How an American Bankrupted the Hudson Bay Company

by Shannon Peel | Brand & Communications | Part of the Brand Sovereignty Series

A child got dressed for Bay Days in Saskatoon in 1967 and the moment mattered, they got dressed up and took a picture. We don't know the child's name. We don't need to. The photograph isn't about the child. It's about what the Bay meant, that a store could matter enough that getting ready for its sale felt like getting ready for a fair.

That is the story this article tells. The story of what a country builds when it trusts a brand for three hundred and fifty-five years, and what happens to that trust when nobody is left to protect it.

What Brand Sovereignty Actually Means

Brand culture is internal. It is what it feels like to work inside a company. Brand sovereignty is external. It is what happens when a community adopts a brand as part of its own culture. The brand stops being a product the community purchases and becomes an icon of the community.

A child getting dressed for Bay Days. A Crown Royal bag repurposed to hold a grandfather's poker chips. Hockey tickets purchased by 3 generations of fans. These are not purchases. They are culture, expressed through a brand the community did not create but chose to claim.

Once a community adopts a brand into its culture, the community holds the authority to decide whether the brand still represents that culture and what the brand means to them. Not the shareholder. Not the acquiring company. Not the board that votes on a sale. The community that has a shared story with the brand.

The Company That Kept Becoming Something Else

Hudson's Bay Company was chartered by King Charles II on May 2, 1670, granting eighteen London investors the right to trade furs across a third of what would become Canada. The French nearly destroyed it before it turned fifty, seizing its forts one by one until the company held a single outpost. A 1713 treaty between empires, not any business decision, saved it. The North West Company tried to out-trade it a rivalry violent enough to produce a massacre at Seven Oaks in 1816, until Britain forced the two companies to merge in 1821.

By the mid-nineteenth century, the fur trade that had sustained the company for two centuries was dying. So the company surrendered Rupert's Land, a third of a continent, to the new Dominion of Canada in 1869, kept seven million acres of prairie, and became something new: a retailer. The first Hudson's Bay department store opened in Winnipeg in 1881, selling dry goods, groceries, and hardware to settlers building a country the company had once governed.

Every time the ground shifted, someone in control of the company asked what it needed to become next, and answered the question. An empire became a land company. A land company became a retailer. A retailer kept absorbing the country's other retailers, Morgan's in Montreal, Simpsons in Toronto, Woodward's in Vancouver, each acquisition another act of becoming something slightly different than it had been the year before.

By the twentieth century, the stores themselves had become something more than retail. They were, in the words of one history of the company, the cultural and social hubs of their communities, natural meeting places offering art exhibitions, music recitals, public lectures, and fine dining alongside the hardware and dry goods. A Vancouver employee who worked there for years later described it simply: everyone shopped at the Bay, for everything. Weddings, births, funerals. Wedding dresses and yarn and art supplies and china and fur coats lugged in every spring for seasonal storage in a vault built into the store itself. I bought my wedding dress at the Bay in Calgary in 1998 for $600. Way cheaper than anything at the wedding dress stores and suited me better.

The Bay covered everything. Hatch, match, dispatch.

This is what three hundred years of evolution had built by the time Kenneth Thomson bought a controlling stake in 1979: not a department store chain, but something closer to civic infrastructure that happened to sell things.

The Last Owner Who Tried to Save the Bay

Thomson didn't get an easy company. He got one already showing cracks, and the 1980s nearly broke it. Debt from the acquisition itself, falling oil prices from the company's old petroleum ventures, a recession, six straight years of losses totalling $330 million between 1983 and 1988. By 1985, HBC owed $2.5 billion, with feeble operating profits wiped out entirely by interest payments.

Thomson's sold the parts of the company that weren't retail, the oil and gas business, the financial services arm, the distillery interests, anything peripheral, to protect the parts that were. He spun off the company's real estate subsidiary as its own public company rather than stripping the retail business of its buildings. The strategy worked. HBC returned to profitability by the late 1980s.

It worked again, and then it didn't.

The early 1990s recession hit. Then Walmart entered Canada in 1994, buying 122 Woolco stores and converting them overnight, and within three years had captured 45 percent of the discount market, a market Zellers, the discount chain HBC depended on for volume, had once dominated. Zellers' net earnings fell from $256 million in 1993 to $73 million in 1997. The company's overall net earnings fell to just $54 million.

By 1997, after eighteen years of trying, Thomson sold his shares. A retail historian later described it as a man "tired of fending off cascading disasters." This is what an honest business failure looks like: a real owner, fighting a real competitive threat, for nearly two decades, losing to a structural force he genuinely could not beat.

That is the last time anyone who controlled Hudson's Bay Company tried, in any sustained way, to save it by building something new rather than selling something old.

