HBC to spin off Saks Off 5th digital business
Having spun off luxury department store Saks Fifth Avenue’s online operations earlier this year, Hudson’s Bay Company (HBC) has now announced that it is also establishing the e-commerce business of its discount chain, Saks Off 5th, as a standalone company.
The separation is being carried out through a partnership with growth capital investor Insight Partners, which has led a $200 million equity investment in the digital business, valuing it at around $1 billion. Previously, Insight Partners gave the Saks Fifth Avenue e-commerce segment an injection of $500 million prior to its spin-off.
Saks Off 5th’s brick-and-mortar fleet, which is made up of 105 stores spread across the U.S. and Canada, will be run as a separate entity known as O5 and will continue to be fully owned by HBC.
The current president and CEO of Saks Off 5th, Paige Thomas, will maintain these roles at the newly digitally native business and will also join its board. In this position, she will be expected to lead the spun-off company into the future, notably by driving advances in its omnichannel capabilities, through improvements in fufillment and logistics, for example, as well as through the development of infrastructure and customer experience.
Former chief customer officer at Saks Off 5th, Rob Brooks will take on the role of president at O5, which will operate the Saks off 5th physical stores via a franchise-like model. Brooks will report directly to HBC’s governor, executive chairman and CEO, Richard Baker.
Marketing and merchandising for both O5 and the Saks Off 5th digital business will be led by the latter so as to ensure a cohesive experience across on and offline touchpoints, as, according to HBC, the customer-facing brand will not change. Returns, exchanges and SaksFirst credit cards will continue to be accepted both online and in stores.
“With a unique market position and on the heels of explosive growth, we are excited to establish Saks Off 5th as the preeminent digitally native luxury off-price retailer,” said Baker in a release. “As a true off-price business with a superior merchandise offering, Saks OFF 5TH has a significant opportunity to capture additional market share by further expanding its digital capabilities.”
“There is a category-making growth opportunity within luxury off-price, and we believe Saks Off 5th has carved out a differentiated position in an underserved market,” explained Insight Partners’ managing director, Deven Parekh. “We’ve been consistently impressed by the Saks Off 5th management team and their focus on developing an unparalleled ecommerce experience.”
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