust by the time of his death in 1990.
From the rubble of HBC when Zucker, or some other future buyer is done with it, will rise men and women with ambitious schemes who will face doubters, as Timothy Eaton once did.
Whether they succeed or fail, though, in occupying retail space once claimed by HBC, they will fare better than an HBC behemoth that has spent so much of its history watching the world pass it by.
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Old Posted Oct 30, 2005, 8:28 PM
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Laura Secord Indulges in a Dramatic Makeover
Canada's largest chocolatier announces a new look and 20 enticing new flavours.


Canadians love chocolate and are consuming more of it each year. Now Canadian Godiva, Laura Secord, is undergoing a major renewal that will include new products and packaging and remodeled stores.

Just in time for the holidays, chocolate lovers can enjoy more than
20 new chocolates including Raspberry Marilla, Fresh Lemon, 72% Cocoa Dark Chocolate and Pistachio Marzipan. All these sweet treats are included in Laura Secord's signature "Miniatures" and classic "Assorted" chocolate collections.

Laura Secord's new packaging features a tone-on-tone ivory design which
is contemporary and elegant. Inside the box, each chocolate has been carefully selected to tantalize the taste buds and delight the eyes. The

Laura Secord's stores also underwent a facelift, with rich wood design elements, colourful mosaic tiles and the enticing aroma of waffle cones baked on the premises.

"Laura Secord is a beloved Canadian icon with a rich heritage as a
chocolatier," said Jamie Ardrey, chief executive officer, Laura Secord.
"We are indulging more often," confirms vice president of marketing, Andrea Graham.
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Old Posted Oct 31, 2005, 10:10 PM
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Other bidders expected to circle HBC
By ANDY HOFFMAN
Sunday, October 30, 2005 Posted at 10:13 PM EST
From Monday's Globe and Mail

Jerry Zucker hasn't even filed a formal bid for Hudson's Bay Co., and analysts and investors are already talking up the likelihood of another offer for North America's oldest retailer.

With HBC now in play, a long list of potential buyers will once again take a look at the company that owns the Bay, Zellers and Home Outfitters. Some analysts believe the company could be worth up to $30 a share and the roster of possible bidders includes U.S. department store operators, Canadian pension funds and private equity firms. The question for many will be whether HBC is worth more intact or in pieces.

Last week, Mr. Zucker, a South Carolina businessman, announced plans to offer $1.1-billion for HBC and said through a spokesman that he had no plans to chop up and sell off HBC's various assets.

Mr. Zucker, who already owns about 19 per cent of the company's shares, said he would bid $14.75 a share for HBC through his company Maple Leaf Heritage Investments Acquisition Corp. On Friday, HBC shares closed at $15.35.

Robert Johnston, a vice-president at Mr. Zucker's U.S.-based InterTech Group Inc., has said Mr. Zucker would consider raising the hostile offer if he is given a look at the company's books and finds it is worth more.

In a letter sent Friday to HBC chief executive officer George Heller, Mr. Zucker himself held out the prospect of a sweeter bid.

Wendy Evans, president of Evans & Co. Consultants Inc., said other possible bidders could include Federated Department Stores Inc., which recently took over rival May Department Stores Co. in a $11.9-billion (U.S.) merger.

“They have such wonderful real estate,” Ms. Evans said of HBC, adding the property assets make HBC attractive to a wide range of suitors.

John Chamberlain, an analyst with Dominion Bond Rating Service, said HBC's real estate assets have a book value of $250-million (Canadian), but conceded the market value is much higher.

A recent CIBC World Markets report pegged the value of the HBC-owned real estate at up to $770-million, and consequently, there is concern Mr. Zucker plans to gut the retailer of those lucrative assets.

“At this point, we're not entirely convinced that Mr. Zucker and his Maple [Leaf] Heritage Investments has a long-term strategy to run the business,” Mr. Chamberlain said. “The danger for bondholders at this point is that there is no protection if any potential acquirer should strip out assets, including the credit card operations, the real estate or any of the other hidden assets within HBC.”

Some retail consultants say financial players, many of whom have already taken a long hard look at HBC, could be poised to swoop.

“I would not expect ... that it would be done on a single offer,” said retail consultant Maureen Atkinson, senior partner at J.C. Williams Group Ltd.