The HBC Decade Nobody Talks About

What happened between 1997 and 2008 gets skipped in most retellings of this story, because it doesn't have a single villain. It has something worse: a company drifting, ownerless in any meaningful sense, while the ground kept shifting beneath it.

HBC shares, once worth $25, fell to around $6. The company bought Kmart Canada's stores in 1998, merged Woodward's locations in 1993, launched Home Outfitters in 1999, kept trying variations on the same playbook that had worked for a century, acquire, consolidate, expand, without anyone steering toward what the company needed to do. Take the time to understand their customer's changing shopping habits, needs, wants, and desires to become something new.

The money they were spending on acquiring other locations, would have been better spent on focus groups to talk to customers and ask what the problems were, why they chose WalMart over Zellers. It's not about survey's that end up misleading because they don't go deep enough to uncover the real behaviours. It means doing something revolutionary, sitting down and talking with people.

By 2005, the company was openly looking for a buyer. It found Jerry Zucker, an American industrialist who had been quietly accumulating shares since 2003, and who won the company in a hostile $1.1 billion bid in late 2005. Whatever Zucker intended to do with it is unknowable, because he died of cancer on April 12, 2008, less than two years into his ownership. His widow, suddenly the first woman in the company's 338-year history to hold the title of Governor, needed a buyer.

Richard Baker had been waiting. His real estate firm, NRDC Equity Partners, already owned roughly twenty percent of HBC. Baker was already on the board. On July 16, 2008, NRDC bought the rest for slightly more than $1.1 billion. He announced plans to "recreate the retail landscape in North America."

He would. Just not the way anyone listening that day understood.

Baker used HBC Wealth to Buy it

Here is the detail that explains everything that follows, and it has nothing to do with retail strategy. It has to do with how the purchase itself was financed.

Two years before buying HBC, Baker had bought Lord & Taylor for $1.2 billion. He put up $25 million of his own money. Ninety-seven cents of every dollar came from bank loans, secured not against Baker's wealth but against the company's own real estate, because Baker structured the deal as what the industry calls Opco/Propco, splitting a retail company into an operating business and a property business, then using the property's value as collateral to borrow the money to buy both. The trade publication that documented this called it, simply, the blueprint for every deal that followed.

It was. The HBC purchase, the Saks acquisition five years later, the Galeria Kaufhof purchase in Germany, the Neiman Marcus deal sixteen years after that, all of them ran some version of the same trick. Borrow against the real estate the target company already owns. Put in as little of your own capital as the banks will allow. Let the building, not the business, carry the risk.

This is the mechanism, not a metaphor: Baker never had much of his own money at stake in any of it. The downside, when it came, was never going to be his.

Seventeen Years of Selling the Same House Twice

What Baker actually did with HBC, for seventeen years, was extract.

In 2011, three years after buying the company, he sold the Zellers store leases to Target Canada for $1.8 billion, more than the entire purchase price of HBC. In 2012, he took the company public, raising $365 million. In 2013, HBC bought Saks Inc. for $2.9 billion. In 2014, he sold the Toronto Queen Street flagship, one of the company's most recognizable buildings, to Cadillac Fairview for $650 million, and leased it back. In 2015, a joint venture with RioCan gave the REIT a stake in twelve HBC properties for $325 million, and HBC bought Germany's Galeria Kaufhof for €2.825 billion, financed in part by simultaneously selling more than forty of Kaufhof's own buildings for roughly €2.4 billion to a separate joint venture. In 2017, the Lord & Taylor Fifth Avenue flagship sold to WeWork for $850 million, with Baker telling Women's Wear Daily the sale would "dramatically de-lever" the company. In 2019, the Kaufhof stake sold to Signa Group for several billion euros more than HBC had paid. In 2024, Saks Global, Baker's new entity, bought Neiman Marcus for roughly $2.7 billion.

Read that paragraph again and notice what's missing. There is no line in it that says "and HBC invested in e-commerce" or "and HBC renovated its stores." Every transaction either bought something else or sold a piece of what HBC already had. The money moved in a circle: sell a Canadian asset to fund an American acquisition, use the American acquisition's own real estate to pay for itself, use the proceeds of that sale to pay down debt from the last acquisition, repeat.

Baker described this philosophy publicly and without apparent embarrassment. He called himself an "accidental retailer" who thinks like a real estate developer. He called the practice of selling off pieces of the companies he owned "editing the garden." He told Cornell University students this directly, as a description of how he worked.

The One HBC Executive Who Actually Tried

It would be easy to tell this story as if no one inside the company ever fought for something different. That isn't true.

