The Company's flag prior to 1801
In the 17th century the French had a de facto monopoly on the Canadian fur trade with their colony of New France. Two French traders, Pierre-Esprit Radisson and Médard des Groseilliers (Médard de Chouart, Sieur des Groseilliers), Radisson's brother-in-law, learned from the Cree that the best fur country lay north and west of Lake Superior, and that there was a "frozen sea" still further north. Assuming this was Hudson Bay, they sought French backing for a plan to set up a trading post on the Bay, to reduce the cost of moving furs overland. According to Peter C. Newman, "concerned that exploration of the Hudson Bay route might shift the focus of the fur trade away from the St. Lawrence River, the French governor", Marquis d'Argenson (in office 1658–61), "refused to grant the coureurs de bois permission to scout the distant territory". Despite this refusal, in 1659 Radisson and Groseilliers set out for the upper Great Lakes basin. A year later they returned with premium furs, evidence of the potential of the Hudson Bay region. Subsequently, they were arrested for trading without a licence and fined, and their furs were confiscated by the government.
Determined to establish trade in the Hudson Bay, Radisson and Groseilliers approached a group of English colonial businessmen in Boston, Massachusetts to help finance their explorations. The Bostonians agreed on the plan's merits but their speculative voyage in 1663 failed when their ship ran into pack ice in Hudson Strait. Boston-based English commissioner Colonel George Cartwright learned of the expedition and brought the two to England to raise financing. Radisson and Groseilliers arrived in London in 1665 at the height of the Great Plague. Eventually, the two met and gained the sponsorship of Prince Rupert. Prince Rupert also introduced the two to his cousin, King Charles II. In 1668 the English expedition acquired two ships, the Nonsuch and the Eaglet, to explore possible trade into Hudson Bay. Groseilliers sailed on the Nonsuch, commanded by Captain Zachariah Gillam, while the Eaglet was commanded by Captain William Stannard and accompanied by Radisson. On 5 June 1668, both ships left port at Deptford, England, but the Eaglet was forced to turn back off the coast of Ireland.
The Nonsuch continued to James Bay, the southern portion of Hudson Bay, where its explorers founded, in 1668, the first fort on Hudson Bay, Charles Fort at the mouth of the Rupert River. (It was later known as Rupert House, and developed as the community of present-day Waskaganish, Quebec.) Both the fort and the river were named after the sponsor of the expedition, Prince Rupert of the Rhine, one of the major investors and soon to be the new company's first governor. After a successful trading expedition over the winter of 1668–69, Nonsuch returned to England on 9 October 1669 with the first cargo of fur resulting from trade in Hudson Bay. The bulk of the fur – worth £1,233 – was sold to Thomas Glover, one of London's most prominent furriers. This and subsequent purchases by Glover made it clear the fur trade in Hudson Bay was viable.
The Governor and Company of Adventurers of England Trading into Hudson's Bay was incorporated on 2 May 1670, with a royal charter from King Charles II. The charter granted the company a monopoly over the region drained by all rivers and streams flowing into Hudson Bay in northern Canada. The area was named "Rupert's Land" after Prince Rupert, the first governor of the company appointed by the King. This drainage basin of Hudson Bay constitutes 1.5 million square miles (3.9×106 km2), comprising over one-third of the area of modern-day Canada and stretches into the present-day north-central United States. The specific boundaries were unknown at the time. Rupert's Land would eventually become Canada's largest land "purchase" in the 19th century.
The HBC established six posts between 1668 and 1717. Rupert House(1668, southeast), Moose Factory (1673, south) and Fort Albany, Ontario (1679, west) were erected on James Bay; three other posts were established on the western shore of Hudson Bay proper: Fort Severn (1689), York Factory (1684) and Fort Churchill (1717). Inland posts were not built until 1774. After 1774, York Factory became the main post because of its convenient access to the vast interior waterway systems of the Saskatchewan and Red rivers. Called "factories" (because the "factor," i.e., a person acting as a mercantile agent did business from there), these posts operated in the manner of the Dutch fur trading operations in New Netherlands. By adoption of the Standard of Trade in the 18th century, the HBC ensured consistent pricing throughout Rupert's Land. A means of exchange arose based on the "Made Beaver" (MB); a prime pelt, worn for a year and ready for processing: "the prices of all trade goods were set in values of Made Beaver (MB) with other animal pelts, such as squirrel, otter and moose quoted in their MB (made beaver) equivalents. For example, two otter pelts might equal 1 MB".