“Canadian pension funds may take a look at it. [They] probably would do it in partnership with a venture capitalist,” Ms. Atkinson said. “KKR [Kohlberg Kravis Roberts & Co.] has done very well with their investment in Shoppers Drug Mart and maybe are looking at that.”

There has even been talk of combining HBC with the assets of Sears Canada Inc.

Earlier this month, HBC said it would sell its credit card division, which analysts have said is worth up to $700-million. The move accelerated Mr. Zucker's plans to bid for HBC.

On Friday, HBC said it would assess Mr. Zucker's offer and make a recommendation to its shareholders but offered no timelines.

However, in an internal letter to staff, Mr. Heller suggested that while management and the board were not pursuing a sale, a “change of ownership is not necessarily a negative development and does not automatically mean a change in our current strategic direction.”
______________________________
Oct. 31, 2005. 06:08 AM
Trouble in the aisle
The Hudson's Bay Company isn't alone among retailers struggling as they attempt to meet the challenges of an ever-changing business environment
DANA FLAVELLE AND NAOMI CARNIOL
BUSINESS REPORTER

Here's the problem for the Bay.
Even people who feel strongly about its heritage — who identify the Hudson's Bay Company with the fur trade and the founding of Canada — don't shop at its namesake department store chain.
So, they have very mixed feelings about last week's announcement that an American financier has made a $1 billion bid to buy the Canadian retail icon, a move that could spell dramatic changes at the troubled company that operates the Bay, Zellers, Home Outfitter and Designer Depot.
"I think it's a big part of Canadian history, so I don't know if it's right to sell it," says 14-year-old Noëlle Nurse, standing outside the flagship downtown Toronto Bay store on Queen St. W. with a group of friends. "But I don't shop there."
"They need to change," Nurse says, adding the store needs to do more to attract young people with louder, hipper music and edgier décor. "They could make it better."
"It's pretty historic," 22-year-old Beth Evans says of the Hudson's Bay Company. But she rarely shops at the Bay stores, except occasionally for makeup. She views the stores as appealing to older consumers. "My mother will be devastated."
But HBC's problems aren't confined to its 98 Bay stores. Its discount department store chain, Zellers, is also struggling for many of the same reasons that department stores across North America are languishing.
In an era dominated by big box retailers, like Home Depot, and the world's biggest discounter, Wal-Mart, the traditional department store has lost its relevance to consumers, says John Williams, a consultant with J.C. Williams Group Ltd.
Since 1995, an onslaught of new format U.S. retailers has gradually chipped away at the traditional department stores' turf, leaving them with little more than clothing and some housewares to sell. Consumer electronics was the first to go, followed by home furnishings.
The trend isn't confined to Canada or to HBC — one of the last two department store operators still in business north of the 49th parallel, the other being U.S. controlled Sears Canada Inc. The list of chains that has disappeared over the last four decades includes Eaton's, Simpsons, Kmart, Woodwards and Towers.
Consider the experience over the weekend of Scarborough shopper Gina Dacanay, a mother of three who had been all over town looking for Halloween costumes that didn't break the budget.
She went first to Wal-Mart, where nothing was left in the right size, and then to costume specialty retailer Party Packagers, where the prices were too high.
"Thirty five to forty dollars? That's too much for one night. And I have three kids to buy for," says Dacanay.
Finally, she went to a Zellers store — "Truly Canadian," as the sign outside proudly proclaims — because the costumes are on sale at 40 per cent off.
Does it matter to her whether it's Canadian owned or not? "Not really," she conceded, somewhat embarrassed. "As long as I still have a lot of choice."
But there was little left to choose from in the Zeller's customer department yesterday. "Maybe it's too late," says Dacanay.
The same could be said for Hudson's Bay, which is now in play after a $800 million bid by Jerry Zucker.
The company missed expectations in each of the last three quarters, losing $8.3 million as sales fell 1.5 per cent to $1.6 billion in its latest three months. Meanwhile, Wal-mart has grown to be Canada's largest general merchandiser, with an estimated $11 billion a year in sales, and just over 50 per cent of the market.
It didn't help that department store retailers completely missed the new trend in shopping mall development that saw open air power centres replace enclosed regional malls in the fast growing suburbs.
Hudson's Bay finally entered the power centre segment in 1999 with a specialty bed and bath concept called Home Outfitters, the only profitable and growing chain in the company. More recently it began adding a second concept called Designer Depot, specializing in off-price fashion, much like Winners.
But it hasn't solved the problems at the Bay or Zellers.
Geography is only one of the ways shopping patterns have evolved. Consumers are no longer loyal to a single store or brand. Instead they shop according to what they value, studies by the market research group NPD shows.
That can mean mixing a cheap T-shirt from Wal-Mart with Prada shoes and designer jeans. What has been lost is the mass middle market, the one department stores have traditionally occupied.
As part of a five-year turnaround plan HBC articulated two years ago, the company began carrying more private-label merchandise and exclusive brands to take the focus off price, where it can't compete with Wal-Mart's image as the low-price leader.
Zellers is gradually moving upmarket with furniture by Alfred Sung and fashionable clothing from Tres You, in a bid to emulate Target Corp., the one U.S. discounter that has managed to compete with Wal-mart.
At the Bay, the company has added exclusive furniture lines along with more off-price designer merchandise that appeals to consumers' desire for a good deal.
But much of it seems to be lost on Canadian consumers, increasingly distracted by new European retailers, like H&M, who use celebrities to flog their "cheap chic" gear.
"I definitely care if (an) American buys too much of Canada," says 30-year-old Ian Gardner, standing at the bus stop outside the Bay's Queen St. store yesterday. "It's a cultural thing."
At the same time, all he buys at the Bay is basics like underwear.
Similarly, Ralston Bennett, 58, says, "I wouldn't want it to close. It's a landmark." But, like the others, he only shops at the Bay two or three times a year.
But Robert Banks, 50, says that if the business isn't thriving, it's because the company has done a poor job of adapting to changing times.
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  #207  
Old Posted Nov 1, 2005, 12:20 AM
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Its funny that Sears is being touted as a new owner for The Bay stores afterwards, but its doing just as poorly. I guess the only reason is because it has deep pockets and is the only competition left for The Bay.
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  #208  
Old Posted Nov 1, 2005, 5:05 AM
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"They need to change," Nurse says, adding the store needs to do more to attract young people with louder, hipper music and edgier décor. "They could make it better."