Helena Foulkes became CEO in February 2018, inheriting a company hemorrhaging $646 million in annual operating losses across ten sprawling, internally incoherent business units spanning three countries. She cut it to three. She nearly tripled online sales growth, from 6.8 percent to 20.6 percent quarter over quarter, using operational discipline rather than new capital, because new capital was never made available to her. Saks Fifth Avenue, under her leadership, regained genuine market position against Nordstrom and Neiman Marcus.

Her restructuring generated $2.6 billion in transaction proceeds. Every dollar of it went to paying down $1.6 billion of debt that Baker's prior acquisitions had already created. None of it went to stores. None of it went to building the e-commerce infrastructure that might have let Hudson's Bay compete with Amazon a decade earlier.

The moment her cleanup made the company sellable enough to take private, in March 2020, Baker removed her and took the CEO title for himself. Baker had said publicly, before this happened, that it would be easier to fix HBC's challenges away from public scrutiny. The executive who had proven discipline could work inside this structure was gone within weeks of proving it.

What the Bay Customers Saw

A former copy director at Hudson's Bay, writing years later in The Globe and Mail, remembers the exact moment she understood what was happening. It was 2012, at a management retreat, when Baker walked onstage dressed as Willy Wonka to announce the company's IPO. "I'm going to make your dreams come true," she remembers him saying, more or less. She thought, at the time, it was simply a bold choice of costume.

She would later identify a precise hinge point for when the company's actual quality began to erode: 2013, when Bonnie Brooks, the merchandising chief who had spent years rebuilding the company's fashion credibility, left. After Brooks departed, in this former employee's words, the Bay lost the fashion credibility her team had built, sale messaging took over from the genuine value proposition the brand had once offered, and aspirational brands like Le Creuset and Hunter started disappearing from the shelves. "Then there was just less of everything," she wrote.

She also confirmed, from the inside, the precise nature of the digital failure outsiders could only guess at. While more nimble retailers partnered directly with Amazon's infrastructure, HBC stuck to proprietary software through the entire 2010s, software with a notoriously clunky search function and a reputation for losing orders entirely. When the company finally upgraded its e-commerce platform in 2021, she wrote plainly, it was too late.

Her verdict on the company's death, published the week liquidation began, was a single sentence: don't shed a tear for Hudson's Bay, there's nothing left to mourn.

The Day the Bay Store Died

On the day Hudson's Bay announced it was filing for creditor protection, a reporter walked the floor of a Toronto store and found something that explains the entire emotional aftermath of this story better than any poll.

A sixty-two-year-old woman named Deanne Christine was standing in the women's shoe section. She had shopped there for at least three decades, buying her clothing and cosmetics from brands like Estée Lauder, Lancôme, and Clinique. "When I heard the news, I was like, 'No!'" she said. "Do they even carry those at Sephora?" she wondered aloud.

Thirty feet away, in the same store, on the same afternoon, two women in their thirties wandered through a small revived Zellers display. The reporter noted, simply, that they were not mourning the news either.

A younger man elsewhere in the store put words to the gap directly. "We're very much online shoppers," he said. "I just don't think there's an appeal to department stores for Canadians." Another, reminded that the Bay was a storied Canadian institution worth defending in a moment of rising trade tension with the United States, pushed back without hesitation. "Yeah, it's a Canadian corporation," he said. "But I'm looking around here, and there's Armani, there's Coach, most of this isn't Canadian anyways."

Neither group was wrong. They were describing two different stores that happened to share an address. One store existed in memory, built across three or four decades of trust, milestones, and a specific relationship with specific brands found nowhere else. The other store existed in the present, and in the present it was simply a building full of merchandise a phone could deliver faster and cheaper.

This is what the Leger polling data, taken two weeks into liquidation, ultimately confirmed at national scale: thirty percent of Canadians felt indifferent, the largest single response, especially among adults under fifty-five. Twenty-five percent felt sad. Nineteen percent felt disappointed. Eighty-three percent of the country knew the news. Far fewer felt it.

The People Who Could Not Afford to Shrug

There was a third group standing in no store that day, because they no longer had a store to stand in. They were not shrugging, and they were not nostalgic. They were furious, and their fury had nothing to do with department store sentiment.

More than nine thousand workers were losing their jobs with no severance, while the company sought court approval for up to three million dollars in retention bonuses for the managers overseeing the liquidation. Unifor held rallies demanding HBC honour its wage, pension, and benefit obligations. The Canadian Labour Congress pressed the federal government to confirm that workers' employment insurance wouldn't be clawed back because of severance the company legally owed but wasn't paying.

NDP Leader Jagmeet Singh stood with workers directly and said what the polling data couldn't capture: "Hudson's Bay has been part of Canada since before Canada was even a country. But now, an American hedge fund is walking away with the real estate while workers are left with nothing, not their wages, not their severance, not even a thank you."

For these nine thousand people, the question of whether the Bay still meant anything culturally was beside the point. The only question that mattered was whether the company they had given decades of their working lives to would honour what it owed them on the way out. By and large, it did not.