During the fall and winter, First Nations men and European trappers accomplished the vast majority of the animal trapping and pelt preparation. They travelled by canoe and on foot to the forts to sell their pelts. In exchange they typically received popular trade goods such as knives, kettles, beads, needles, and the Hudson's Bay point blanket. The arrival of the First Nations trappers was one of the high points of the year, met with pomp and circumstance. The highlight was very formal, an almost ritualized "Trading Ceremony" between the Chief Trader and the Captain of the aboriginal contingent who traded on their behalf. During the initial years of the fur trade, prices for items varied from post to post.
Logo on old fur trading fort
The early coastal factory model of the English contrasted with the system of the French. They established an extensive system of inland posts at native villages, and sent traders to live among the tribes of the region, learning their languages and often forming alliances through marriages with indigenous women. In March 1686, the French sent a raiding party under the Chevalier des Troyes more than 1,300 km (810 mi) to capture the HBC posts along James Bay. The French appointed Pierre Le Moyne d'Iberville, who had shown great heroism during the raids, as commander of the company's captured posts. In 1687 an English attempt to resettle Fort Albany failed due to strategic deceptions by d'Iberville. After 1688 England and France were officially at war, and the conflict played out in North America as well. D'Iberville raided Fort Severn in 1690 but did not attempt to raid the well-defended local headquarters at York Factory. In 1693 the HBC recovered Fort Albany; d'Iberville captured York Factory in 1694, but the company recovered it the next year.:151–158
In 1697, d'Iberville again commanded a French naval raid on York Factory. On the way to the fort, he defeated three ships of the Royal Navy in the Battle of Hudson's Bay (5 September 1697), the largest naval battle in the history of the North American Arctic. D'Iberville's depleted French force captured York Factory by laying siege to the fort and pretending to be a much larger army. The French retained all of the outposts except Fort Albany until 1713. (A small French and Indian force attacked Fort Albany again in 1709 during Queen Anne's War but was unsuccessful. The economic consequences of the French possession of these posts for the company were significant; HBC did not pay any dividends for more than 20 years. See Anglo-French conflicts on Hudson Bay.:160–164
Trading at a Hudson's Bay Company trading post
With the ending of the Nine Years' War in 1697, and the War of the Spanish Succession in 1713 with the signing of the Treaty of Utrecht, France had gotten the short end of the stick. Among the treaty's many provisions, it required France to relinquish all claims to Great Britain on the Hudson Bay, which again became a British possession. (The Kingdom of Great Britain had been established following the union of Scotland and England in 1707). After the treaty, the HBC built Prince of Wales Fort, a stone star fort at the mouth of the nearby Churchill River.:202–206 In 1782, during the American Revolutionary War, a French squadron under Jean-François de Galaup, comte de Lapérouse captured and demolished York Factory and Prince of Wales Fort in support of the American rebels.:366–371
In its trade with native peoples, Hudson's Bay Company exchanged wool blankets, called Hudson's Bay point blankets, for the beaver pelts trapped by aboriginal hunters. By 1700, point blankets accounted for more than 60% of the trade. The number of indigo stripes (a.k.a. points) woven into the blankets identified its finished size. A long-held misconception is that the number of stripes was related to its value in beaver pelts.
A parallel may be drawn between the HBC's control over Rupert's Land with the trade monopoly and government functions enjoyed by the Honourable East India Company over India during roughly the same period. The HBC invested £10,000 in the East India Company in 1732, which it viewed as a major competitor.
Hudson's Bay Company's first inland trading post was established by Samuel Hearne in 1774 with Cumberland House, Saskatchewan.
In 1779, other traders founded the North West Company (NWC) in Montreal as a seasonal partnership to provide more capital and to continue competing with the HBC. It became operative for the outfit of 1780 and was the first joint-stock company in Canada and possibly North America. The agreement lasted one year. A second agreement established in 1780 had a three-year term. The company became a permanent entity in 1783. By 1784, the NWC had begun to make serious inroads into the HBC's profits.
