Hudson’s Bay Co. sustains wider Q1 loss — but sales are surging
Discount banner Saks Off Fifth continues to boost bottom line
Hudson’s Bay Co. posted a wider loss in its first quarter as the department store chain continued its investments in digital technology.
The owner of Hudson’s Bay and Saks Fifth Avenue reported a net loss of $54 million, or 30 cents per share, in the period ended May 2, compared with net profit of $176 million (97 cents) in the same period a year earlier.
The retailer’s adjusted loss, which filters out a number of one-time factors, was $33 million, compared with $27 million last year. On a per share basis, the adjusted loss was 18 cents, compared with analyst estimates of five cents per share.
Consolidated sales between the Toronto-based company’s store banners were up 11.7 per cent to $2.1 billion.
The company’s off-price banner Saks Off Fifth continued its growth surge in the period, with samestore sales, a key measure of retailing health, rising 10.3 per cent. Consolidated same-store sales were up 2.7 per cent, with growth of 0.6 per cent at Saks and a sales rise of 4.9 per cent in the department store group, which includes Hudson’s Bay and Lord and Taylor.
“One of the major competitors went out of the business, Target ,and that obviously threw a lot more volume back on the market,” CEO Jerry Storch told analysts on a conference call Wednesday. Target’s failure in Canada was good for HBC’s department stores as well as Home Outfitters, its big-box home decor chain.
The company has been working to leverage its bricks and mortar stores with a burgeoning digital business. Digital sales were up 37 per cent in the quarter.
Storch also said executives were enthusiastic about the strength of the Saks Off Fifth banner, which sells brand name and luxury merchandise at 40 per cent to 70 per cent off of the original ticket price. While the retailer sells goods at a lower margin, he said, it has higher inventory turns than HBC’s traditional department store chains, and that is good for the bottom line.
“This includes strengthening our digital capabilities, expanding Off Fifth, bringing Saks Fifth Avenue and Off Fifth to Canada and leveraging our scale to capture synergies and promote efficiencies across our business.”
As expected, analysts asked executives about rumoured acquisition targets such as Germany’s Kaufhof department store chain.
Noting the company’s management and board of directors are key shareholders of the company, governor Richard Baker said any proposed target would have to be a highly lucrative opportunity.
“We consider our currency and our stock very very precious, and we are very much opposed to adding debt and diluting the value of our currency,” Baker told analysts.