Richard Baker bought Hudson's Bay in 2008 for approximately $1.1 billion. Within three years he had sold the Zellers store leases alone to Target for $1.8 billion — more than he had paid for the entire company. He had, by any measure, acquired North America's oldest retailer for free, with cash left over. Seventeen years later, the company entered compulsory liquidation with $3.3 million in cash, $329 million in losses in the prior year alone, and broken escalators that had been left unrepaired for months or years. The question is not why Hudson's Bay ran out of money. The question is what kind of governance produces that outcome from that starting position.
What Actually Happened
The Hudson's Bay Company's 355-year history made it, simultaneously, one of the most recognisable brands in Canada and one of the most structurally vulnerable retailers in North America. When Baker's NRDC Equity Partners acquired it in 2008, they inherited a chain whose real estate was worth considerably more than its retail operations — a classic private equity entry point. What followed was a seventeen-year period in which the real estate was systematically monetised, acquisitions were stacked onto the balance sheet, the retail operation was neglected, and leadership rotated with a frequency that made strategic continuity structurally impossible.
The acquisitions told the story plainly. Saks Fifth Avenue in 2013 for $2.9 billion. Lord and Taylor — which closed entirely in 2020. Galeria Kaufhof in Germany — opened as Hudson's Bay stores in the Netherlands and then retreated. Each acquisition added debt and complexity without strengthening the core Canadian business. Cash generated by the Canadian operations was used to fund expansion elsewhere. By the time HBC went private in 2020, the Bay's stores had been visibly deteriorating for years — broken escalators, failed HVAC systems, unfilled staffing positions, outdated technology maintained by patching legacy infrastructure rather than replacing it.
2008: Richard Baker's NRDC Equity Partners acquires Hudson's Bay for approximately $1.1 billion — gaining control of what Baker himself acknowledged was approximately $5 billion in real estate for $1.1 billion paid.
2011: HBC sells the Zellers store leases to Target Corporation for $1.8 billion — more than the entire company cost to acquire. The proceeds are not reinvested in the Bay's retail operations. The balance sheet begins accumulating debt from subsequent acquisitions.
2012–2013: Baker takes HBC public on the Toronto Stock Exchange and immediately pursues the $2.9 billion acquisition of Saks Inc., including Saks Fifth Avenue. The acquisition adds significant debt and management complexity. The Canadian operations continue to fund the broader empire's ambitions.
2013–2020: Seven different CEOs lead Hudson's Bay in thirteen years. Bonnie Brooks, who built genuine retail credibility, departs in 2013. What follows is described by retail analysts as a "revolving door" — each CEO lasting a few years, each promising a new strategy. The stores continue to deteriorate physically. E-commerce investment is made, then reversed: Baker separates TheBay.com as a standalone financial entity — a decision retail analysts call structurally incoherent from a customer perspective — before eventually reversing the separation.
2020: Baker takes HBC private, buying out public shareholders. Lord and Taylor, the US sister chain, closes entirely. The pandemic shutters stores and accelerates the cash burn. HBC receives government support but burns through it amid repeated closures. Baker's focus shifts to the US luxury market — the Neiman Marcus acquisition — leaving the Canadian operations increasingly starved of investment and leadership.
2023: Hudson's Bay falls significantly behind on payments to vendors. By January 2025, it is paying suppliers an average of 57 days late — with late payment "more the norm than the exception." The only party willing to provide liquidity is Cadillac Fairview, a landlord, which extends a $200 million emergency term loan.
December 2024: Baker restructures the empire, cleaving Hudson's Bay Canada off from Saks Global — the US luxury business containing approximately US$7 billion in real estate assets — as a standalone entity. Baker walks away from the Canadian business with the US assets intact. Hudson's Bay Canada enters the CCAA process alone, carrying the debt, the broken stores, the unpaid suppliers, and the 9,364 employees.
March 7, 2025: Hudson's Bay files for creditor protection. Net loss of $329.7 million for the year ended January 31, 2025. Cash on hand: $3.3 million. Total debt and lease obligations: over $2 billion. The Ontario court grants the initial stay. Justice Osborne opens his ruling: "It is hard not to have a sense of melancholy when considering the Application before me."