Hudson's Bay Company officials in an express canoe crossing a lake, 1825
In 1821, the North West Company of Montreal and Hudson's Bay Company were forcibly merged by intervention of the British government to put an end to often-violent competition. 175 posts, 68 of them the HBC's, were reduced to 52 for efficiency and because many were redundant as a result of the rivalry and were inherently unprofitable. Their combined territory was extended by a licence to the North-Western Territory, which reached to the Arctic Ocean in the north and, with the creation of the Columbia Department in the Pacific Northwest, to the Pacific Ocean in the west. The NWC's regional headquarters at Fort George (Fort Astoria) was relocated to Fort Vancouver on the north bank of the Columbia River; it became the HBC base of operations on the Pacific Slope.:369–370
Before the merger, the employees of the HBC, unlike those of the North West Company, did not participate in its profits. After the merger, with all operations under the management of Sir George Simpson (1826–60), the company had a corps of commissioned officers: 25 chief factors and 28 chief traders, who shared in the company's profits during the monopoly years. Its trade covered 7,770,000 km2 (3,000,000 sq mi), and it had 1,500 contract employees.
The career progression for officers, together referred to as the Commissioned Gentlemen, was to enter the company as a fur trader. Typically, they were men who had the capital to invest in starting up their trading. They sought to be promoted to the rank of Chief Trader. A Chief Trader would be in charge of an individual post and was entitled to one share of the company's profits. Chief Factors sat in council with the Governors and were the heads of districts. They were entitled to two shares of the company's profits or losses. The average income of a Chief Trader was £360 and that of a Chief Factor was £720.
Although the HBC maintained a monopoly on the fur trade during the early to mid-19th century, there was competition from James Sinclair and Andrew McDermot (Dermott), independent traders in the Red River Colony. They shipped furs by the Red River Trails to Norman Kittson a buyer in the United States. In addition, Americans controlled the Maritime fur trade on the Northwest Coast until the 1830s.
Throughout the 1820s and 1830s, the HBC controlled nearly all trading operations in the Pacific Northwest, based at the company headquarters at Fort Vancouver on the Columbia River. Although claims to the region were by agreement in abeyance, commercial operating rights were nominally shared by the United States and Britain through the Anglo-American Convention of 1818, but company policy, enforced via Chief Factor John McLoughlin of the company's Columbia District, was to discourage U.S. settlement of the territory. The company's effective monopoly on trade virtually forbade any settlement in the region.:370 It established Fort Boise in 1834 (in present-day southwestern Idaho) to compete with the American Fort Hall, 483 km (300 mi) to the east. In 1837, it purchased Fort Hall, also along the route of the Oregon Trail. The outpost director displayed the abandoned wagons of discouraged settlers to those seeking to move west along the trail.
The company's stranglehold on the region was broken by the first successful large wagon train to reach Oregon in 1843, led by Marcus Whitman. In the years that followed, thousands of emigrants poured into the Willamette Valley of Oregon. In 1846, the United States acquired full authority south of the 49th parallel; the most settled areas of the Oregon Country were south of the Columbia River in what is now Oregon. McLoughlin, who had once turned away would-be settlers as company director, then welcomed them from his general store at Oregon City. He was later proclaimed the "Father of Oregon". The company retains no presence today in what is now the United States portion of the Pacific Northwest.
During the 1820s and 1830s, HBC trappers were deeply involved in the early exploration and development of Northern California. Company trapping brigades were sent south from Fort Vancouver, along what became known as the Siskiyou Trail, into Northern California as far south as the San Francisco Bay Area, where the company operated a trading post at Yerba Buena (San Francisco). These trapping brigades in Northern California faced serious risks, and were often the first to explore relatively uncharted territory. They included the lesser known Peter Skene Ogden and Samuel Black.
Coming in for Christmas
(H. Bullock Webster)
Between 1820 and 1870, the HBC issued its own paper money. The notes, denominated in pounds sterling, were printed in London and issued at the York Factory, Fort Garry and the Red River Colony. For forty or so years beginning in 1870, the company employed paddle wheel steamships on the rivers of the prairies.
