Richard Baker strides through the recently remodelled designer-fashion floor of the flagship Saks Fifth Avenue in Manhattan. Suddenly, he slows down, pulls out his iPhone and snaps a picture. What has caught his attention?
"I didn't like the way the carpet looked," says Mr. Baker, executive chairman of Saks's Toronto-based parent, Hudson's Bay Co. (HBC). He points to the culprit – a traditional-looking area rug amid the modern renovation – then e-mails the photo to an employee in charge. "It doesn't match with the decor. And it's crooked. It's not right at all."
Mr. Baker certainly has an eye for detail. But the wealthy U.S. real estate investor – who has acquired a string of department stores, including Saks and Lord & Taylor in the United States, Hudson's Bay in Canada and Galeria Kaufhof in Europe – also has a grand vision to transform his retail empire into one of the world's most "spectacular." A key part of that vision is a $250-million (U.S.) makeover of this landmark Saks store in New York, across from Rockefeller Center, the aim of which is to make it "the most spectacular department store in the world."
"Spectacular" is a word that comes up several times when talking to Mr. Baker. It's also a word some may apply to HBC's net losses over the past six quarters, which total $938-million (Canadian). In the second quarter of fiscal 2018, losses jumped to $201-million from $142-million a year earlier. Sales edged up just 1.2 per cent, from $3.25-billion to $3.29-billion. Overall sales at stores open a year or more, a key retail metric that excludes the effects of store openings and closings, slipped 1.3 per cent, though they rose at Saks, one of few bright spots for Mr. Baker.
HBC is far from alone in its struggles. The entire retail sector is being reshaped by the shift to online shopping, led by Amazon.com Inc., and department stores are feeling much of the pain. At the same time, many of the brands HBC counts on to stock its shelves – from jeweller Swarovski to Hunter boots – are selling more goods directly to consumers from their own bricks-and-mortar stores and websites.
To help lure back customers, Mr. Baker has invested heavily in both HBC's digital and physical infrastructure. The company's capital spending this year alone is expected to be about $550-million, on top of $657-million last year. The most lavish project is the Saks store on Fifth Avenue, which has become ground zero in an escalating fight between Mr. Baker and minority shareholder Jonathan Litt. Mr. Litt, a U.S. real estate investor whose company, Land & Buildings, has said it holds almost 5 per cent of HBC's shares, is lobbying for a dramatic overhaul of the business and pushing Mr. Baker to turn the coveted Saks building, appraised at $3.7-billion (U.S.), into luxury condominiums, a hotel – anything but a department store.
The interior of the Saks Fifth Avenue flagship store in New York City.
Michael Falco/The Globe and Mail
In fact, Mr. Litt wants HBC to sell off more of its properties, which it has estimated to be worth $6.4-billion, or $35 a share. The stock has been stuck at close to one-third of that, finishing at $11.31 on Thursday, well off its debut price of $17 in late 2012.
Mr. Baker has long hinted that HBC's shareholders will be rewarded for their patience by an eventual spinoff of its real estate assets into publicly traded real estate investment trusts. So far, though, he hasn't followed through, and the department stores' results have continued to slide over the past couple of years.
"Richard is not making shareholders money," Mr. Litt says. "The world has changed. The department-store business is transforming very quickly. The rose-coloured glasses need to come off."
But Mr. Baker – who is also HBC's interim CEO following the sudden departure of Gerald Storch on Nov. 1 after less than three years in charge – remains unapologetic about his commitment to retail.
"We're living in a transformational time," he says. "Business is going to have to be done differently going forward. We have some tremendous assets, operating companies and real estate, and we are rethinking how we marshal those resources. There's no single blanket answer to our road forward, but it will be a series of transformational moves that takes HBC to the forefront of retail globally."
Mr. Baker is undoubtedly passionate about his retail assets. But all of his most lucrative deals have been on the real estate side. So what, exactly, is his plan to reinvent the department store – and why is he one of the only guys betting on a revival?
One day in the middle of November, Mr. Baker settled into a modern-chic space on the 31st floor of HBC's new corporate digs in lower Manhattan for a deep conversation about his turnaround plan. The room has an unobstructed view of the Hudson River and Statue of Liberty, unlike his own surprisingly small and windowless office across the hall.
