HBC aiming to stem tide
• After a tough third quarter Hudson’s Bay Co. is seeking to cut expenses as the retailer’s shares bottomed out at the lowest point yet since going public for a second time in 2012.
Chief executive Jerr y Storch said Tuesday the owner of Saks, Hudson’s Bay and Kaufhof in Germany is keen to focus on finding “non- customer facing” efficiencies after the company reported a wider than antici- pated loss and a four per cent dip in sales at stores open for more than a year, citing weakness in women’s apparel and luxury retail.
“Our fundamental hypothesis is that customers love great department stores, and that includes great service,” Storch said, while discussing earnings for the period ended Oct. 29. “We do not want to, in the short- term pursuit of (expense) reduction, destroy our competitive advantage over the Internet, which is the service we provide in the stores. Some retailers are in great jeopardy of doing that so they can have a great quarterly conference call, but in the end they find that they gave away the crown jewel.”
His vision seems to be losing ground in the broader market; HBC’s shares ended the day at $13.52, down $1.02 or 7.02 per cent.
HBC has built up a network of businesses to cover off multiple consumer segments: In the mid- to upmarket department store segment the retailer has its eponymous banner, as well as Lord & Taylor and Kaufhof. It caters to luxury consumers through Saks Fifth Avenue and the value- minded through its off-price Saks Off Fifth and Gilt online banners, and has been heavily expanding its digital presence.
But industry analysts have been questioning whether there is more value to leverage from HBC’s valuable real estate portfolio, which the retailer has realized to a degree through sale leaseback and joint venture projects.
“HBC’s focus on robust customer service, online and in the real-world experience of the stores is profoundly important to the modern age department store,” said Patrick Rodmell, president of Toronto-based retail consultancy Rodmell & Co.
“They are in a much better position than Sears. The challenge for HBC will not be the revenue issue; the challenge becomes what do you do with the real estate through the migration from physical retail to virtual retail?”
Executive chairman Richard Baker sounded a bullish note for the current quarter, a period that saw Hudson’s Bay stores hit their biggest sales day in history on Nov. 25, Black Friday. “( The fourth quarter) is where the department stores shine — it’s our quarter,” Baker said.