The Guillaume Sayer Trial in 1849 contributed to the end of the HBC monopoly. Sayer, a Métis trapper and trader, was accused of illegal trading in furs. The Court of Assiniboia brought Sayer to trial, before a jury of HBC officials and supporters. During the trial, a crowd of armed Métis men led by Louis Riel, Sr. gathered outside the courtroom. Although Sayer was found guilty of illegal trade, having evaded the HBC monopoly, Judge Adam Thom did not levy a fine or punishment. Some accounts attributed that to the intimidating armed crowd gathered outside the courthouse. With the cry, Le commerce est libre! Le commerce est libre! ("Trade is free! Trade is free!"), the Métis loosened the HBC's previous control of the courts, which had enforced their monopoly on the settlers of Red River.
Another factor was the findings of the Palliser Expedition of 1857 to 1860, led by Captain John Palliser. He surveyed the area of the prairies and wilderness from Lake Superior to the southern passes of the Rocky Mountains. Although he recommended against settlement of the region, the report sparked a debate. It ended the myth publicized by Hudson's Bay Company: that the Canadian West was unfit for agricultural settlement. In 1863, the International Financial Society became the majority shareholders of the HBC.
A rough and tumble with a grizzly
In 1869, after rejecting the American government offer of CA$10,000,000, the company approved the return of Rupert’s Land to Britain. The government gave it to Canada and loaned the new country the £300,000 required to compensate HBC for its losses. The deal, known as The Deed of Surrender, came into force the following year. The resulting territory, now known as the Northwest Territories, was brought under Canadian jurisdiction under the terms of the Rupert's Land Act 1868, enacted by the Parliament of the United Kingdom. The Deed enabled the admission of the fifth province, Manitoba, to the Confederation on 15 July 1870, the same day that the deed itself came into force.
During the 19th century the Hudson Bay's Company went through great changes in response to such factors as growth of population and new settlements in part of its territory, and ongoing pressure from Britain. it seemed unlikely that it would continue to control the future of the West.
Department stores and diversification
The iconic department store today evolved from trading posts at the start of the 19th century, when they began to see demand for general merchandise grow rapidly. HBC soon expanded into the interior and set-up posts along river settlements that later developed into the modern cities of Winnipeg, Calgary and Edmonton. In 1857, the first sales shop was established in Fort Langley. This was followed by other sales shops in Fort Victoria (1859), Winnipeg (1881), Calgary (1884), Vancouver (1887), Vernon (1887), Edmonton (1890), Yorkton (1898), and Nelson (1902). The first of the grand "original six" department stores was built in Calgary in 1913. The other department stores that followed were in Edmonton, Vancouver, Victoria, Saskatoon, and Winnipeg.
The First World War interrupted a major remodelling and restoration of retail trade shops planned in 1912. Following the war, the company revitalized its fur-trade and real-estate activities, and diversified its operations by venturing into the oil business. Today, the department store business is the only remaining part of the company's operations, in the form of department stores under the Hudson's Bay brand.
Oil and gas operations
The company co-founded Hudson's Bay Oil and Gas Company (HBOG) in 1926 with Marland Oil Company (which merged with Conoco in 1929). HBOG expanded during the 1940s and 1950s, and in 1960 began shipping Canadian crude through a new link to the Glacier pipeline and on to the refinery in Billings, Montana. The company became the sixth-largest Canadian oil producer in 1967. In 1973, HBOG acquired a 35% stake in Siebens Oil and Gas, and, in 1979, it divested that interest. In 1980, it bought a controlling interest in Roxy Petroleum. In the 1980s, sales and oil prices slipped, while debt from acquisitions piled up which led to Hudson's Bay Company selling its 52.9% stake in HBOG to Dome Petroleum in 1981.
In 1960, the company acquired Morgan's allowing it to expand into Montreal, Toronto, Hamilton, and Ottawa. In 1965, HBC rebranded its department stores as The Bay. The Morgan's logo was changed to match the new visual identity. By 1972 the last of the former Morgan’s stores had been rebranded to Bay stores.