Four years ago, Mr. Baker was looking for new space to consolidate five HBC offices scattered around the city after multiple U.S. acquisitions, including Saks and Gilt Groupe, an online seller. He landed on seven floors in Brookfield Place, close to the rebuilt World Trade Center and next to the September 11 Memorial.
"I was looking for the least-expensive 400,000 square feet in all of New York and, believe it or not, this was it," he says. "If you can imagine what it looked like four years ago when we signed the lease, with the World Trade Center under construction, it was a mess, so no one wanted to be down here. We negotiated a very good transaction, and now it's" – here's that word again – "spectacular."
Mr. Baker's art-collector wife, Lisa, curated the space, which includes a light installation by artist James Turrell. A Turrell creation is also featured in one of the Baker family's two pools at their 10-acre property in Greenwich, Conn. (They also have homes in Telluride, Colo., and on the North Fork of Long Island.)
The Bakers have three children, aged 22, 20 and 18. The middle one, Jack, is already following in his father's footsteps. He interned in HBC's real estate department last summer and is taking the same program at Cornell University as his father did: hotel administration. Jack has accompanied him on a few business trips, including a three-week summer adventure visiting about 100 stores across Canada, as well as the Hudson Bay area, where North America's oldest department-store chain got its start in the fur trade.
Just as HBC's stores and offices are undergoing a remake, so is Mr. Baker. Today, he is clad in jeans, an unstructured blazer and black leather sneakers, not the suit and tie that used to be his daily uniform. He has declared the new office, which houses HBC's 1,600 New York-based staff, a "smart casual" dress zone. The 52-year-old has also lost 25 pounds in four months, thanks to a sugar-free, dairy-free, (almost) carbohydrate-free diet and regular workouts in his home gym. He has even taken up boxing.
"I've got to get in tip-top shape for the retail battle."
Mr. Baker didn't start out in retail. His father, Robert, ran his own shopping-centre business, which Richard joined after graduating from Cornell. One of the younger Baker's first big deals was persuading discount giant Wal-Mart Stores Inc. to set up shop in Baker-owned properties on the U.S. East Coast.
By 2005, retailers were looking like attractive investments because of their real estate holdings, which often seemed more valuable than the businesses themselves. Another appeal was that a buyer could borrow more money to finance an acquisition by using the properties as security, instead of just the company's cash flow as collateral.
Along with his father and two real estate investors, Mr. Baker formed a private-equity firm. Its first move was investing $25-million (U.S.), along with another private equity firm, in the $5.1-billion acquisition of Linens 'n Things. Then, in 2006, the group paid $1.2-billion for Lord & Taylor, using only $25-million of its own cash and borrowing the rest against the chain's real estate, including the Manhattan flagship on Fifth Avenue, about 10 blocks south of Saks.
Two years later – the same year Linens 'n Things crumpled, vaporizing the Baker group's entire investment – he led the takeover of HBC, including Zellers, the downtrodden Canadian discount chain. Much of the $1.1-billion (Canadian) price tag came from the assumption of HBC's debt. (A sovereign wealth fund kicked in an additional few hundred million.)
After taking HBC public again in 2012, Mr. Baker made a series of splashy deals, spending $2.9-billion (U.S.), including debt, to acquire Saks, then another $3.9-billion (Canadian) on Kaufhof in 2015.
The acquisitions all had one thing in common: they were tired retailers sitting on a fortune in real estate. And on that side of the business, Mr. Baker's natural acumen shone through. Perhaps his most notable deal was selling the bulk of HBC's Zellers leases to Target Corp. for $1.8-billion in 2011, more than what he'd paid to acquire the entire company just three years earlier.
In early 2014, HBC – which became the parent company to all of Mr. Baker's retail assets – sold its flagship Hudson's Bay store and office tower in downtown Toronto to Cadillac Fairview Corp. for $650-million. A year later, the stock market rewarded HBC for joint-venture deals with RioCan Real Estate Investment Trust in Canada and Simon Property Group in the United States.
Mr. Baker unveiled his most recent real estate blockbuster in October: an unusual series of transactions that will see HBC sell its Lord & Taylor store on Fifth Avenue to work-sharing company WeWork for $850-million (U.S.), about a third more than its appraised value last year.
The deal will see Lord & Taylor's store footprint on Fifth Avenue shrink by three-quarters, with WeWork taking over the rest. The latter will also occupy the top floors of HBC stores in Toronto, Vancouver and Frankfurt. Eventually, WeWork could set up office space in as many as 20 HBC stores globally, Mr. Baker says.
