The Hudson's Bay Company has struck a deal with fashion rental chain Le Tote that will see HBC sell its Lord & Taylor unit to Le Tote for $100M US.

Under the terms of the deal announced Wednesday morning, Le Tote will get the Lord & Taylor brand name and control of all 38 of the chain's luxury department stores from HBC, along with all the inventory of clothing and other items.

HBC, meanwhile, will retain control of all the real estate assets that Lord & Taylor stores are sitting on.

Lord & Taylor booked about $1.4 billion in sales last year, but the division didn't turn a profit for its parent company. So HBC, which is currently in the middle of a takeover fight for the future of the company, is selling it to Le Tote, a fashion subscription service that lets women rent clothing and accessories for a flat monthly fee.

As part of its turnaround plan, in 2017 HBC sold Lord & Taylor's flagship store in New York to office space renting firm WeWork for $850 million. Wednesday's move to sell the chain is a continuation of that strategy, Bloomberg retail analyst Abigail Gilmartin said.

"Hudson's Bay's plan to take itself private would enable the retailer to more easily make radical changes to turn around the underperforming business. The company has struggled to draw better results at the namesake and Off Fifth stores for some time."

The deal will "leave Hudson's Bay to focus on its core business," Gilmartin said.

HBC isn't exiting the business entirely, as it will retain a minority equity stake in the company, and in three years time the two companies have agreed to reassess how all the locations are doing and whether or not HBC may take back some of those locations.

"We're excited to have reached an agreement with Le Tote that creates a new model for Lord & Taylor, bringing together fashion rental subscriptions with traditional retail," HBC's chief executive officer Helena Foulkes said in a release.

Le Tote says it plans to continue to employ "the vast majority" of people who currently work for Lord & Taylor.