Fashion rental subscription service Le Tote is now officially the owner of the Lord & Taylor business.
The company completed the acquisition from Hudson’s Bay Co. on Friday for $75 million in cash and a $25 million secured promissory note payable in cash after two years, subject to customary adjustments.
Under the terms of the deal, Le Tote now owns the Lord & Taylor brand and related intellectual property assets, and has taken over operation of the chain’s 38 stores and e-commerce site. Stores that occupy real estate assets owned by Hudson’s Bay Company remain under HBC’s ownership. For the initial three years following closure of the transaction, HBC will retain economic responsibility for the rent obligations connected to the store base.
HBC also holds a 25 percent equity stake in Le Tote and has named two of its executives to the rental innovator’s board: chief marketing officer Bari Harlam and corporate development executive Nick Cavallaro.
Le Tote chief merchandising officer Ruth Hartman is taking on a new role as president of Lord & Taylor.
“There are lots of great things in store for the Lord & Taylor brand…. We really are out to create the most personalized retail experience possible,” Hartman said in a telephone interview Friday.
Customers of Lord & Taylor and Le Tote share similar psychographics, Hartman explained. They’re busy women seeking to simplify their lives. “Having a curated assortment under one roof will allow the customer access regardless of where she wants to shop by channel,” she added, noting that many of the brands sold at Lord & Taylor overlap with Le Tote’s inventory pool.
Le Tote’s long-term vision is to integrate inventory at both brands into one streamlined back-office platform so that products that aren’t selling quickly can be listed on the subscription side of the business and generate stronger revenue through multiple rentals until they’re ultimately purchased by rental customer, Hartman explained.
“From a business standpoint, that will give both customer bases a huge rental inventory to pull from, one that I believe will be the largest in the retail industry,” she said.
In October, Le Tote opened a showroom it calls a “Rental Studio” at a Yonkers Lord & Taylor store in suburban New York, marking the first collaboration between the two brands. While the Lord & Taylor brand skews toward an older customer relative to the typical Le Tote renter, Hartman said she’s heard anecdotal evidence of customers commenting about how their daughters would love the subscription service.
Le Tote is considering opening additional studio and shop-in-shop concepts further down the road in order to forge this connection and crossover with the Lord & Taylor customer base.
The Le Tote service allows subscribers to select the apparel and accessories they want to populate their monthly box. This flexibility enables users to access seasonal items that might be useful for a month but not as a permanent investment.