June 2025: All Hudson's Bay stores close. 8,300 retail employees lose their jobs. The 1670 royal charter — the founding document of the oldest company in North America — is auctioned alongside 1,700 pieces of art and 2,700 company artifacts. Canadian Tire acquires the brand's intellectual property. After 355 years, the company ceases to exist.
The post-collapse explanation — pandemic, trade tensions, department store headwinds — contains truth but not the whole truth. Sears Canada failed. Target Canada failed. Nordstrom Canada failed. The department store format has faced structural pressure across North America. But the question NAVETRA™ asks is not whether the market was difficult. It is whether the governance architecture existed to read the market accurately, allocate resources to the people and operations that needed them, and make strategic decisions that were grounded in a true picture of where the business actually was.
"Financial engineering, Richard Baker's specialty, can only get a chief executive officer so far. To build on a four-century legacy, an executive actually has to execute. That's where Mr. Baker fell short — and why 9,000 Hudson's Bay employees face losing their jobs."
The Five NAVETRA™ Domains That Were Failing
NAVETRA™ measures the ten organisational and human domains that determine whether governance functions in practice. Hudson's Bay's collapse was the product of five domains failing in tandem — not for months, but for years before the cash ran out.
Is the governing owner and the operational leadership team working from the same strategic picture — a shared, honest assessment of where the retail business stands, what it needs, and what trade-offs are being made when capital flows toward acquisitions rather than operations?
At Hudson's Bay: Baker's background was real estate, not retail. The Globe and Mail reported that landlords described him as "a clever real estate investor, but a terrible department store operator." The revolving door of seven CEOs in thirteen years meant that no single retail leader had the tenure, the authority, or the structural backing to build a coherent long-term retail strategy. Each CEO inherited a deteriorating estate, an under-invested technology stack, and a capital allocation structure that consistently prioritised deal-making over operations. The governing owner and the operational leadership team were never in alignment about what the business was: Baker saw a real estate and financial engineering platform; the retail operation needed to be a functioning, competitive department store. Leadership Alignment failure at Hudson's Bay was baked into the ownership structure from 2008 onward.
Is the organisation structurally aligned toward what customers need — or has the internal culture been shaped by financial engineering priorities that make retail excellence structurally secondary to deal execution and cost extraction?
At Hudson's Bay: the BoF analysis identified the core Organisational Alignment failure precisely — private equity's structural incentive to cut operational costs, combined with the debt burden placed on the retail entity, meant that the organisation was internally aligned to cost extraction rather than retail excellence. Stores had broken escalators and failed HVAC systems for months or years. Staffing levels were depleted. The technology infrastructure was patched rather than replaced. The company was a signatory to the Prompt Payment Code — and was paying suppliers 57 days late. These are not random operational failures. They are the outputs of an organisation that, at every level, was making resource allocation decisions shaped by a financial engineering model in which operational investment in retail was structurally lower priority than servicing debt and enabling acquisitions.
Does the organisation have the structural capacity to process signals about competitive disruption — e-commerce, specialty retail expansion, shifting consumer behaviour — and translate them into strategic responses before the market displacement becomes irreversible?
At Hudson's Bay: the competitive threats were visible, documented, and not secret. Amazon, Sephora, Aritzia, Lululemon, Uniqlo, and digital-first brands were systematically taking the categories and the customers that had historically been Hudson's Bay's core. The retail industry's e-commerce transition was not a surprise — it was the defining retail story of Baker's entire seventeen-year tenure. The response was structurally inadequate: TheBay.com was separated as a standalone financial entity (reversed later, after the damage was done), investment in digital was repeatedly deferred in favour of debt service and acquisition, and the physical store experience deteriorated to the point where — as retail analysts noted — the dilapidated store environment directly contradicted whatever upmarket positioning strategy each successive CEO was attempting. External Risk Readiness failure at Hudson's Bay was not about the signals being absent. They were present, visible, and acted upon by every competitor that survived.
Is the organisation able to attract, retain, and develop the retail leadership talent required to compete — or does the ownership and governance structure create conditions in which capable retail leaders cannot build the long-term strategies the business needs?