This statement speaks volumes about the Bay.

If they changed their image, carried more trendy and hip lines, they would attract many. A Macy's-esk look and feel would really do wonders.
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  #209  
Old Posted Nov 2, 2005, 10:49 PM
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^^And also because no one seems to want to enter the market from elsewhere. The US chains aren't faring much better. Les Ailes de la Mode, a five store chain of Québec department stores was bought by a Canadian retailing company, which is good news for the Bay, that there are some people who want to buy department store (other than Sears).

^Anyone remember when Eaton's post-bankruptcy (the first time) tried to woo the younger crowd, with its in-store Diversity departments? It was pretty cool, but still a dud. Too little too late.
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Old Posted Nov 3, 2005, 2:23 AM
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Yeah. Not gonna work. They need to take on a classicly Canadian iconish feel. Like when you are shopping at The Bay you are shopping in one of the most important stores in the world like Harrods or one of the biggies in New York, instead of just another bland surburban retail chain.
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Old Posted Nov 5, 2005, 10:30 AM
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Holt Renfew already takes the "top department store" label in Canada.
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Nov. 5, 2005. 01:00 AM
More jobs cuts likely at HBC, analysts say
Galloway to head special committee

Retail icon fights hostile takeover

Hudson's Bay Co. will likely make future job cuts in its merchandising group, industry watchers speculated yesterday, a day after the retailer announced it was eliminating 825 management positions.
That conjecture came as the Toronto-based retailer announced that David Galloway, a former CEO of Torstar Corp., is chairing a special committee struck to assess a hostile takeover offer from a wealthy American industrialist who is the Canadian retailer's largest shareholder.
"I think there probably will be more (cuts)," said Richard Talbot, president of Talbot Consultants International Inc. in Unionville, Ont. "It is an incredibly bureaucratic organization and somebody with a very sharp knife needs to get in there."
Canada's biggest department store operator, and the country's oldest company, announced a streamlining of its management ranks Thursday, saying it was seeking annualized savings of $40 million to $45 million.
The company, target of a $1 billion takeover bid by U.S. investor Jerry Zucker, will assume a pre-tax restructuring charge of approximately $28 million in its fiscal third quarter to reflect severance.
HBC Merchandising Group, which does the buying for HBC's Bay and Zellers banners, was reorganized last February and underwent a ``handful of changes" as a result of Thursday's announcement, the company said.
Nevertheless, Talbot predicted more cuts to back office staff and outsourcing would be used to trim expenses, possibly to entice rival bids.
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Old Posted Nov 6, 2005, 10:54 AM
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Can it be? A Winners in Toronto's poshest stretch of retail?
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Nov. 6, 2005. 01:00 AM