WeWork's private-equity partner in its real estate joint venture, Rhône Capital, will also invest $500-million in HBC. Mr. Baker says that money will go toward paying down the company's debt, which could satisfy concerns about HBC being overleveraged. (Mr. Litt's firm is challenging the deal at the Ontario Securities Commission.)
Derek Dley, retail analyst at Canaccord Genuity, says the deal isn't as good as it looks at first blush. Rhône Capital's preferred share equity investment in HBC is highly dilutive to existing shareholders and "essentially offsets the higher-than-expected sale price," Mr. Dley wrote in an October report.
The real estate and other potential deals gave HBC's stock a lift – at least for a while. What will give the share price another boost? "Execution in our retail business is what is going to bring that up," Mr. Baker says, "and maximizing our real estate portfolio."
A retailer’s stock slide
Hudson’s Bay Co. has been on a topsy-turvy ride
since Richard Baker purchased the ailing retailer in
2008. Mr. Baker has notched some major wins,
including the sale of most Zellers store leases to
Target Corp. for $1.8-billion – far greater than the
$1.1-billion paid for HBC. But like other
department store giants, HBC has struggled to
find its footing in a rapidly shifting retail
landscape. The stock now trades well below its
IPO price, a reflection of investors’ growing
frustrations.
HBC share price (Toronto listing)
$30
25
4
5
20
2
9
15
3
6
1
10
7
8
5
2013
2014
2015
2016
2017
1. Nov. 2012: HBC is back on public markets. It
raised about $365-million through an initial public
offering, valuing the company at $17 a share.
2. July 2013: HBC seals a deal to buy luxury
department- store retailer Saks Inc. for nearly
$3-billion (U.S.), including debt.
3. Jan. 2014: Mr. Baker announces the sale of
HBC’s flagship Toronto store and adjacent office
tower to Cadillac Fairview Corp. for $650-million
(Canadian).
4. Nov. 2014: HBC says its Saks Fifth Avenue
flagship property in New York City is appraised at
$3.7-billion (U.S.) – well in excess of the Saks
takeover price.
5. June 2015: HBC strikes a $3.9-billion
(Canadian) deal for German department store
chain Galeria Kaufhof.
6. Feb. 2016: HBC opens its first two Canadian
locations of Saks Fifth Avenue, followed a month
later the country’s first discount Saks Off 5th
outlets.
7. Jan. 2017: HBC shares plunge nearly 13 per
cent in a single session after its 2016 sales
guidance was lowered a second time.
8. June 2017: HBC announces it is slashing 2,000
jobs in its core North American retail business, or
4 per cent of its work force in the market, as it
copes with mounting losses.
9. Oct. 2017: Gerald Storch announces he is
stepping down as CEO of HBC, after less than
three years at the helm. Mr. Baker takes over on
an interim basis.
MATT LUNDY, THE GLOBE AND MAIL, SOURCE: BLOOMBERG
A retailer’s stock slide
Hudson’s Bay Co. has been on a topsy-turvy ride since
Richard Baker purchased the ailing retailer in 2008. Mr.
Baker has notched some major wins, including the sale of
most Zellers store leases to Target Corp. for $1.8-billion –
far greater than the $1.1-billion paid for HBC. But like
other department store giants, HBC has struggled to find its
footing in a rapidly shifting retail landscape. The stock now
trades well below its IPO price, a reflection of investors’
growing frustrations.
HBC share price (Toronto listing)
$30
25
4
5
20
2
9
15
3
6
1
10
7
8
5
2013
2014
2015
2016
2017
1. Nov. 2012: HBC is back on public markets. It raised
about $365-million through an initial public offering,
valuing the company at $17 a share.
2. July 2013: HBC seals a deal to buy luxury department-
store retailer Saks Inc. for nearly $3-billion (U.S.), including
debt.
3. Jan. 2014: Mr. Baker announces the sale of HBC’s
flagship Toronto store and adjacent office tower to
Cadillac Fairview Corp. for $650-million (Canadian).
4. Nov. 2014: HBC says its Saks Fifth Avenue flagship
property in New York City is appraised at $3.7-billion (U.S.)
– well in excess of the Saks takeover price.
