The oldest department store in the US has been acquired by a seven year old clothing retail service for $100 million.
Hudson’s Bay Company will sell Lord & Taylor to Le Tote for $100 million (£82.5 million).
The Canadian department store giant will be paid CAD 99.5 million (£61.3 million) in cash after the deal closes and a secured promissory note of CAD 33.2 million (£20.44 million) payable in cash after two years.
In addition, Hudson’s Bay will receive an equity stake in Le Tote, two seats on its board and certain rights as a minority shareholder.
Under the terms of the agreement, online-only Le Tote will acquire the Lord & Taylor brand and related intellectual property and assume operations of 38 Lord & Taylor stores, its digital channels, and the associated inventory. Le Tote expects to retain the majority of the brand’s associates.
Founded in 2012, Le Tote is a fashion subscription service that lets people rent clothing and accessories for a flat monthly fee.
Le Tote members choose the items they want to wear and can keep them as long as they like. They also have the option to purchase items at a discount.
“Since founding Le Tote, it’s been our mission to push the boundaries of retail,” said Le Tote founder and chief executive Rakesh Tondon.
“We’re excited to bring Le Tote together with Lord & Taylor, a storied brand that has stood for quality, style and service for nearly two centuries. With this acquisition, we continue our journey in creating the future of retail.”
“We’re excited to have reached an agreement with Le Tote that creates a new model for Lord & Taylor, bringing together fashion rental subscriptions with traditional retail,” said Hudson’s Bay chief executive Helena Foulkes.
“Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord & Taylor, its loyal customers and dedicated associates. For HBC, this transaction builds upon our previous bold actions, further enabling us to focus on our greatest opportunities, Saks Fifth Avenue and Hudson’s Bay,” Foulkes added.
The deal is Le Tote’s first venture into operating physical stores.