MINK MILE on the MARKDOWN
There's just one weekend to go until Winners opens its doors on that luxe stretch of Bloor between Yonge and Avenue. Right on time for the holiday rush, the wildly successful discount retailer gears up for battle with its haute new neighbours. By Dana Flavelle

Canada's most exclusive shopping district is just one weekend away from an extraordinary event: the official opening of a no-frills, no-holds-barred discount fashion retailer.
Winners is "crashing" the elite fashion enclave on Bloor St.
"It's a bit like having a hot dog vendor next to a nice restaurant," says Nicole Sibonney, a long-time Bloor St. aficionado.
The sprawling suburban "wannabe," with its fluorescent lighting and jam-packed racks is setting up shop next to European luxury goods retailer Gucci, a study in granite, glass and understated elegance.
"It's a signature high-end retail destination and Winners ain't — at least that's the perception," says Councillor Kyle Rae, whose ward encompases homeless shelters as well as Rosedale mansions.
But it's not just the clash of ambience and architecture that has raised eyebrows among Toronto's moneyed elite. For established retailers like Holt Renfrew, there's the prospect of having to compete with a neighbour that carries much of the same designer merchandise at 20 to 60 per cent off.
Is it the end of the "Mink Mile" or just the inevitable next step in the "democratization" of luxury goods retailing?
Winners' arrival on Bloor speaks volumes about the way people shop, particularly in the two fastest-growing segments of the market, women under 34 and over 45, according to market research firm NPD Canada.
Their wallets dictate value but their hearts yearn for luxury so they're splitting their purchases between the two extremes, says NPD's director of fashion Kaileen Millard.
There's a parallel trend: It's no longer embarrassing or a badge of class to shop at a thrift store. Getting something cheap has become chic.
"Remember 40 or 50 years ago when people sent their maids to Honest Ed's?" says Millard, referring to the discount emporium at Bloor and Bathurst. "Now it's: `Isn't this too cool and can you believe I got it at Wal-Mart?'"
The two fastest-growing categories of jeans are those priced under $29 and over $69. "Everything else in between is decreasing. The same thing is happening in bras. You've got polarization of price points," Millard adds.
John Williams, a principal in the retail-consulting firm J.C. Williams Group Inc., calls it the "democratization" of Bloor St.
Toronto is treading a path already forged on Manhattan's Fifth Ave. and Los Angeles' Rodeo Drive, the most exclusive shopping district in North America, he says.
Bloor is already home to Zara and H&M. Both specialize in runway knockoffs at cut-rate prices.
Even well-heeled Bloor St. shoppers who will pay $2,000 to $3,000 for suits at Harry Rosen privately admit to picking up khakis at the Gap for $69.95.
But will they shop at Winners?
"Disgusting," said Sandra Sherman, while browsing Bloor St. yesterday afternoon with her husband Ronald Sherman, who works in finance. "It's disgusting that Toronto can't support two blocks of high-end retail stores," she said.
"I don't think it's the right thing," adds George Corbo, owner of Corbo Boutique, across the street from the new Winners. "We've worked hard to develop Bloor St. as a high-end shopping area and this detracts from the whole thing."
Take a walk on Mink Mile, starting at Yonge St. and work your way west to Avenue Rd. There's Holt Renfrew, the luxury goods retailer owned by Galen and Hilary Weston. The 137-year-old company was once the official furrier to Queen Victoria.
Just ahead, Adrienne Clarkson, former governor-general of Canada, wrestles with an unruly umbrella outside the Chanel boutique, where the less-is-more aesthetic flashes from the single handbag ($2,175) on display in the window.
Security guards prowl the entrances.
On the left is Royal de Versailles, purveyors of fine jewellery.
Maple Leaf hockey star Tie Domi peeled off crisp $1,000 bills at least once here to buy baubles for his wife, or at least so the MFP leasing inquiry at City Hall heard earlier this year.
The store's owners, Irit and Michael Shay, are as much part of the social scene as their customers. Irit co-chaired one of the city's most fabulous fundraisers, the Brazilian Ball, earlier this year. Proceeds go to Toronto General Hospital.
The Shays have seen a lot of changes on Bloor since they opened their shop 30 years ago. Most of it has been for the better, says Irit, citing the arrival of Louis Vuitton and Prada.
"It's the best street in Canada. It's a destination for people who are after the high end," she says.
Winners is opening directly across the street. What does she think?
"The way we handle our business, we don't look right, we don't look left, we just look at what is right for us. Whatever happens on the street? I don't know," she says.
David Margolis opened the first Winners in 1982 on Spadina Ave. near Front St., in the heart of what used to be a thriving "rag trade" before cheap imports from China decimated Canada's apparel manufacturing sector.
The brash newcomer pioneered the concept in Canada of selling wholesalers' excess inventory at steep discounts in warehouse-style stores, a sort of permanent garage sale where the merchandise changed weekly and customers could find Calvin Klein jeans alongside Roots bags and the occasional Chanel sweater.
Twenty-three years later, Winners has 170 stores across Canada and is part of the $14.9 billion a year TJX Cos. Ltd. empire, the United States' leading off-price retailer, with buying clout that extends to Europe and Asia.
