HBC to shut most Zellers discount stores

Fri Jul 27, 2012 10:44am EDT
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(Reuters) - Retailer Hudson's Bay Co will close most of the 64 remaining stores operating under its discount Zellers banner in March 2013, the company said on Friday.

HBC sold 189 Zellers leases to Target Corp in 2011. Target chose some spots for its own stores, and sold on or returned others to landlords. The U.S. retailer will open its first 125 Canadian stores in 2013.

"Zellers is considering options for certain locations, including potentially rebranding some stores," said spokeswoman Tiffany Bourre. "We haven't determined which locations those will be, if any. Most will close."

The remaining Zellers stores are mostly in smaller markets across Canada, and employ about 6,400 people. Many stores under the banner, which competes with Wal-Mart Stores Inc, have become run down. Target plans to spend about $10 million renovating each outlet that it takes over.

Closely-held HBC, North America's oldest continually operating company, has been moving upscale in recent years.

In Canada, at department store chain The Bay, it has been swapping out brands, pushing to improve customer service and hosting high-profile celebrity fashion events at remodeled downtown stores.

In January, HBC completed its acquisition of upmarket U.S. department store chain Lord & Taylor and The Bay's president, Bonnie Brooks, took charge of both chains.

The Bay and Lord & Taylor had been operating as side-by-side affiliates since Richard Baker's U.S.-based private equity group, NRDC Equity Partners, bought HBC in 2008. It already owned Lord & Taylor.

Baker, chief executive of HBC, has floated the idea of taking the company public when market conditions are right, but has not announced specifics.

(Reporting by Allison Martell; editing by Frank McGurty)