Brooks, 60, has been the retailer's high-profile president since 2008 and will be succeeded by Liz Rodbell, who was most recently its chief merchant and executive vice-president.
The changes, which are effective immediately, will have both executives report to HBC chairman and CEO Richard Baker.
Despite the surprise announcement, Baker said it was business as usual at HBC.
"It's important to us that we build a world class team of managers and executives and we thought this was a good time in order to expand our team at the top level," he said Tuesday in an interview.
Brooks, an industry veteran, has been praised for reshaping and rebranding the national retailer over the last few years into an upscale chain that offers high-end clothing, handbags, shoes and accessories.
With her at the helm, Hudson's Bay has also partnered with several new brands and retailers, including Britain's Topshop.
As vice-chair, Brooks will move on to a more "advisory capacity" with the company's board of directors, the Toronto-based retailer said.
"(The new role) really puts Bonnie in a stronger position for us to leverage her talents," said Baker. "She will be spending a lot of her time on long-term strategies and advising me and working on trends and improving the quality of our stores and the quality of our customer service."
Brooks, who has also been featured in radio advertisements for Hudson's Bay for several years, will continue to be the face and voice of the chain.
"Nothing is changing. Bonnie is not going anywhere. She did such a good job, you get promoted," Baker said. "She's going to be expanding that vision to more aspects of our business and less burdened by our day-to-day business."
Prior to joining parent HBC, Brooks was the president and CEO of the Hudson's Bay department stores. She's also worked for Asia's Lane Crawford retail stores, Holt Renfrew, and was editor-in-chief of Canadian fashion magazine Flare.
Retail consultant Maureen Atkinson said this executive shuffle is definitely a promotion for Brooks.
"It's good for her certainly and probably the organization, having that kind of knowledge and experience there in a very senior capacity, " said Atkinson, a senior partner with J.C. Williams Group.
"We heard so many promises in the past so clearly she has been able to deliver on really what she said and I think this is just a recognition of that."
Founded in 1670 as a trading company with rights to large portions of what is now Canada, HBC currently has 90 Hudson's Bay department stores across the country. The company also owns 69 Home Outfitters housewares stores and 48 Lord & Taylor department stores in the United States.
Rodbell, 55, has been an executive with HBC since February 2012 after having joined Lord & Taylor in 1985.
Baker said the responsibilities of chief merchant will be taken over by several people.
He added that the retailer continues to have its eyes on expansion and growing its business. It expects to have five more Topshop locations open in its stores by the end of the year and is turning its focus on its online business.
Last week, Hudson's Bay also opened the largest women's shoe department in the country at its flagship store in downtown Toronto.
Baker said even the highly-anticipated arrival of upscale U.S. retailer Nordstrom next year is of little worry to the retailer.
"What they're going to find is a beautiful Nordstrom store, that has very few promotions and very high prices and very good service," he said.
"We are excited and energized by the fact that the Canadian customer will be able to walk through the value product offering at Nordstrom and come back and visit what Hudson's Bay's value proposition is, and we think our customers will be even more excited and energized to shop in our stores after they visit Nordstrom."
Shares in Hudson's Bay Co. fell 52 cents to close at $16.23 on the Toronto Stock Exchange. The company went public last November.
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