HBC has used its property savvy to secure one other $340 million in money that could be used to bolster its retail operations — and chief executive officer Richard Baker can also be using the sale as a possibility to underscore his company’s real estate backbone.

“HBC is a holding company,” Baker told WWD in what become a Sunday explainer on his business empire. “Our largest business is our real estate business. Everyone seems to have forgotten that I used to be an actual estate guy, still am, and that HBC is primarily an actual estate company. We own $7 billion value of real estate. 

“We recurrently monetize, on a pre-organized campaign, our real estate assets,” he said. “We have now a big team that works on approvals and leasing and selling and what have you ever.” 

The corporate owns or controls — outright or with three way partnership partners — roughly 42 million square feet of gross leasable area in North America. 

“We’re a wealthy company that owns an actual estate company that uses the money flow that comes out of the true estate as a way to nourish and grow our businesses,” Baker said, noting HBC has been investing in its digital luxury business.  

“Saks.com goes to be a very powerful, biggest, strongest luxury digital retailer in the entire world,” Baker claimed. “As everyone else ran out of cash and fell into the bottom, saks.com picked up the business because we invested in our business.”

The brand new money coming into HBC now got here from sales over the past week of real estate in Canada and the U.S., although Baker said the contracts included agreements that prevented him from identifying the precise properties. 

HBC sells $300 million to $500 million in real estate every year, raising money that strengthens its balance sheet, but doesn’t count toward its earnings before interest, taxes, depreciation and amortization. 

“We do this yr in, yr out — that’s what HBC is,” Baker said. 

That gives lots of cushion for the firm’s operating divisions, which include the Saks Fifth Avenue, Saks Off fifth and Hudson’s Bay brick-and-mortar businesses. Individually, HBC can also be majority owner of those brands’ e-commerce businesses. 

And while HBC has its real estate portfolio, the retail businesses are way more subject to the backwards and forwards of the buyer.

“We have now been excellent predictors of the economy, all the way through the pandemic and we made a selected decision initially of our fiscal 2023 yr that this was going to be a slow yr,” Baker said. 

That definitely turned out to be true, with retailers across the spectrum reporting weakness as consumers digest all of the moving parts within the economy, from higher rates of interest to still-significant inflation.

“We proactively lowered our inventory, which suggests we ordered less,” he said. The corporate has also cut some brands. 

That has reverberated through the market with smaller vendors griping about Saks, although the companies of larger vendors are said to have continued uninterrupted. 

There have also been other rumblings which have dogged the business in the commonly shaky retail environment.

The Instagram account Estée Laundry posted last week that Estée Lauder Cos. Inc. has issued a directive that Saks is on credit hold for all Lauder brands, which include Tom Ford Beauty, Jo Malone, Bobbi Brown, MAC, La Mer and more. Some sources backed that up, while others said there was a passing credit dispute and that the wonder giant remains to be shipping Saks as usual. 

There was loads of Lauder product available on saks.com over the weekend. And it’s common for rumors to flow into or for vendors to gripe when times are tough.  

Baker clearly sees himself as floating above the fray, together with his retail businesses backed by his company’s real estate holdings and large plans ahead, particularly for saks.com. 

Those plans could get even greater. Although Baker declined to comment on it within the interview, he has been said to be once more courting Saks’ longtime rival Neiman Marcus, even though it remains to be unclear if the retail stars align for a luxury retail takeover.