5. June 2015: HBC strikes a $3.9-billion (Canadian) deal for
German department store chain Galeria Kaufhof.
6. Feb. 2016: HBC opens its first two Canadian locations of
Saks Fifth Avenue, followed a month later by the
country’s first discount Saks Off 5th outlets.
7. Jan. 2017: HBC shares plunge nearly 13 per cent in a
single session after its 2016 sales guidance was lowered a
second time.
8. June 2017: HBC announces it is slashing 2,000 jobs in its
core North American retail business, or 4 per cent of its
work force in the market, as it copes with mounting losses.
9. Oct. 2017: Gerald Storch announces he is stepping down
as CEO of HBC, after less than three years at the helm.
Mr. Baker takes over on an interim basis.
MATT LUNDY, THE GLOBE AND MAIL, SOURCE: BLOOMBERG
A retailer’s stock slide
Hudson’s Bay Co. has been on a topsy-turvy ride since Richard Baker purchased the ailing
retailer in 2008. Mr. Baker has notched some major wins, including the sale of most Zellers
store leases to Target Corp. for $1.8-billion – far greater than the $1.1-billion paid for HBC.
But like other department store giants, HBC has struggled to find its footing in a rapidly
shifting retail landscape. The stock now trades well below its IPO price, a reflection
of investors’ growing frustrations.
HBC share price (Toronto listing)
$30
25
4
5
20
2
9
15
3
6
1
10
7
8
5
2013
2014
2015
2016
2017
1. Nov. 2012: HBC is back on public markets. It raised about $365-million through an initial
public offering, valuing the company at $17 a share.
2. July 2013: HBC seals a deal to buy luxury department-store retailer Saks Inc. for nearly
$3-billion (U.S.), including debt.
3. Jan. 2014: Mr. Baker announces the sale of HBC’s flagship Toronto store and adjacent
office tower to Cadillac Fairview Corp. for $650-million (Canadian).
4. Nov. 2014: HBC says its Saks Fifth Avenue flagship property in New York City is
appraised at $3.7-billion (U.S.) – well in excess of the Saks takeover price.
5. June 2015: HBC strikes a $3.9-billion (Canadian) deal for German department store
chain Galeria Kaufhof.
6. Feb. 2016: HBC opens its first two Canadian locations of Saks Fifth Avenue, followed a
month later by the country’s first discount Saks Off 5th outlets.
7. Jan. 2017: HBC shares plunge nearly 13 per cent in a single session after its 2016 sales
guidance was lowered a second time.
8. June 2017: HBC announces it is slashing 2,000 jobs in its core North American retail
business, or 4 per cent of its work force in the market, as it copes with mounting losses.
9. Oct. 2017: Gerald Storch announces he is stepping down as CEO of HBC, after less than
three years at the helm. Mr. Baker takes over on an interim basis.
MATT LUNDY, THE GLOBE AND MAIL, SOURCE: BLOOMBERG
But executing a turnaround in the retail business won't be easy. In the United States, brick-and-mortar department-store sales slid 4 per cent annually between 2012 and 2017, to $156.4-billion (U.S.), and will stay on that negative trajectory over the next five years, dipping by 2.6 per cent a year, according to estimates from market researcher IBISWorld.
In Canada, where there is less competition, department stores have fared slightly better (the continuing liquidation of failed Sears Canada Inc. notwithstanding): Sales have slipped just 0.1 per cent annually over the past five years, to $28.1-billion (Canadian), but are expected to decline 0.4 per cent annually for the next five years, according to IBIS.
"Very few department stores are faring well," says Anya Cohen, a retail analyst with IBIS in New York. Their stocks have dropped as they race to slash costs, beef up e-commerce and close or shrink stores. The S&P 500 department-stores subindex is down 26 per cent from a year ago. "In order to make money, operators in this environment are going to have to spend money." But finding a balance between investing and generating profit margins will be a challenge, she says. Even Seattle-based Nordstrom Inc., one of the stronger players, has had some disappointing results and is considering going private.
Meanwhile, HBC is facing direct competition from specialty brands that it sells in its own stores. Swarovski, for instance, is adding more standalone stores to its current 52, while enjoying double-digit sales gains on its own e-commerce site, says Aurelie Pepion, managing director of Swarovski's Canadian division. She has been pushing for more prominent positioning in Hudson's Bay stores and more control over what the retailer actually stocks. "We have to be visible," Ms. Pepion says. "One of our main competitors is department stores. We have to be smart in the way we work with them."
