Hudson’s Bay will sell Lord & Taylor to clothing rental subscription service Le Tote for $100 million, the company announced Wednesday.
The deal allows the department store chain to continue operations, after its Fifth Avenue flagship and other stores closed earlier this year.
In May, Hudson’s Bay said it was considering strategic alternatives for the Lord & Taylor brand, including a possible sale or merger.
Department stores as a sector have been struggling to grow sales, as falling foot traffic in malls hurt chains. Earlier this month, luxury chain Barneys New York filed for bankruptcy and JCPenney announced it was working with restructuring advisers to lessen its debt.
Le Tote is an apparel rental service that allows subscribers to rent clothes for $79 a month.
That Le Tote, which was founded as a start-up in 2012, is able to snag the longstanding department store chain, speaks to how far department stores have fallen. Lord & Taylor’s footprint had fallen to 45 department stores as of Feb. 2, down from 50 a year ago. Its Fifth avenue location was sold to WeWork.
The deal is also a sign that Le Tote is looking for physical storefronts to boost its presence and stay top of mind with consumers.
Hudson’s Bay has a market value of $1.8 billion. Trading was halted on the Toronto Stock Exchange early Wednesday.
The company previously announced it retained PJ Solomon as its financial adviser for review of Lord & Taylor’s sale.
Retailers such as Banana Republic and Urban Outfitters have recently jumped into the apparel rental market. According to a report from data analytics firm GlobalData, the rental subscription market was valued at around $1 billion in 2018 and is expected to grow more than 20 percent a year, reaching $2.5 billion by 2023.