Following coronavirus-induced store closures, Saks Fifth Avenue parent Hudson’s Bay Co. is reportedly prepping a bond deal to bolster its finances.
According to a Reuters report, Hudson’s Bay is looking to raise about $800 million to $900 million through the bond offering. It’s uncertain as to whether the Toronto-based company will provide investors collateral such as real estate, the report said. A representative from HBC declined FN’s request for comment.
In mid-March, Saks, along with other so-called nonessential retailers, was forced to temporarily close all outposts due to the COVID-19 pandemic. With doors shut, the department store chain made the decision in April to place a portion of its U.S. workforce on unpaid leave. Saks kept “small teams” of staff onboard during the furlough period to support essential business functions, including e-commerce operations.
As of this week, about half of Saks’ 41 U.S. units had reopened their doors, but on a reduced schedule. The company is also offering curbside pickup and returns at some of its outposts.
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Saks has been the top performer for its parent, which went private earlier this year after months of back-and-forth buyout proposals. In recent years, HBC has shed many of its less profitable businesses to focus on Saks, as well as the namesake Hudson’s Bay. It sold flash sale site Gilt to Rue La La in June 2018, and it let go of its Lord & Taylor business before the start of the 2019 holiday season.
However, retailers across the board have seen sales drop during the pandemic due to government-mandated store closures and decreased consumer discretionary spending. Apart from furloughing staff, companies have looked to tighten up their balance sheets by cutting capital expenditures, reducing executive pay and slashing discretionary expenses.
What’s more, scores of retailers, including Nordstrom and Macy’s, announced during the pandemic that they would draw down on their revolving credit lines in order to maintain cash flow. Further, some companies have announced that they will be trimming their fleets. And a growing list of retailers — including department store chains Neiman Marcus Group and J.C. Penney Co. — have filed for bankruptcy in recent weeks, with COVID-19 in many cases exacerbating existing challenges.