At Hudson's Bay: Bonnie Brooks — the one CEO universally cited as having genuine retail competence — departed in 2013 after five years. What followed was described by retail analysts as a "13-year revolving door": Jerry Storch (former Toys R Us CEO), Helena Foulkes (former CVS Health president), Iain Nairn, Wayne Drummond, Sophia Hwang-Judiesch, Liz Rodbell. Each lasting roughly two to three years. The pattern is not coincidental. When the governing owner's strategic orientation is real estate and financial engineering rather than retail operations, when capital allocation consistently favours acquisitions over the operational investment that retail CEOs need to execute their strategies, and when the board has no independent mechanism for evaluating whether its retail strategy is working — capable retail leaders either cannot succeed or leave when they cannot. The revolving door is not a cause of the failure. It is a symptom of Hiring Friction at the governance level.
Are the real estate function, the retail operations function, the technology function, and the financial engineering function working from a shared picture of what the business needs to survive and compete — or is each function operating to its own priorities, with no governance mechanism to reconcile the conflicts?
At Hudson's Bay: the real estate function and the retail operations function were structurally misaligned for seventeen years. Real estate decisions — selling flagship properties, mortgaging others, extracting value from the estate — consistently preceded and constrained retail decisions about what to invest in, what to close, and how to compete. The technology function was left patching legacy infrastructure because the capital allocation that would have enabled replacement was directed elsewhere. The financial engineering function — structuring acquisitions, managing debt, eventually separating Saks Global from the Canadian entity months before the Canadian entity's collapse — operated entirely separately from the retail operational function that was managing deteriorating stores and unpaid suppliers. The December 2024 separation of Saks Global from Hudson's Bay Canada — executed months before filing — was the final expression of this misalignment: the financially valuable assets were preserved, and the retail operating entity was left to enter liquidation alone.
The Governance Architecture That Was Never Built
The most instructive comparison is the one Baker himself provided. He paid $1.1 billion for Hudson's Bay. He sold the Zellers leases alone for $1.8 billion. He had, in effect, acquired North America's oldest retailer for free, with $700 million left over that could have been invested in the operations. The question retail analysts have asked — and cannot quite answer — is how an asset acquired for no net cost could be run into the ground so thoroughly.
The answer NAVETRA™ offers is not about Baker's intent — multiple former executives described him as genuinely wanting the Bay to thrive. It is about the governance architecture. A governing owner whose expertise is real estate, running a company whose survival depends on retail excellence, with no independent board mechanism for assessing whether the retail operations are receiving what they need — is a governance structure that will systematically underinvest in retail and overinvest in financial engineering, regardless of intent. The five NAVETRA™ domains that were failing were not failing because of bad people. They were failing because the structural conditions that would have made the right decisions possible did not exist.
355 years ended with $3.3 million in cash, 8,300 employees unemployed, broken escalators, and a founding royal charter auctioned alongside corporate artifacts. The company was acquired for free, with cash left over. Hudson's Bay is not a story about a department store that couldn't survive market disruption. Every department store faces market disruption. It is a story about a governance architecture that was built for financial engineering and real estate — and was therefore structurally incapable of producing the Leadership Alignment, Organisational Alignment, External Risk Readiness, Hiring Friction management, and Cross-Functional Alignment that retail survival requires. The market didn't end Hudson's Bay. The governance did.
Justice Osborne's melancholy was well-placed. This was not inevitable.
The Question for Every Founder-Led and PE-Backed Board
Hudson's Bay is a particularly Canadian tragedy, but the governance pattern it represents is universal. When a governing owner's expertise, incentives, and strategic instincts are misaligned with what the operating business actually needs — and when no independent governance mechanism exists to surface that misalignment and require it to be addressed — the operating business will be systematically deprioritised in every resource allocation decision, every leadership appointment, every capital structure choice.
The seven CEOs in thirteen years were not a coincidence. They were the output of a governance structure that could not give any single retail leader what they needed to succeed — the capital, the tenure, and the strategic backing to compete against Amazon, Sephora, and Aritzia. Each CEO left or was removed when their retail strategy could not be executed within the financial constraints the ownership structure imposed. That is not a CEO selection problem. That is a governance architecture problem.
NAVETRA™ measures the five domains that were failing at Hudson's Bay — and measures them before the cash runs out, before the escalators break, and before the royal charter goes to auction. The oldest company in North America did not need to end this way.
Financial engineering extracts value from an operating business. Governance is what determines whether the operating business survives long enough to have value left to extract.