One of retail’s oldest existing department stores is getting a lifeline from a young e-commerce player.
Struggling department store chain Lord + Taylor, which was founded in 1826, is being acquired by Le Tote, a 7-year-old clothing rental subscription website, in a $75 million deal.
Lord + Taylor owner Hudson’s Bay Co. (HBC) announced the agreement Wednesday in a statement. HBC said that the deal was designed around the idea of merging Le Tote’s proprietary technology, data, and innovation with Lord + Taylor’s traditional store footprint, e-commerce presence, and merchandise selection to offer consumers “a new experience” in the mid-market segment.
The deal entangles the two retailers on two levels. Le Tote will acquire the Lord + Taylor brand and related intellectual property while assuming operations of 38 stores, Lord + Taylor’s digital channels, and its inventory. And HBC will receive an equity stake in Le Tote, two seats on the company’s board of directors, and “certain rights as a minority shareholder.”
HBC and HBS Global Properties, HBC’s real estate joint venture, will retain ownership of all owned and ground-leased real estate assets related to Lord + Taylor. And for at least the initial three years, HBC has agreed to maintain economic responsibility for the rent payments owed by Lord + Taylor at the locations operated by Le Tote.
“We’re excited to have reached an agreement with Le Tote that creates a new model for Lord + Taylor, bringing together fashion rental subscriptions with traditional retail,” said Helena Foulkes, HBC’s chief executive officer, in the statement. “Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord + Taylor, its loyal customers, and dedicated associates.”
Le Tote is a data-driven fashion subscription service that offers women’s clothing and accessories for a flat monthly fee. The retailer partners with hundreds of brands on the contemporary tier (Lord + Taylor’s territory), including French Connection, Vince Camuto, BCBGeneration, Kate Spade, Rebecca Minkoff, and Calvin Klein.
Even its founding was thoroughly modern—it was backed by the Y Combinator and a laundry list of well-known venture capitalists, including Andreessen Horowitz, GV, Azure Capital Partners, Lerer Hippeau, Simon Ventures, Sway Ventures, Epic Ventures, Arsenal Venture Partners, and FundersClub.
Le Tote is in the process of securing financing for the full purchase price, and the transaction is expected to close before the start of the 2019 holiday season.
In a message on its website, the rental fashion company wrote, “Something big is happening! We’re acquiring Lord + Taylor! Get excited for more brands, styles and 1,000s of options for you to rent. Just wear, return, repeat.”
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