CEO steers The Bay away from U.S.-style outlet model

The Bay is not looking to include discount stores as part of its future strategy and instead is hell-bent on selling brand name fashion and home furnishings not available at the competition, the iconic retailer’s president and chief executive said Thursday.

The department store’s No. 1 priority is to up gross profit per square foot, The Bay President and CEO Bonnie Brooks said at a speaking engagement hosted by Ad Women of Toronto. The event was the third in series called the Extraordinary Stories Speaker Series organized by the Institute of Communication Agencies.

The Bay President and CEO Bonnie Brooks speaks at an event organized by the Institute of Communication Agencies in Toronto on Thursday, May 27, 2010. QMI AGENCY / Stefania Moretti

“We’re working on a plan to differentiate ourselves from that ‘other’ department store in Canada,” Brooks said.

Brooks' bold plan to offer exclusive brands in a higher-end space stands in stark contrast to those of department stores south of the border, where outlets are increasingly becoming key drivers of growth.

Nordstrom, Saks, Neiman Marcus, Macy’s and Bloomingdale’s have all recently renewed pushes into the discount market.

Outlet stores requires a certain kind of buying strategy that is focused on volume and margins. Exclusivity, on the other hand, allows for greater freedom, Brooks said.

“We can price wherever we want because we’re not worried about the competition marking us down,” she said.

Brooks said the strategy is already working. EBITDA, or earnings before interest, taxes, depreciation and amortization, nearly doubled last quarter. The Bay, along with Zellers and Home Outfitters, operates within the Hudson’s Bay Trading Company which is not publicly traded.

“We’re well on our way to being the most successful department store in North America,” Brooks said. The Bay turns 340 years-old this year.

Since taking over the reigns roughly 18 months ago, Brooks has turned her attention to four key aspects of the business – exclusive products, great value on key items, service and loyalty programs.

In little over a year, The Bay has dropped approximately 800 brands from its portfolio and picked up only 200 carefully selected new ones, most of which were previously not available in Canada.

Take the new Halston Heritage collection for instance. Brooks’ radio ads make no mistake of mentioning a particular white Halston dress megastar Sarah Jessica Parker wears in the latest “Sex and the City” film that is only sold at The Bay.

The retailer even has plans to open additional upscale “The Room” boutiques showcasing the world’s most talked about designers.

She also said the entire sales force has been put through new training to address legacy concerns, including poor service. The Bay also has a new loyalty program in the pipeline that will work in conjunction with HBC’s existing reward program, she said.

Brooks called the job of leading the oldest continuously operating company under one name any where in the world a “daunting task” but one she accepts with “pride and honour.”

One of the most recent successes under Brooks’ watch has been the popularity and brisk sales of the 2010 Vancouver Olympic apparel, especially those red mittens. HBC sold roughly 3.5 million pairs raising more than $14.5 million for Canadian athletes.

If you are among the unlucky few who couldn't get your hands on a pair of mittens the first time around don’t fret. The company has plans to take that program forward, Brooks said.