In 1970, on the company's 300th anniversary, as a result of punishing new British tax laws, the company relocated to Canada, and was rechartered as a Canadian business corporation under Canadian law, Head Office functions were transferred from London to Winnipeg. By 1974, as the company expanded into eastern Canada, head office functions were moved to Toronto.
In 1972, the company acquired the four-store Shop-Rite chain of catalogue stores. The chain was quickly expanded to 65 stores in Ontario, but closed in 1982 due to declining sales. In these stores, little merchandise was displayed; customers made their selections from catalogues, and staff would retrieve the merchandise from storerooms. The HBC also acquired Freimans department stores in Ottawa and converted them to The Bay.
In 1978, the Zellers discount store chain made a bid to acquire the HBC, but the HBC turned the tables and acquired Zellers. Also in 1978, Simpson's department stores were acquired by Hudson's Bay Company, and were converted to Bay stores in 1991. (The related chain Simpsons-Sears was not acquired by the Bay, but became Sears Canada in 1978.) In 1991, Simpsons disappeared, when the last Simpsons store was converted to the Bay banner.
In 1979, Canadian billionaire Kenneth Thomson won control of the company in a battle with George Weston Limited, and acquired a 75% stake for $400 million. Thomson sold the company's oil and gas business, financial services, distillery, and other interests for approximately $550 million, transforming the company into a leaner, more focused operation. In 1997, the Thomson family sold the last of its remaining shares.
Hudson's Bay Company reversed a formidable debt problem in 1987, by shedding non-strategic assets such as its wholesale division and getting completely out of the oil and gas business. HBC also sold its Canadian fur-auction business to Hudson's Bay Fur Sales Canada (now North American Fur Auctions). The Northern Stores Division was sold that same year to a group of investors and employees, which adopted The North West Company name three years later.
The HBC acquired Towers Department Stores in 1990, combining them with the Zellers chain, and Woodward's stores in 1993, converting them into Bay or Zellers stores. Kmart Canada was acquired in 1998 and merged with Zellers.
In 1991, the Bay agreed to stop retailing fur in response to complaints from people opposed to killing animals for this purpose. In 1997, the Bay reopened its fur salons to meet the demand of consumers.
The Hudson's Bay Company building in Montreal, originally the Morgan's flagship store
In December 2003, Maple Leaf Heritage Investments, a Nova Scotia-based company created to acquire shares of Hudson's Bay Company, announced that it was considering making an offer to acquire all or some of the common shares of Hudson's Bay Company. Maple Leaf Heritage Investments is a subsidiary of B-Bay Inc. Its CEO and chairman is American businesswoman Anita Zucker, widow of Jerry Zucker. Zucker had previously been the head of the
Polymer Group, which acquired another Canadian institution, Dominion Textile.
On 26 January 2006, the HBC's board unanimously agreed to a bid of $15.25 CAD/share from Jerry Zucker, whose original bid was $14.75 CAD/share, ending a prolonged fight between the HBC and Zucker. The South Carolina billionaire financier was a longtime HBC minority shareholder. In a 9 March 2006 press release, the HBC announced that Zucker would replace Yves Fortier as governor and George Heller as CEO, becoming the first US citizen to lead the company. After Jerry Zucker's death the board named his widow, Anita Zucker, as HBC Governor and HBC Deputy-Governor Rob Johnston as CEO.
Hudson's Bay downtown store in Winnipeg
On 16 July 2008, the company was sold to NRDC Equity Partners, a private equity firm based in Purchase, New York, which already owned Lord & Taylor, the oldest luxury department store chain in the United States. The Canadian and U.S. holdings were transferred to NRDC Equity Partners' holding company, Hudson's Bay Trading Company, as of fall 2008.
In September 2011, the HBC began downsizing the Zellers chain with the announcement that it would sell the majority of the leases for its locations to the U.S.-based retailer Target Corporation and close all of their remaining locations by early 2013. Target used the acquisition of this real estate as a means to enable its entry in the Canadian market. HBC used the proceeds to allow it to pay down debt and to invest in growing its Hudson's Bay and Lord & Taylor banners. In January 2013, it was confirmed that only three of the remaining Zellers locations would remain open.
