For a while, many wondered what would become of Canadian retailer Hudson’s Bay, which was about to fold up entirely. But another Canadian retail giant, Canadian Tire (TSE:CTC.A) stepped in to give Hudson’s Bay a breath of new life in its own shop. Canadian Tire picked up Hudson’s Bay’s intellectual property, and in so doing, would keep a part of the retailer alive for some time to come. Investors applauded the measure, sending shares up nearly 2% in Friday morning’s trading.
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Canadian Tire announced that it would buy the intellectual property of Hudson’s Bay for $30 million, reports noted, which includes the “four stripes” motif that Hudson’s Bay popularized. This includes the various logos, the company names, and the “coat of arms” symbol along with the four stripes concept. The deal still, apparently, requires court approval to undertake, but given the current environment, the approval is likely to go through.
Hudson’s Bay has been fighting off creditors for months now, having received court protection back in March, and subsequently firing up an asset sale. Next month, Hudson’s Bay will be closing close to 100 stores, including 80 Hudson’s Bay locations still operating, and 16 stores with Saks branding. Reports note that Hudson’s Bay has received 12 bids on 39 of its stores. For its part, though, it is unclear what Canadian Tire plans to do with the Hudson’s Bay logos and such.
Not the First Time, Either
Canadian Tire seems to be making a habit out of these kinds of buys. Not only is it coming in with the Hudson’s Bay sale, but it also picked up Sport Chek, Atmosphere, Nevada Bob’s Golf, and several others. In fact, some believe that the Hudson’s Bay move is particularly timely now, as a “Buy Canadian” spree whips across the nation following tariff hikes from the United States.
It could be that Canadian Tire is simply converting some cash to goodwill, which can be one of the handiest coins around, particularly in bad times. When people get to feeling like shopping at a certain store is not only necessary, or fun, but also patriotic, that can be a huge help. People may buy less, but there is also a greater chance that customers will depart some other store in a bid to shop at a store that makes them feel more patriotic in so doing.
Is Canadian Tire a Good Company to Invest In?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:CTC.A stock based on four Buys, five Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 14.86% rally in its share price over the past year, the average TSE:CTC.A price target of C$169.26 per share implies 3.33% upside potential.
