Lord & Taylor To Close Fifth Avenue Flagship, 9 Other Stores As Part Of 'Rightsizing'
One of the world's first department stores will close next year.
Hudson's Bay Co. plans to shutter the Lord & Taylor flagship store on Manhattan's Fifth Avenue in early 2019, the Canadian department store company announced Tuesday. The closure is one of up to 10 Lord & Taylor locations the chain plans to close in 2019 after another quarter of declining sales growth.
It sold the 11-story property at 424 Fifth Ave. to a partnership of WeWork and Rhône Capital Advisors for $850M last fall. As part of the deal, WeWork planned to move its headquarters to 500K SF on the upper eight floors, and Lord & Taylor would operate a slimmed-down, 150K SF store on the lower three levels, with work set to begin after the holiday shopping season in 2018. Now, Lord & Taylor will exit the property, where it has operated for more than 100 years, for good.
"After evaluating best use scenarios for its New York City Fifth Avenue location, the Company has decided not to maintain a presence at this location following turnover of the building to WeWork," HBC said in its financial statement. "Exiting this iconic space reflects Lord & Taylor's increasing focus on its digital opportunity and HBC's commitment to improving profitability."
HBC also owns the Saks Fifth Avenue brand, which reported a 6% year-over-year gain in sales. But its Lord & Taylor, Saks Off Fifth and European brands each reported sales declines, and HBC's recently appointed CEO, Helena Foulkes, is embarking on an aggressive strategy to clean up the company's balance sheet.
That includes partnering with Walmart to launch a Lord & Taylor e-commerce platform to reach customers who are not close to one of its current 48 U.S. locations. HBC also announced Tuesday that it sold online discount retailer Gilt, which it bought in 2016 for $250M, to a competitor.
Department stores have been among the hardest-hit segments in retail, which is undergoing a seismic shift away from the big-boxes that defined the sector for decades. Lord & Taylor was a pioneer of that movement, inventing the Christmas window displays for entertainment in the 1930s at its flagship shop, according to CNBC.
By this time next year, Lord & Taylor will be gone from the world's most expensive retail corridor. It will be up to WeWork and its new chief architect, Bjarke Ingels, to decide what will go in its place.