On 24 January 2012, the Financial Post reported that Richard Baker (owner of NDRC and governor of Hudson's Bay Company) had dissolved Hudson's Bay Trading Company and that the HBC would now also operate the Lord & Taylor chain. At the time, the company was run by President Bonnie Brooks. Baker remained governor and CEO of the business and Donald Watros stayed on as chief operating officer.
In October 2012, the HBC announced a $1.6 billion initial public offering (IPO); Baker planned to use the IPO to allow Canadian ownership to return to the company, and to help pay off debts with other partners. Additionally, the company also announced that it would re-brand The Bay department store chain as "Hudson's Bay".
From 2004 to 2008, the HBC owned and operated a small chain of off-price stores called Designer Depot. Similar to the Winners and HomeSense retail format, Designer Depot did not meet sales expectations, and its nine stores were sold. Another HBC chain, Fields, was sold to a private firm in 2012. Established in 1950, Fields was acquired by Zellers in 1976. When Zellers was acquired by HBC in 1978, Fields became part of the HBC portfolio. Zellers is still owned by HBC but has been reduced to a chain of two liquidation stores following the sale of its lease portfolio to Target Canada in 2011. The Target Canada chain folded in 2015; these leases have since been returned to landlords or re-sold to other retailers.
The new Hudson's Bay brand was launched in March 2013, incorporating a new logo with an updated rendition of the classic Hudson's Bay Company coat of arms, designed to be modern and better reflect the company's heritage. Following the IPO, HBC had also introduced a new corporate logo of its own (reviving a wordmark from the original HBC flag), but the new logo was not intended to be a consumer-facing brand.
On 29 July 2013, Hudson's Bay Company announced that it would buy Saks Incorporated for US$2.9 billion, or $16 per share. The company also stated that as a result of the purchase, Canadian consumers would see Saks stores arriving in their country soon. After the purchase was finalized, HBC had a net loss of $124.2 million in the 2013 3Q due to the cost of the purchase and promotions.
In early 2017, the Hudson's Bay Company made an overture to Macy's for a potential takeover of the struggling department store. More recently it considered a purchase of the struggling Neiman Marcus Group Inc. It did not proceed with either deal.
The company also has retail operations in Europe, including 20 Hudson’s Bay stores in the Netherlands and five Saks Off Fifth stores in Germany as well as the 135 stores of the Galeria Kaufhof department store chain in Germany. The latter was acquired in 2015 in a deal that included the Belgian Galeria Inno retail chain (that was operated by Kaufhof) and some other properties. On November 1, 2017, HBC received an unsolicited offer from Austrian firm SIGNA Holding for Kaufhof and other real estate. An unnamed source told CNBC that the value of the offer was approximately 3 billion euros. This information on the offer was also reiterated in a press release by activist shareholder Land & Buildings Investment Management who urged HBC to accept the offer; the company replied that the offer was incomplete and did not provide indication of financing for the deal.
At the time, HBC had recently sold the building that houses its Lord & Taylor store on Fifth Avenue in Manhattan to WeWork Property Advisors after pressure from Land & Buildings Investment Management. The deal also includes the use of floors of certain HBC owned department stores in New York, Toronto, Vancouver and Germany as WeWork’s shared office workspaces. In late October, HBC was also considering the sale the building that houses its flagship Vancouver store.
By that time, CEO Gerald Storch was scheduled to leave HBC on November 1, with Richard Baker taking over as interim CEO; both CFO Paul Beesley (who was replaced by Edward Record) and Don Watros, president of HBC International, had departed earlier. All left the company during a time of intense pressure on the executive and directors from Land & Buildings Investment Management, an entity that owns less than 5% of HBC shares.
On 1 April 2018, HBC disclosed that more than 5 million credit and debit cards used for in-store purchases had been recently breached by hackers. The compromised credit card transactions took place at Saks Fifth Avenue, Saks Off 5th and Lord & Taylor stores. The hack had been discovered by Gemini Advisory, which called the breach "amongst the biggest and most damaging to ever hit retail companies".