Lately, I’ve been drawn to a research topic that feels both timely and revealing: what causes major companies—especially legacy giants—to fall? Are there any patterns behind it so I started this series. Is it poor decision-making, failure to adapt to shifting market trends, or something deeper within their internal structures?

Today we are doing Hudson's Bay Company (HBC)

Now in my G12 accounting class, we were given a news about HBC timeline and asked to conduct a SWOT analysis, Porter’s Five Forces, and a stakeholder analysis in class on Hudson’s Bay Company (HBC. I ended up receiving a perfect score on the assignment, and after getting my marked sheet back, I thought it’d be worth sharing some reflections and my analysis here.

To be honest, I’ve always thought of HBC as something deeply rooted in Canadian identity—almost too historic to fail. It felt like one of those institutions that would "certainly" always be there. But seeing its decline and eventual bankruptcy was a wake-up call.

This topic instantly brought me back to the 2023 CEBCC case competition, where I was tasked with proposing a turnaround strategy for HBC after Nordstrom exited the Canadian market. Even then, department stores were rapidly losing relevance, squeezed by the rise of e-commerce and shifting consumer habits. HBC’s future already felt fragile.

SWOT Analysis of Hudson's Bay Company

Strengths

• Historic brand recognition and legacy: With 355 years of history, Hudson's Bay has established deep roots in Canadian retail culture, creating strong brand recognition that newer retailers cannot match.

• Valuable real estate portfolio: Despite financial struggles, the company maintains prime retail locations that have significant value, as evidenced by previous successful real estate transactions totaling billions of dollars.

• Privatization provided initial flexibility: When Richard Baker took the company private in 2020, it removed public market pressures, theoretically allowing for long-term planning and operational transformation.

Weaknesses

• Severe underinvestment in physical stores: Hudson's Bay failed to revamp increasingly out-of-date stores, instead allocating $130 million to a digital expansion strategy that "did not yield the anticipated financial returns."

• Misguided e-commerce approach: The separation of e-commerce and store operations in 2021 led to higher overhead costs, operational complexity, and inventory management problems that accelerated the company's decline.

• Mounting financial losses: Hudson's Bay reported a net loss of $329.7 million in the 12 months ended January 31, 2025, with persistent inability to pay suppliers and landlords.

• Declining customer experience: Cost-cutting measures resulted in reduced staffing levels and marketing investments, making it difficult to attract new shoppers, particularly younger consumers.

Opportunities

• Potential for smaller, focused retail formats: If Hudson's Bay survives, it could operate in smaller spaces that better match current consumer preferences rather than maintaining oversized department stores.

• CCAA restructuring process: Court-mandated protection from creditors provides a window to restructure operations and negotiate with stakeholders to establish a more viable business model.

Threats

• Intensifying industry competition: Specialty retailers like Shoppers Drug Mart and Sephora have captured high-margin beauty and fragrance businesses that were once department store mainstays.

• Brand direct-to-consumer shifts: Manufacturers that previously relied on department stores now reach consumers directly through their own stores and online channels, controlling the sales experience and retaining higher margins.

• Post-pandemic consumer behavior changes: Downtown locations face persistently lower foot traffic due to remote work patterns, while these stores typically have the highest operating costs.

• Economic pressures on consumers: Inflation and interest rate increases have reduced discretionary spending, forcing retailers to discount heavily and further compressing margins.

• Canada-U.S. trade tensions: According to court documents, trade uncertainties contributed to the breakdown of financing talks that might have provided needed liquidity.

Stakeholder Analysis

Internal Stakeholders

Employees (9,000+)

• Facing immediate job insecurity: With potential closure of approximately half of all stores, thousands of retail workers face unemployment in a challenging economic environment.

• Staff have already experienced multiple rounds of layoffs and cost-cutting measures that affected working conditions.

• Many long-term employees have dedicated careers to the company and face difficult job transitions.

Executive Leadership Team

• Managing crisis amid reputational damage: Leadership must navigate CCAA proceedings while addressing their role in failed strategies that led to the company's decline.

• Their decisions about digital investment and store neglect directly contributed to the current situation.

• Executives face pressure to develop a viable turnaround plan with limited financial resources.

Richard Baker and Ownership Group

• Balancing portfolio interests against Canadian operations: After extracting significant value from real estate assets, ownership must decide how much to invest in saving the Canadian retail operations.

• Baker's previous statements about the company's financial strength now appear disconnected from reality.

• Ownership has already restructured to separate more valuable U.S. assets from the struggling Canadian business.

External Stakeholders

Suppliers and Vendors

• Facing significant unpaid invoices: Many suppliers have gone months without payment, creating cash flow problems especially for smaller vendors dependent on Hudson's Bay business.

• Suppliers must decide whether to continue shipping merchandise to a financially troubled retailer.

• Fashion and home goods manufacturers may need to find alternative retail channels if Hudson's Bay contracts.

Mall Owners and Commercial Landlords

• Confronting potential major vacancies: Property companies like Cadillac Fairview and RioCan face the prospect of enormous empty anchor spaces that are difficult to fill with alternative tenants.

• Landlords are owed substantial back rent while simultaneously being asked for concessions to keep stores open.

• The loss of Hudson's Bay as an anchor tenant could reduce overall mall traffic, affecting other retailers.

Canadian Consumers

• Losing a historic retail institution: Shoppers face the potential loss of a 355-year-old Canadian retail icon that has been part of the national identity and shopping landscape.

• Consumers in smaller markets may lose a significant local shopping option if their Hudson's Bay location closes.

• Loyalty program members may face uncertainty about the future value of their points and rewards.