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Wednesday, February 4, 2009

Husdon's Bay cuts 1000 jobs

From The Star

Canada's largest department store chain is slashing 1,000 jobs across Canada, or 5 per cent of its full-time workforce, citing the need to cut costs.

Hudson's Bay Co. said today that the job losses, which affect mainly head office staff in accounting, information technology and logistics, would help it save $150 million a year.

The job cuts, effective today, are the result of a strategic decision by Hudson's Bay's new U.S. owners to combine more of its Canadian and U.S. operations to save money.

But there could be more cost-cutting if business conditions worsen, the retailer warned.

"As the economy changes, we will then be forced to react to what the economy does," said Jeffrey Sherman, chief executive officer of Hudson's Bay Trading Co., who oversees the business on both sides of the border.

"Never and finished are too very difficult words to use," Sherman said in a telephone interview.

"We're expecting the business to remain very challenging," he said.

Today's announcement completes a program the company announced a month ago that would combine the back-office services of both its Canadian and U.S. operations.

The company's U.S. operations include the upscale department store chain Lord & Taylor, which has announced 290 job cuts over the last five months, or roughly 3.5 per cent of its total workforce of 9,000 at its 48 stores.

"We believe this new structure will allow us to better compete during these challenging economic times and ensure our long-term success," said Sherman.

"These changes allow us to be more responsive to customer needs and expectations while at the same time aggressively implement our business strategy in order to grow sales and earnings," Sherman added.

The company, which is privately held and doesn't publish financial results, has also cut travel, marketing and other expenses, he said.

Overall retail sales have plunged in the U.S. after a mortgage crisis that spread through the financial system around the globe zapped jobs and consumer confidence. Retail sales in Canada have also slowed, though at a more gradual rate.

Sherman said he thinks his stores are performing slightly better than competitors, and while Zellers has long struggled to compete with Wal-Mart, he said he believes "we're very competitive with Wal-Mart."

New presidents at both the Bay and Zellers are bringing new energy to those stores, and making changes that resonate with customers, he said.

Some of the Canadian job losses will be at the store level, but will not affect customer service, the company said.

Hudson's Bay operates 600 stores across Canada and employs about 60,000 people, including part-timers.

Combined with a $70 million investment announced in January, these initiatives will contribute to the Hudson's Bay Co. rapidly re-positioning the Bay and Zellers for Canadian consumers, the company said.

"Each of the banners has world-class executives managing the businesses who will benefit from more focused resources and the ability to drive growth," said Sherman. "We will be better positioned to succeed in the long term."

Sherman, a seasoned U.S. retail executive, was brought in after Hudson's Bay was sold to NRDC Equity, a private equity firm in the U.S.