Financial expert says HBC's days are numbered

Jason Del Vicario has been keeping an eye on companies like the Hudson's Bay Company for the past 18 years.

He's a portfolio manager with Holliswealth and has been watching large department stores struggle in the changing era of online shopping.

With the recent sale of HBC's Lord & Taylor and the 'For Sale' sign posted at the flagship Vancouver HBC, the Company's struggle to stay afloat is becoming apparent in the public eye.

This week, HBC's European store received a $3.5 billion unsolicited offer from a rival European real estate company that hopes to acquire HBC's European retail assets and real estate.

The offer came from the Austrian company, Signa.

"This is the same company HBC outbid for the Kaufhof brand and assets in 2015 for 2.5 billion Euros," said Del Vicario.

While HBC is trying to plug the leaks by selling off properties and leasing certain spaces, Del Vicario believes the Company's actions are reflective of the current retail sector.

"Almost the entire retail sector is stifling with very few pockets of strength," he said.

This is especially true for large department store retailers, as they're expensive to operate.

"It’s becoming quickly obvious that retail sales is not the most profitable or best use of the buildings or land."

When the HBC flagship VANCOUVER store at Georgia and Granville sells, the store will remain intact on a few floors and the remainder of the floors will be occupied by WeWork, a company that allows people to rent office space.

"I wouldn't be surprised to see this trend continue as new economy companies will take over space traditionally run by old economy companies such as HBC. The fact HBC owns their stores and land is the only silver lining in this saga."

Johnathan Litt is the founder and CIO of Land and Buildings, a global real estate company, but he's also a shareholder with HBC. He wrote a letter to HBC, suggesting it focus more on operating as a real estate company and less on retail.

"The simple fact is that large department stores have seen steadily dropping same store sales now for half a decade. Unless one thinks that this trend will reverse- I personally do not -then the next obvious decision is how to maximize revenues per square foot," said Del Vicario.

He believes that selling, renting or leasing property will be more profitable in the long run and will best protect its shareholder wealth.

An avid baseball fan, Del Vicario puts HBC's future as a retail store, in baseball terms:

"If we use the baseball ninth inning analogy, I would say we are in the fifth inning...let’s say mid way."

Essentially, he believes, the future of large department stores are numbered and the traditional shoppers will have to come to terms with it eventually.