Palisades Center Left With Two Empty Anchors
By Tina Traster
Lord & Taylor at the Palisades Center is closing its doors on January 29th, 2020, according to several sources. The closure is another blow for The Palisades Center, where former anchor J. C. Penney remains vacant.
“It’s really sad,” said a salesperson who confirmed closure of the store. “There are a lot of people who work here.”
Palisades Center’s spokesman David Aiken did not respond to calls seeking comment.
The closure comes amid a shrinkage of department stores and big boxes in Rockland, and nationally. Empty stores fronts in the Route 59 corridor and in the Palisades Center are victims of the retail apocalypse, a syndrome occurring nationwide as a response to both a glut of retail as well as a migration to online shopping. And now with a potential recession looming and a tariff war, the prospects of a healthy retail scene looks even more pessimistic.
Meanwhile, EklecCo NewCo, the Delaware-based LLC that owns Palisades Center, is fighting Clarkstown over a town-imposed restriction limiting its right to build out and lease an existing but unused 240,000-square-foot section on the mall’s fourth floor. The 1.85 million square foot mall needs town and voter approval in order to expand.
According to a new report from global marketing research firm Coresight Research, there have been 29% more store closings announced in 2019 compared to all of 2018. Based on Coresight Research’s figures, retailers’ earnings reports, bankruptcy filings and other records, more than 7,600 stores are slated to shutter this year and thousands of locations already gone.
Last month, Hudson’s Bay Company announced that it is selling Lord & Taylor to clothing rental subscription service Le Tote for $100 million but the deal still has hurdles to jump.
The allows the department store chain to continue and potentially transform operations as its sales have fallen and it has lost touch with today’s shoppers. It will also allow Hudson’s Bay, owner of Saks Fifth Avenue and Hudson’s Bay in Canada, to further simplify its business, as Executive Chairman Richard Baker looks to take the company private while the retailer grapples with sweeping industry change.
Hudson’s Bay is continuing to downsize the Lord & Taylor chain as part of a plan announced last year to close up to 10 of the 48 stores that it operated at the time. Last week, the company listed an additional pair of Lord & Taylor stores in struggling malls for closure later this year: Lakeforest Mall in Gaithersburg, Maryland and Lakeside Mall in Sterling Heights, Michigan.
Baker has already begun to unwind the retail empire he built through deals, selling flash sale site Gilt and European department store Galeria Kaufhof. Hudson’s Bay struck a deal with Work Property
Hudson’s Bay will be paid $99.5 million Canadian dollars ($75 million) in cash after the deal closes and a secured promissory note of CA$33.2 million ($25 million) is payable in cash after two years. Hudson’s Bay will also receive an equity stake in Le Tote, two seats on its board and certain rights as a minority shareholder.
Under the deal, Le Tote will acquire Lord & Taylor’s brand and intellectual property and assume operations of 38 stores, its digital channels and its inventory. In fiscal 2018, Lord & Taylor generated $1.4 billion, or roughly 14% of Hudson’s Bay’s $9.4 billion in retail sales. Hudson’s Bay has a market value of CA$1.8 billion ($1.35 billion).
Le Tote, a rental service founded 2012 that allows subscribers to rent clothes for $79 monthly, has plans to reinvent Lord & Taylor, said its founder, Brett Northart.
“The customers have spoken, and people are looking for smaller, more personalized locations — that’s something we do well at Le Tote,” said Northart.
It will look to build out new smaller-format stores, potentially beyond the Northeast and Mid-Atlantic where Lord & Taylor is traditionally found. It may also repurpose existing Lord & Taylor stores, where locations no longer make sense for the evolving business.
As part of the deal, Hudson’s Bay will retain ownership of its Lord & Taylor real estate and, starting in 2021, it has the right to reassess and potentially redevelop these locations. For at least the first three years, Hudson’s Bay has agreed to be responsible for the rent payments owed by Lord & Taylor, or about C$77 million ($58 million) annually, net of distributions.
Le Tote plans to personalize and expand Lord & Taylor’s offerings beyond the dresses for which the department store has been historically known. One of those services will be Le Tote’s core business: rental.
According to a report from data analytics firm GlobalData, the rental subscription market was valued at around $1 billion in 2018 and is expected to grow more than 20% a year, reaching $2.5 billion by 2023. Other retailers like Gap’s Banana Republic and Urban Outfitters have recently jumped into the apparel rental market, looking to grab the growth in this segment and reach millennial consumers who have been using these types of services.