Where the Hudson Bay Company's Wealth Went

It did not vanish. It moved, in a circle, for seventeen years, away from the only place that might have saved the company.

The roughly eight billion dollars that flowed through HBC's books across the Baker era, real estate sales, mortgages, acquisition financing, never sat in an account waiting to be allocated between buying companies and modernizing stores. Most of it was acquisition debt the moment it was raised, debt that had to be serviced regardless of how the Canadian stores performed. The interest payments didn't care about quarterly sales. They had to be paid whether HBC sold more sweaters or fewer, and the only lever available to pay them was selling the next piece of real estate.

This is the actual tragedy buried in the financial mechanics, more precise than simple greed. Baker wasn't a failed real estate investor. Individually, most of his real estate trades worked. He bought low and sold high more often than not. The Kaufhof flip alone, bought for €2.825 billion and sold years later for several billion more, was a genuinely successful transaction by real estate standards. The problem was never that his trades failed. The problem was that every dollar he extracted from a building was a dollar the retail business sitting on top of that building needed, and never got back.

Could eight billion dollars, spent differently, have saved Hudson's Bay? Probably, if it had ever actually been available to spend that way. It never was. The company was structured, from the moment Baker bought it with borrowed money rather than his own, so that the choice between acquisitions and modernization never genuinely existed. The debt came first. Everything else was whatever was left over, which by the end was nothing.

The Charter, the Stripes, and the Logo

When the liquidation reached its final accounting, Canada discovered exactly what its oldest institution was worth in pieces.

The royal charter itself, the five-page vellum document King Charles II signed in 1670, the actual founding instrument of the company that helped create the country, sold for eighteen million dollars to holding companies belonging to the Thomson and Weston families, the same two families who had fought over the company in 1979. No corporation bid against them. HBC's financial advisers contacted a hundred and fifty potential buyers. None were willing to pay more. The families bought it specifically to give it away, donating it immediately to the Archives of Manitoba, the Manitoba Museum, the Canadian Museum of History, and the Royal Ontario Museum.

The stripes, the name, the coat of arms, the entire visual identity of three hundred and fifty-five years sold separately, to Canadian Tire, for thirty million dollars. More than the charter that started the whole story.

No level of government stepped in to buy either one. The only reason the actual birth certificate of Canada's oldest company stayed in the country, in public hands, accessible to citizens, is that two private families decided, on their own, that it should.

What Could Not Be Sold

Every other time the ground shifted beneath Hudson's Bay Company, someone in control of it asked what the company needed to become next. The French wars forced a treaty. The collapse of the fur trade forced a transformation into retail. The rise of Walmart forced Kenneth Thomson into eighteen years of triage before he finally let go. Each time, an owner chose evolution over extraction, and the company outlived the crisis.

Richard Baker was the first owner in three hundred and fifty-five years who never had to ask that question, because his business model paid him whether the company evolved or not. So it didn't. Not because change was impossible. The department store format dying everywhere, Amazon's rise, the fragmentation of retail into specialty chains, none of that made Hudson's Bay's specific death inevitable. Companies facing the exact same headwinds, Canadian Tire, Aritzia, Costco's Canadian operations, kept investing and kept surviving. What made this death inevitable was that the one person who could have demanded evolution instead of extraction had no structural reason to ever ask for it.

You can buy the stripes back. Canadian Tire already did, for thirty million dollars. What you cannot buy back is three hundred and fifty-five years of continuity, the unbroken thread from a royal charter to a Saskatoon child getting dressed for Bay Days to a sixty-two-year-old woman standing in a shoe department asking where she'll find her cosmetics now. That asset was never on any balance sheet, and it is the only one that actually mattered. It is gone, and there is no court process, no acquisition, and no amount of capital that brings it back.

A child got dressed for Bay Days in 1967, the way children get dressed for a fair. Fifty-eight years later, a sixty-two-year-old woman stood in a shoe department and said no, out loud, to a room of strangers, when she heard the news. In between those two moments, a company older than the country it helped build was bought with almost none of the buyer's own money, mortgaged against its own walls, sold off piece by piece to fund acquisitions an ocean away, and finally closed with nine thousand people owed money they will likely never see in full.

Some Canadians grieved. More, by the numbers, shrugged. Almost everyone who worked there could not afford to do either. And the man who structured the seventeen years in between never once explained himself to the country he was doing it to.

He simply declined to comment, and was given his next job within months.

This story is part of the Canadian Brand Sovereignty Series. [Read the full series →]

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Shannon Peel is a Brand Narrative and Communications Strategist. She builds strategic brand storytelling ecosystems that help businesses, executives, and thought leaders earn authority, credibility, and citations across the digital landscape.