Dive Brief:

• Apparel rental company Le Tote, which last August bought department store Lord & Taylor from parent company Hudson’s Bay Co. for $100 million, said that in light of the COVID-19 pandemic, it will run both companies only​ online for the foreseeable future.

• Le Tote co-founders Rakesh Tondon and Brett Norhart in a statement emailed to Retail Dive also said that the company on April 1 “instituted significant company-wide layoffs across both organizations, immediately reducing the majority of Le Tote and Lord + Taylor staff across all departments.”

• Store worker furloughs have also been extended until temporarily shut stores reopen, they said. Le Tote didn’t immediately return Retail Dive’s inquiry into how many employees are affected by layoffs and furloughs.

Dive Insight:

If Le Tote’s acquisition last summer of the ailing department store seemed to be the retailer’s last, best hope, that may be dashed by the requirement to shut stores in hopes of curtailing the outbreak of a highly contagious disease.

“The world has been thrust into a health and economic crisis that most of us have not witnessed in our lifetimes,” Tondon and Norhart said in their joint statement​. “The events that are unfolding are impacting every industry, and the retail industry is front and center in the crosshairs of this pandemic.” 

They “are still operating both companies online, with Le Tote continuing to maintain an active rental service, and the LordandTaylor.com ecommerce site is fully operational,” they also said. But that wasn’t the point of taking over Lord & Taylor. The e-commerce site, which was founded in 2012 and offers apparel rental, stood to gain a new channel in brick and mortar, the merchandising expertise still found at Lord & Taylor — about 45 locations (many of them stylish mid-20th century buildings), a smattering of still-loyal customers, and the high-touch marketing and customer acquisition that physical stores seem best at providing.

At the same time, the tie-up promised to give the struggling department store a fresh chance at new customers, including, possibly, younger ones, and the sales that have been eluding it as HBC’s most neglected business unit.

While several analysts saw the potential in the deal for both companies, others were skeptical even before COVID-19 interfered. Le Tote is overshadowed by better known competitors Stitch Fix and Rent the Runway, and Lord & Taylor is one of the weakest players, if not the most precarious, in the challenged department store sector.