Margolis has retired but the business continues to thrive.
The Bloor St. location, which opens Nov. 17 in a space once occupied by a Chapters bookstore, will sport a distinct look from the franchise, one that is more in line with its haute new neighbours. The discounter is also sparing its fellow retailers the insult of living next to a no-frills window display. Access to the store is gained only through an interior hallway between a new La Senza lingerie store and a Nike sportswear outlet.
Winners has unveiled a sleek new sign intended to signal to shoppers that the store is more high-end than people might think, said Nigel Smith of HahnSmith Designs, the Toronto company hired to redesign the logo. Slender silver lettering on a black background replaces the fat blue lettering on stark white.
"We think it's a natural extension of our business," says Sherry Lang, vice president of communications for TJX, of Winner's Bloor St. location. "We think it's a perfect fit."
That's not what they're saying behind closed doors at the Bloor-Yorkville Business Improvement Area.
"It's come up," says Eric Abugov, vice-chair of the 2,500-member business association, says of Winners' move to Bloor St.
He's also a vice-president at ICI Construction Ltd., a company that has built such Bloor St. retail landmarks as Christian Dior, Tiffany's and Harry Rosen.
The problem for some BIA members wasn't just that Winners was coming to Bloor St. but that it was locating in the "luxury block" at the Avenue Rd. end of the district, Abugov explains.
Didn't Winners realize there was a pecking order on the street? The lower-end stores are supposed to locate closer to Yonge St., where the younger people shop.
An ardent free-market capitalist, Abugov figures consumers will decide who succeeds. "And if it doesn't work, it doesn't work."
In any case, no one else wanted the peculiar space at 110 Bloor St.
The trouble with the space is it's inverted, Abugov explains. All the square footage is on the second floor with a very small window at ground level. Most retailers want lots of street frontage to showcase their wares, while second floor space usually goes to offices, fitness clubs and other services. But it's ideal for a fashion discounter, looking to cut its window dressing costs and rental rates.
Caryn Lerner is the 48-year-old American retail whiz at the helm of Holt Renfrew, Canada's best-known luxury goods retailer
Coming into the job 13 months ago, Lerner inherited a small nine-store chain that she says has enjoyed several years of "double digit" sales growth. (The privately held firm doesn't disclose actual numbers.)
Her challenge, she says in a telephone interview just off the plane from New York, is to build on that success. With Lerner, who has worked at Barney's, Jones New York and ran Escada USA, came the depth of experience that owner Weston hoped would help Holt Renfrew become "an emerging international brand," he said at the time of her appointment.
She has already brought back children's wear, a category the retailer exited 20 years ago, because she noticed the top two trends in retailing were luxury goods and infant wear. Why not combine them, she thought?
Next, she's planning to overhaul the shoe department. And in the ready-to-wear category, she wants to add even more prestigious international brands, such as Gucci, Chanel and Dior, a move that will put her in direct competition with other boutique owners on the street.
Lerner believes there is room for everyone on the street, a philosophy underscored by an event the retailer launched last Thursday when Holt Renfrew held its first annual holiday window unveiling.
The festivities featured an outdoor ice rink, performances by Olympic skaters Jamie Sale and David Pelletier, and a flurry of artificial snow to herald the season.
Lerner defines Holt Renfrew's core customer as a sophisticated person who travels widely, is fashion savvy and appreciates fine quality. She's not worried about them defecting to places like Winners, or anywhere else for that matter.
"There's something to be said for walking into a nicely lit store and being waited on in a nice way, as opposed to shoving a shopping cart up to a steel rod and diving into the merchandise while another woman is driving her shopping cart into the back of your knees," Millard says. "I don't see Holt Renfrew panicking by any means."
Sibonney agrees. She and her husband owned a store at Bloor and Avenue Rd. before moving to funkier Queen St. W., where she co-owns The Beadery.
She's a supplier to Holt Renfrew and still loves to shop Bloor St.
Her favourite haunts include luxury goods retailers Corbo and Prada as well as Holts.
She doesn't see herself switching to Winners, where a prized Gucci bag may be hidden beneath heaps of more pedestrian Nine West or Liz Claiborne satchels.
"I'm a speedy shopper. I don't have the time or patience to go through racks of stuff," says Sibonney. She also believes that at better stores she's paying for higher quality. "I buy expensive items because of the way they're made."
Still, Sibonney thinks there is room for everyone on Bloor St. Winners could help attract more younger shoppers to the area.
"Maybe it will create a balance in the somewhat stuffy atmosphere. Things may change for the better."
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  #213  
Old Posted Nov 6, 2005, 3:37 PM
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Quote:
Originally Posted by SSLL
Can it be? A Winners in Toronto's poshest stretch of retail?
Emerging crisis in Rosedale! Alert the matrons at once!

