The dog on clothes rental comes for the demanding department store.
Hudson's Bay said Wednesday that Lord & Taylor, the beleaguered department store chain founded in 1826, would be acquired by Le Tote, a seven-year-old clothing rental startup.
In an unusual deal, Hudson's Bay, the chain's parent company, will continue to own Lord & Taylor's property and cover Le Totes lease for these properties for three years. Le Tote will pay $ 100 million in cash for Lord & Taylor's brand and inventory and take control of 38 stores and the chain's digital presence. Five stores will close as part of the transaction, but the company did not say which ones.
It is a surprising marriage, especially given Le Tote's relatively low profile. The San Francisco-based company, which started in 2012, lacks name recognition for Rent the Runway, the most well-known clothing rental business, and has raised only $ 75 million in venture capital. (It's still securing funding for the purchase.) That's a tenth of the size of Lord & Taylor based on revenue, Mr. Tondon said.
The idea emerged from discussions Le Tote had with Lord & Taylor about helping the chain develop rental and subscription services, he said. Leasing of clothing and accessories has been a tear lately, and is attracting interest from high-end designers to malls like American Eagle. The startup grew to believe that it could use technology and computer knowledge to customize store visits and online shopping for Lord & Taylor customers, while injecting new fuel into the rental offering.
the technology and tools that allow us to provide a truly personalized experience to each and every customer, "Tondon said.
He described a long-term vision where a customer could download a Lord & Taylor app, visit a store and go up to a screen that would recognize her. The customer would receive product recommendations based on her digital browsing habits, and a suitable room could be curated for her, Tondon said.
The purchase probably comes as a relief to Hudson's Bay, backed by how to handle Lord & Taylor The Canadian retail group, which also owns Saks, has closed Lord & Taylor stores, sold the chain's flagship building in New York to WeWork and even started selling the items on Walmart's website. # 39; Bay said in May that it pursued "strategic alternatives" for Lord & Taylor.
Helena Foulkes, the company's CEO, has said that Lord & Taylor is in the "middle" among retailers, as she sees r at being the toughest place to be. "It's neither the luxury high-end where you can really own it, nor is it the expensive discount retailer at low prices," Foulkes said in an interview with Recode in March.
On Wednesday, Foulkes said in an interview that the deal would bring much more technology into Lord & Taylor stores and allowed Hudson's Bay to focus on Saks Fifth Avenue chain and "real estate opportunities down the road."
"It is unique to have a technology company that buys a department store chain," Foulkes said. She added that it was also good for affiliates, as a regional chain acquisition would probably have eliminated more jobs.
Mr. Tondon said on Wednesday that Lord & Taylor had about 180 corporate and 4,000 store-related workers, while Le Tote had 250 employees. Miss Foulkes did not specify how many Lord & Taylor employees would lose the job, saying the "vast majority" would be asked to stay.
Lord & Taylor customers could begin to see Le Tote signs in stores over the next few months, and start-up subscribers could also see hundreds of new brands and new options to buy underwear, swimwear and cosmetics through the service.
Mr. Tondon said the companies were preparing for "the customer of the future."
"Many of them will buy, many of them will rent, they will go into stores and return to online, "he said . "We want to be able to offer customers the opportunity to do all this."