There were early signs of a turnaround at Hudson's Bay and Lord & Taylor under seasoned divisional leaders hired by Mr. Baker. But as its performance weakened, the company laid off about 2,000 employees this year in a North American restructuring aimed at generating $350-million in annual savings. That should help HBC's third-quarter results, to be released Wednesday.
Mr. Baker doesn't hang HBC's recent woes on any one thing. Each chain has its own specific set of problems, he says. Saks has been hurt by waning U.S. tourism, which has bruised all luxury retailers but is now starting to improve; Lord & Taylor has been hurt by declining brands such as Jones New York and Michael Kors, a shortfall it is covering partly with its own in-house brands; Kaufhof has felt the pinch of less shopping because of terrorist attacks in Europe, forcing it to discount merchandise; and Hudson's Bay is being squeezed by Sears's liquidation sales in Canada.
With Sears set to close in Canada next year, Hudson's Bay will be the last man standing among conventional department stores. The U.S. field is much more crowded, and Mr. Baker's attempts in early 2017 to acquire Macy's Inc. and heavily indebted Neiman Marcus both failed. In Europe, he's battling Mr. Litt's call for HBC to consider accepting a takeover offer for sagging Kaufhof from Signa Holding, which owns its key rival.
Mr. Baker acknowledges HBC's performance is "not acceptable." But ever the optimist, he adds: "It's an opportunity, not a problem."
"Are we going to do better in Canada with no more Sears?" he says. "Are we going to do better in the United States with a beautiful, renovated Saks Fifth Avenue against an overleveraged Neiman Marcus? Are we going to do better in Europe with a strong, vibrant portfolio of stores versus a competitor that is under-capitalized? I think so. That's our strategy."
Amazon remains a formidable threat, of course. But Mr. Baker says it's not fair to compare its performance with a company such as HBC. "Amazon is allowed to make no money and spend all that money on technology and upgrading their business," he says. "How do you expect to … be under the same metrics as a historical department store chain? It's impossible."
HBC has been doing all right in online sales, which are now $2.5-billion across all its chains, according to Mr. Baker. They rose 11 per cent in the past quarter alone (20 per cent excluding Gilt).
Nonetheless, he hears plenty of complaints from e-commerce customers: "'Goddamn, this Hudson's Bay Co. can't get it right – why does Amazon's order come in one day and I have to wait three days [for HBC], and I'm on the call centre for eight minutes instead of two minutes at Amazon?' Because the amount of money we're able to spend solving these problems is less, because our shareholders – rightfully – want a return on their investment."
Amazon shareholders, he continues, "are happy to make no income. It's a balancing act, and we're working our way through it."
Richard Baker is shown at the Saks Fifth Avenue flagship store in New York City.
Michael Falco/The Globe and Mail
It's mid-November, and in six days, the Saks on Fifth Avenue will unveil its annual holiday windows. This year, the store has teamed up with Walt Disney Co. to create a Snow White-themed installation, and as the construction crews work away, Mr. Baker squeezes into a narrow area behind the displays and peers at the back of each mechanically rotating dwarf. He seems as energized as the whirring forms, snapping photos with his iPhone.
The Disney deal is just one of many partnerships Mr. Baker has signed over the past several years, with the aim of bringing in younger shoppers (which was also a key driver of the WeWork deal). The deals include putting Topshop and Kleinfeld Bridal shops in Hudson's Bay stores, Pusateri's in Saks's Canadian stores and Topshop and Sephora in Kaufhof outlets. These moves have all helped bolster HBC's performance, Mr. Baker says. (Every time Kaufhof launches a Sephora shop, Mr. Storch told analysts back in September, "there's a line out the door and down the block to come in.")
In an unlikely marriage of upmarket and downscale, HBC signed an agreement last month with Wal-Mart to launch a Lord & Taylor store on the discounter's website in 2018. Mr. Baker is hoping the deal will help Lord & Taylor – largely a regional player – compete against Macy's and J.C. Penney Co., and boost the chain's online sales to 85 per cent of its total take from 15 per cent today.
Mr. Baker hints there could be more to come: "There's Asia. There's online. There are places we are not. There are places where other people have expertise. We try to do things you'll never imagine."