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  #214  
Old Posted Nov 6, 2005, 9:44 PM
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Winners is everywhere, and I think it stinks that Bloor Street will now have such a common (though full of bargains) superstore next to the likes of Holt Renfrew, Gucci, and the only Canadian Tiffany & Co.
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Old Posted Nov 6, 2005, 11:48 PM
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it's not like this is the homogenization of bloor street. upscale stores like gucci and chanel can be found throughout the world and they're inevitably the same.

but rich people will now have to shop alongside mere commoners! oh, the horror!
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Old Posted Nov 7, 2005, 1:15 AM
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You know, I know quite a few well to do people who LOVE Winners...
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Old Posted Nov 7, 2005, 3:38 AM
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There is nothing wrong with Winners. Its just that its very cluttered, no service, bargin style does not fit in with Bloor Street.

The only issue I have with Winners really, is that they have their main store just down a couple blocks on Yonge Street. Do they really need one on Bloor also? Would be nice to leave the space for more unique retail that would be a draw to Bloor Street.

Here are some pics from the other night when I was at Holt Renfrew on Bloor, for the opening of the Christmas windows. It is just so nice to be in a store like Holts sometimes, where care is given to displays, and good customer service, etc. It leaves a special touch to a shopping trip to Bloor.
And the question is if Winners can fit in.













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Old Posted Nov 7, 2005, 4:08 AM
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just so nice to be in a store like Holts sometimes, where care is given to displays, and good customer service, etc. It leaves a special touch to a shopping trip to Bloor.
And the question is if Winners can fit in.
Depends on the store and dept. There are some real hags in the Edmonton store ladies section. If you're not already dressed in Gucci, you better bugger off.
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Old Posted Nov 7, 2005, 10:03 PM
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^Wow, great pics! Good to see such a production being undertaken. I do like the new logo too... This Winners shows how small the luxury market is in Toronto. Chapters is everywhere, but it was an emporium of literature. Winners is an emporium of last season's don'ts and strange sizes. I'm curious how they could fill all those levels though. Is the Starbucks still around?
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Old Posted Nov 12, 2005, 8:19 PM
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Zucker calls for Zellers closings
By MARINA STRAUSS
Friday, November 11, 2005 Posted at 4:57 AM EST
From Friday's Globe and Mail

Jerry Zucker wants to close some money-losing Zellers stores, sell off the downtown Toronto head office of Hudson's Bay Co. and invest $375-million to polish store operations.

