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Hudson’s Bay Co. CEO dismisses speculation around Brooks

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Say what you like about Hudson's Bay Co.'s Richard Baker, but don't call him shy. Or unapproachable.

Mr. Baker – the U.S. investor who bought Canada's storied retail chain five years ago and remains its chairman, CEO and majority shareholder following last November's initial public offering – called me Wednesday to discuss some of the issues I raised in an ROB Insight post, following the out-of-left-field announcement that high-profile exec Bonnie Brooks would step down (or up?) as president to become vice chairman. Never mind that Mr. Baker had an annual meeting to prepare for later in the day.

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Some might consider that degree of first-person CEO candidness foolhardy; I find it admirable. I figured the least we could do is share with you the thoughts that Mr. Baker was eager to share with us. So here's a partial transcript of our conversation – edited (for brevity) but otherwise unfiltered.

On Bonnie Brooks's move from the president's office to vice chairman:

"Bonnie is staying … What we're trying to do is get her out of the day-to-day weeds so that she can spend her time focusing on new, exciting, creative initiatives for all of our different banners."

"[New president] Liz Rodbell was already a chief merchant – 25 years, very capable lady, everybody in the industry knows her. So instead of having a chief merchant, now she's going to be president, and Bonnie is going be able to have more time doing the exciting, creative new initiatives that we need in an enterprise that's so big."

On the belief that the Canadian invasion by Target and other U.S. retail chains is a threat:

"Target has already opened up a bunch of stores. We have specific data that shows that it's basically a non-event. Some [Bay] stores are up one or two per cent, some stores are down one or two per cent – basically, Target's impact on Hudson's Bay stores is negligible."

"Nordstrom is opening one store more than a year from now, and then one store a year, give or take, going forward. When you've got 90 stores – it's a nothing."

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On my suggestion that Hudson's Bay may want to consider downsizing, and selling its real estate:

"Even if we wanted to sell stores, we can't – because our best stores, which are definitely very valuable, we need to keep to run our business, and the small-market stores where one could come up with a reason why you could close them, no one wants those buildings. So we don't have a choice – we have to make every store great and make every store work."

"I think what Loblaw has done [converting its real estate into a REIT] is very interesting … it's something we're monitoring closely. We own a lot of high-quality real estate and we are savvy to what goes on in the real estate world. … We've told analysts that it's something we would look at in the future."

On what might be holding back the stock price:

"What I'm told is that our float isn't big enough, and that they need a bigger float in order to make it possible for additional investors to come in. And that's something we're going to work on … We've always discussed that as time went forward we would do additional secondaries [secondary share offerings] in order to improve the float. … No idea [of the timing] at the present time."

David Parkinson is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow him on Twitter at @parkinsonglobe .

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About the Author
Economics Reporter

David Parkinson has been covering business and financial markets since 1990, and has been with The Globe and Mail since 2000. A Calgary native, he received a Southam Fellowship from the University of Toronto in 1999-2000, studying international political economics. More

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