NEW YORK -- Lord & Taylor, one of the nation's oldest department stores, is being sold for $100 million to a rental clothing company.
Le Tote Inc. is buying the company from Hudson's Bay Co., which gets a minority stake in Le Tote and will control two seats on its board.
Lord & Taylor, founded as a dry goods store in 1826, has struggled recently as more people shop online. It has closed several stores, including its flagship on New York's Fifth Avenue, which was shut its doors for good earlier this year after more than a century in the 11-story building. There are currently 38 Lord & Taylor stores across the country.
Under the agreement Hudson's Bay and a subsidiary will own the stores and Le Tote will operate from them.
Le Tote, created less than a decade ago in San Francisco, said Wednesday that it plans to bring clothing rental to Lord & Taylor's customers. With clothing rental, popularized by Rent the Runway and other startups, customers pay a monthly fee to get clothes shipped to them, wear a few times and then ship them back. Traditional retailers, such as Urban Outfitters and Banana Republic, are launching their own versions.
Le Tote will pay Hudson's Bay $75 million in cash (or 99.5 million Canadian dollars) when the deal closes, which is expected to happen before the holiday season. It will also pay Hudson's Bay $25 million in cash (or 33.2 million Canadian dollars) after two years.
Hudson's Bay, based in Canada, also owns Saks Fifth Avenue.