As part of his formal, $1.1-billion offer for HBC, the wealthy U.S. financier outlined his blueprint for Canada's oldest company.

The documents, filed with regulatory authorities yesterday, reveal that Mr. Zucker, with almost 20 per cent of HBC shares, was flatly turned down by the HBC board of directors when he asked last May for two seats on an expanded, 14-member board.

"We would have had the best interests of shareholders at heart," Robert Johnston, vice-president at Mr. Zucker's South Carolina InterTech Group Inc., said in an interview. Most of the current board members own relatively few, if any, HBC shares compared with the would-be owner.

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The offer paints a picture of a U.S. businessman who sees potential in HBC, which runs the Bay, Zellers and Home Outfitters.

But the offer also shows Mr. Zucker to having been rebuffed every step of the way as he has tried to take more control of the decision making at HBC.

He says that he would pursue much the same strategy as HBC has now, but try to improve store presentation and behind-the-scenes technology. And he would rent out space to popular retailers within some of the HBC stores to draw more customers.

Nevertheless, his plans for HBC, which has more than 500 stores, may change if more information becomes available, the documents add. Observers believe he ultimately would break up the company and unload its parts. His offer expires on Dec. 29.

Mr. Zucker, who first started buying HBC shares in mid-2003, offered in August of 2004 to buy the company for $15.50 a share -- higher than the current $14.75-a-share bid, the documents disclose. He made the proposal in a letter to the board of directors.

Three weeks later, on Sept. 7, chief executive officer George Heller replied by letter, saying the company was "not for sale," the latest offer says. "The board of directors had concluded that 'it would be inappropriate and unwarranted to give anyone access to confidential data regarding [HBC] under the circumstances.' "

HBC spokesman Rob Moore said in an interview that the board will formally respond by Nov. 25, as required. But "there are items in there we would consider to be inaccurate."

He didn't explain why Mr. Heller, rather than the chairman of the board, had responded to the 2004 offer on behalf of the board.

HBC's chairman, or "governor," is Yves Fortier, an influential Montreal lawyer and former ambassador to the United Nations.

In August, 2004, Mr. Zucker wanted to run HBC with the key management personnel in place, the offer says. Asked yesterday whether Mr. Zucker would still keep the executive team, Mr. Johnston did not reply directly. He said Mr. Zucker would have to meet with management and see if its "goals and interests" were in line with those of the new owner.

Mr. Johnston added that, at the time, Mr. Zucker had high praise for management and its strategy. But since then, he has become increasingly disappointed with the financial performance of HBC, and "the inaction of management and the board of directors of HBC to take effective steps to maximize shareholder value," the offer says.

Last week -- six days after Mr. Zucker made his intentions known -- HBC cut 825 employees from its 70,000-strong staff and reshuffled the top executives, a move aimed at saving up to $45-million in annual costs. The company has struggled to make financial improvements over the past several years.

Mr. Zucker would pour $125-million a year in each of the next three years into improving HBC's operations, Mr. Johnston said yesterday.

Mr. Zucker generally backs HBC's strategy of store modernization, expanded sales of big-ticket items, such as furniture, and the development of new businesses to capture the emerging "off-price" market, the offer says. Off-price retailing is led by the Winners chain in Canada and entails selling popular brands at a discount.

But Mr. Zucker "believes that there are a variety of other strategies that need to be implemented in order to build value and position HBC to compete in today's changing retail environment," it says.

Divesting the Toronto head office could fetch more than $100-million, some analysts have said.

Late last week, the HBC board set up a special committee, headed by board member David Galloway, to weigh its options. Mr. Galloway, a former Torstar Corp. executive, is chairman of Bank of Montreal, which is the parent of BMO Nesbitt Burns, the offer noted. It is advising HBC in both Mr. Zucker's bid as well as the sale of its credit card division.

HBC's decision last month to put the lucrative credit card business up for sale was the final straw that prompted Mr. Zucker to make his bid, Mr. Johnston has said.

On the Toronto Stock Exchange yesterday, HBC shares slipped 6 cents to close at $15.25.
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