Shares of the department store chain dropped as much as 12.5 percent in early trading on the Toronto Stock Exchange, and were down 6.5 percent at C$9.93 at 9:40 a.m. ET (1340 GMT), surrendering nearly all their gains from Monday when they hit a four-month high.
The announcement comes a day after HBC revealed it was selling its online banner Gilt Groupe to Rue La La.
Hudson's Bay Co. posted a loss of $400 million in its latest quarter compared with a loss of $221 million a year ago.
Hudson's Bay engaged investment bankers and consultants to advise on potential deals regarding its department store portfolio and/or a restructure of its business, and reached a conditional agreement to sell its Vancouver flagship store building, people familiar with the matters told Reuters in April and May.
Revenue totalled almost $3.09 billion, up from almost $3.06 billion a year ago.
Other parts of HBC's business did much better during the quarter: Comparable sales, a metric that includes online sales but excludes stores opened or closed in the last 12 months, rose 6% at Saks Fifth Avenue, its strongest result in years. However, those gains were offset by a 6.6 percent drop in comparable sales in its European division, which includes Kaufhof, Germany's largest retail chain, and new stores in the Netherlands, and a 3.5 percent drop in its Saks OFF 5th banner. HBC did not say which of the existing 48 Lord & Taylor stores will close, as it is still negotiating with landlords.
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The deal also freed up higher department store floors for WeWork's shared office work spaces in Toronto, Vancouver and Germany and had an option to lease back the 104-year old NY flagship, though HBC said Tuesday that it will not reopen the store.
Like its competitors, Lord & Taylor is wrestling with a shift as consumers shop online and less at department stores. She said she reorganized management there to have experienced executives run different regions and report directly to her. In contrast, that measure was down 6.6 percent at its European chains, which Foulkes said was partly due to bloated inventories.
She said HBC's discount business, including Saks OFF 5, is under-performing the market and "we have not been pleased with our performance".
"We know that this is a business that is changing rapidly and we need to be nimble and focused on where we can improve profitability". This customer-focused mindset will dictate how we think about key functions of the business, and I see opportunity to dramatically improve our marketing and digital operations while also refining company wide processes that impact our end to end customer experience.
Hudson's Bay does not provide a breakdown of the earnings of individual divisions.