Storied department store Lord + Taylor could be teetering on the brink of demise.
Sources close to the company told FN that the century-old retailer, owned by fashion rental service Le Tote, laid off the majority of its merchants, saw the bulk of its executive team resign — including president Ruth Hartman — and is seriously considering a post-pandemic liquidation.
“It all went down last Tuesday at a corporate meeting — and it’s been impossible to contact anyone at the company since,” one source told FN. “Many people’s emails were cut off within 24 hours of the meeting. There is zero communication.”
In an email exchange with FN today, Le Tote co-founders Brett Northart and Rakesh Tondon confirmed that on April 1 the firm implemented “significant company-wide layoffs across both organizations, immediately reducing the majority of Le Tote and Lord + Taylor staff across all departments, with only key employees remaining to preserve the business.”
The firm has also extended furloughs of its Lord + Taylor store associates until “we can reopen our doors.”
Still, citing persons in attendance at last week’s meeting, a source told FN that the company lost a significant portion of Lord + Taylor’s leadership: Hartman, who became the department store’s president in November, and Brian Hoke, Lord + Taylor’s chief merchant, both resigned at the urging of the company’s board, the source said.
What’s more, said the source, the small number of associates and store operations teams who are being kept on furloughs — the result of widespread store closures as a response to the coronavirus pandemic — are being retained to see the company through potential liquidation sales after national social distancing guidelines are lifted.
“The world has been thrust into a health and economic crisis that most of us have not witnessed in our lifetimes. The events that are unfolding are impacting every industry, and the retail industry is front and center in the crosshairs of this pandemic,” said Le Tote’s Northart and Tondon.
The co-founders added they are still operating both companies online, “with Le Tote continuing to maintain an active rental service, and the LordandTaylor.com e-commerce site fully operational.”
Before announcing its plans to sell Lord + Taylor to Le Tote for $75 million in late August, previous owner HBC had struggled for some time to revive the mid-tier department store chain amid declining comps. Also part of the Le Tote-Lord + Taylor merger was a secured promissory note for $CA33.2 million, or $25 million, after two years.
HBC, which sealed the deal on its own go-private plans in January, memorably shuttered Lord + Taylor’s century-old flagship on New York’s Fifth Avenue last in 2019, shed another 10 of its 48 stores and dabbled in a number of omnichannel initiatives, including an unlikely digital partnership with Walmart in 2018.
When FN caught up with Hartman in November, it had been mere days since she had stepped into the post as Lord + Taylor’s new leader and she was candid about the extent of the turnaround she needed to execute.
“I don’t fault anyone at the organization or the decisions that were made, but [what we have to do now] is a turnaround and a transformation,” said Hartman, whose extensive career in retail included high-level roles at Macy’s, DSW and Le Tote. “Do I feel pressure to make that happen? I absolutely do, [but I also] feel tremendous excitement to allow it to be the crown jewel and heritage brand it has been in a new and innovative way. I don’t think we can go back to what it used to be in the 1920s. We need to do things differently.”
At the time, Hartman said she had hit the ground running, rolling out a new marketing campaign and recalibrating how Lord + Taylor would fulfill its digital demands. She had also laid the groundwork to test a new type of rental service that would integrate both Lord + Taylor and Le Tote’s core strengths.
The retailer last month had joined a growing list of fashion purveyors forced to shutter their doors as the coronavirus pandemic took hold across the U.S. and social distancing recommendations as well as stay-at-home orders kept Americans inside. As store closures extend further into spring and possibly summer, many retailers, from Saks Fifth Avenue and Neiman Marcus to Macy’s, have opted to furlough a portion of their workforce in the U.S. The spread of the coronavirus has also forced many firms to tap into credit lines to maintain their cash flow.
As retailers try to strategize for the economic impact of COVID-19, some experts have suggested the pandemic will deepen the challenges spurred by digital disruption and the so-called retail apocalypse.
James Thomson, partner with Buy Box Experts and former business head of Amazon Services, told FN last week that he expects the coronavirus to speed up the restructuring process for struggling companies.
“If I’m an executive of a retailer that’s slowly dying, in some ways this is a blessing in disguise. It allows me to make big cuts quickly,” he explained. “And if I have to close half my stores or have to lay off, and keep laid off, more than half my employees, I can do that without there being a lot of negative PR [because of the coronavirus threat].”