July 31 (Reuters) - Activist shareholder Land and Buildings threatened a proxy war against Canadian retailer Hudson's Bay Co HBC.TO unless the company took drastic steps to better monetize its assets, including a potential sale of its Saks Fifth Avenue brand.
Jonathan Litt-controlled Land and Buildings had urged the company last month to consider going private and monetize its vast real estate holdings amid declining sales at its retail stores. investor, which owns nearly 5 percent of Hudson's Bay stock, also suggested that the company could redevelop the iconic Saks Fifth Avenue store in New York by converting its higher floors into condos and exit its European business.
"The company's real estate is valued at C$35 (per share) by third parties, more than three times the current share price, but is being valued in the public markets like other department store companies," Litt said in a letter to Hudson's Bay shareholders.
Litt said if the company did not make "substantive progress" in its plans, he would consider a push to remove board members.
Hudson's Bay has over $10 billion in real estate assets, with the Saks store on Fifth Avenue itself valued at $3.7 billion. company is already restructuring its business. The company said last month it would cut about 2,000 jobs across North America after a six-month review of ways to slash costs and streamline its operations. The company is also planning to open its first namesake department store in Canada in at least five years.
But Litt wants the company to do more.
"A 650,000 square feet department store is likely not the highest and best use of the real estate at one of the best locations in the United States," Litt said.
"Shrinking the department store footprint would likely help maximize the value, which we believe could well be in excess of the C$5 billion."
Hudson's Bay did not respond to calls for comment.
Department store chains have been facing declining sales as customers go online to buy everything from clothes to groceries.
Shares of Hudson's Bay were up 2.4 percent at C$10.85 in early trading, after having fallen nearly 20 percent this year.