Hudson’s Bay Co. remains optimistic
MONTREAL — Hudson’s Bay Co. is hopeful that cost-cutting and investments will bear fruit in the busy fall and holiday season after it lost $201 million in a “very disappointing” second quarter.
“While the performance is still very disappointing — and I wouldn’t paint it any other way in the second quarter — as we look to the future we see continued improvement,” chief executive Jerry Storch said Wednesday during a conference call.
The chain saw its net loss grow more than 40 per cent amid rapidly shifting industry trends, lower store traffic and deep promotions.
The retail giant has responded to the persistent losses with major restructuring that is forecast to generate $350 million in annual savings by the end of fiscal 2018. These include the cutting of 2,000 jobs throughout North America, the expansion of its online offerings, and looking at ways to unlock more value from its vast real estate holdings.
The retailer has also seen significant changes at the top recently, with its president of Hudson’s Bay International departing, and new appointments for the chief financial officer and the president of Hudson’s Bay.
The company said its investments in online sales is showing growth, with a 1.2 per cent increase in overall sales to $3.3 billion in the quarter.
Nearly 20 per cent of sales came from digital department store sales. That’s well above the industry average and on par with online rivals such as Amazon, Storch told analysts.
“We’re making the moves that we think we need to make in order to be forward looking and provide great customer
experiences online and in-store which is the answer to the onlineonly threat,” Storch added.
Same-store sales were up 0.4 per cent but comparable sales at Saks grew 1.7 per cent excluding currency fluctuations, the most in more than two years.
Hudson’s Bay continues to invest in its physical stores as well, opening a Hudson’s Bay branded store in Amsterdam Tuesday, and scheduled on Friday to open a renovated designer floor of its flagship Saks Fifth Avenue store in New York.
Activist investors have urged the company to also tap into its real estate holdings, with the Saks Fifth Avenue flagship store in downtown Toronto alone estimated to be worth $3.7 billion.
Hudson’s Bay governor and executive chair Richard Baker said it continues to explore ways to extract value from its real estate holdings. He said the company has a history of doing so by adding other uses on floors such as Pusateri’s fine foods hall in Saks, Topshop in Hudson’s Bay, Sephora in Germany and exclusive rights to Kleinfeld bridal gowns in Canada.
“We’re very focussed on making our stores more efficient by squeezing the square footage in order to put other productive uses inside of them.”
Hudson’s Bay employs more than 66,000 people and operates more than 480 stores under banners such as the Bay, Saks Fifth Avenue, Lord & Taylor, Gilt, and Saks Off 5th.