Dive Brief:

• Hudson's Bay Co. plans to shutter its Manhattan Lord & Taylor flagship after announcing last year it had sold the Fifth Avenue real estate to coworking startup WeWork and initially planned to open a downsized Lord & Taylor store in its place, according to a press release. The company also announced it sold its Gilt brand this week.
• Additionally, the department store retailer said it closed two Lord & Taylor stores in the first quarter and plans to close up to 10 Lord & Taylor stores through 2019 to balance its physical presence with its digital efforts. As of May 5, the company operated 48 Lord & Taylor stores. In May, Reuters reported that Hudson's Bay had hired an advisor to revive, or possibly sell, the ailing luxury department store chain.
• Hudson's Bay also said Thursday its total first-quarter comparable sales fell by 0.7%, with comps at the unit that includes Lord & Taylor and the Hudson's Bay namesake brand falling 0.6%, and with larger drops at the company's European and off-price units. The one bright spot at the retailer was the Saks Fifth Avenue luxury chain, where comps increased 6% in Q1, marking the 31st quarter of positive comps, according to the retailer. Companywide, top-line sales increased 1% to $3.1 billion. Net loss from operations widened by 47% year over year, to $314 million.

Dive Insight:

Hudson's Bay — long an acquirer in the department store space — is making quick, dramatic moves to turn its own business around as it comes under pressure both from its sector and internally, from activist investors.

The move to close the retailer's Lord & Taylor flagship was framed as an effort to streamline the brand's business and reposition it as a more omnichannel retailer. After reportedly hiring advisors to improve — or divest — the department chain, Hudson's Bay last month hired Vanessa LeFebvre from Stitch Fix, where she oversaw strategy and merchandising for the subscription retailer's women's business.

On Tuesday, Hudson's Bay CEO Helena Foulkes, who joined in February following the sudden departure of Jerry Storch, said in a statement, "With a new leader dedicated to evolving our experience and merchandise assortment to best meet customer expectations and shopping preferences, we will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities." Along those lines, she highlighted Lord & Taylor's digital flagship on Walmart.com.

We'll find out eventually if trading a flagship at one of the country's great retail destinations for an online store at Walmart's website will prove effective as a long-run strategy. Plenty of outsiders have already scoffed at the partnership. "Walmart's shoppers have little in common with Lord and Taylor's shoppers," Nick Egelanian, president of retail development consulting firm SiteWorks International, told Retail Dive last fall. "Lord and Taylor shoppers are unlikely to trust the Walmart brand, and the department store industry is a dying business in any case."

If nothing else, the closing of the flagship and other Lord & Taylor stores demonstrates Foulkes' seriousness in turning the chain around and trying to forge a path back to profitability. In the brick-and-mortar world, Lord & Taylor plays in a luxury space where brands have ever more options to reach customers, and one also filled with relatively strong competitors. Nordstrom, especially, is seen by many as a department store standout, along with Hudson's Bay's own Saks brand, which is expanding, with a new store added in Q1 and the chain's Fifth Avenue flagship undergoing a major renovation while its cousin Lord & Taylor closes its flagship.

Along with the retail moves in Q1, Hudson's Bay continued selling off assets where it could, including the brand Gilt, which it acquired less than two years ago. The e-commerce brand is among several properties and business units it has sold or considered selling in the past year as it tries to stem losses, placate investors and simplify its business. Soon after Foulkes arrived at the business she acknowledged that "things do need to change."