He's also thinking about expansion. "We brought Saks Off Fifth to Germany, the Netherlands, Canada and the United States. Could it be elsewhere? Saks Fifth Avenue – could that grow beyond its existing footprints? So we'll see." Last summer, HBC opened its first of 10 Hudson's Bay stores outside of Canada, in the Netherlands.
But Mr. Baker's biggest bet may be the Saks revamp. Back at the flagship store, he motions toward the main-floor beauty counters, which by next year will move to the second floor. Traditionally, high-margin cosmetics have resided on the first – and busiest – level. But with a wave of discounted beauty products being sold at department stores and intensifying online competition, Mr. Baker plans to move lucrative handbags and other accessories to the main floor, which will be joined to the lower and second floors with escalators and opened up to make the space feel more expansive. Pricey jewellery will shift to a basement boutique. "This entire space becomes available for some of our most profitable, strong businesses."
At 3 p.m. on a Tuesday, the flagship store's main floor is humming. But a few hours earlier, at lunchtime, there were few shoppers browsing at two newer Saks stores downtown, one of which is directly across from the headquarters of Goldman Sachs. But even so, a luxury store like Saks doesn't need to draw huge crowds, Mr. Baker says, because a single customer "drops $10,000 or $20,000" – or more – in just one visit. At the Saks flagship, for instance, shoppers venturing into its main-floor Chanel boutique, which will almost triple in size, can find a royal blue alligator handbag for $48,000 (U.S.).
The Saks renovation is expected to last for another year or two – it began in 2015 and is half done. And Mr. Baker has no intention of selling the store, despite pressure from Mr. Litt and others to do so. "This building is worth $4-billion," Mr. Baker says. "Do we think it's going to be worth more, making it look spectacular – the most spectacular department store in the world? Or do we think it's going to be better not to spend the money?"
Retail consultant Mike Culhane, who was HBC's chief financial officer until early 2014, admits Mr. Baker is in a tough position. HBC is a complex company in a difficult market, where a lot of things need to go right at the same time. "It's never been an easy path," says Mr. Culhane, now president of TMA Group in New York. "It's not like one chain – you've got five or six businesses embedded in there. And right now, they're all not working particularly great. It's surviving but not thriving yet. It's a constant battle."
And though Mr. Baker has enjoyed clear wins and is a "magical deal maker," Mr. Culhane says, for investors, it's all about, "What have you done for me lately?" Still, he'd rather have Mr. Baker at the helm than a lot of other people. "He's far more creative and capable of getting deals done," he says. "He thinks he has some pretty good assets, and he's not willing to give them up for cheap."
For example, HBC is considering selling its historic downtown Vancouver flagship, which has been valued at as much as $900-million. But Mr. Baker is in no hurry. "It just depends on whether we get an exceptional proposition for it," he says. "It's very valuable to us the way it is."
Joshua Varghese of CI Investments' Signature Global Asset Management, which owns about 5 per cent of HBC's stock, says that Mr. Baker has come up with some great deals. And HBC has outperformed rivals such as Sears, Macy's and J.C. Penney in a market that's been brutalized by forces outside his control.
But Mr. Varghese is frustrated by Mr. Baker's lack of clarity on his strategy for turning around HBC's retail operations and its moribund stock. Like Mr. Litt, he believes HBC would benefit from going private. "The problem with investing in a guy with vision is that doesn't belong in the public markets," he says. "If he doesn't articulate a plan, it's hard to have confidence that there is a plan. You're left investing in a hope that Richard Baker does the right thing."
Walter Loeb, a New York retail consultant and former HBC director, says Mr. Baker is grappling with a retail environment of constant discounting, which pinches margins. But ultimately, he'll be able to find value in HBC's real estate, Mr. Loeb says: "For Richard Baker, the whole company is a real estate venture. Lots of things can happen because he can buy and sell real estate very advantageously."
Ever the glass-half-full guy, Mr. Baker still believes HBC can be a consolidator of department stores worldwide, backed by strong real estate assets. He isn't looking at taking HBC private. And he's now searching globally for a new CEO who can juggle the competing interests in an increasingly fast-paced retail universe. But time is ticking.
"Nothing is quick, and nothing is easy," Mr. Baker says. "Through ups and downs, we're going to be successful. It's not the last you've heard from me."