Hudson’s Bay loss widens, sales plunge

Department store operator TORONTO Hudson’s Bay Co. reported deeper losses and sliding sales in its third quarter as the owner of Saks and Home Outfitters headed into the critical holiday selling period.

HBC reported a net loss of $125 million, or 69 cents per share in the period ended Oct. 29, compared with net earnings of $7 million (four cents) in the same period a year ago, when the earnings included a gain of $91 million. The normalized third-quarter net loss was $102 million compared with a loss of $1 million a year ago, the company reported.

“Sales were challenging in the third quarter but we believe our all channel strategy is the right long-term strategy for generating profitable growth,” chief executive Jerry Storch said in a statement after the market closed. “While we have made considerable progress on increasing efficiencies during the last year, we believe that there are further areas for improvement and we will continue to evaluate our options.”

Hudson’s Bay reported consolidated retail sales of $3.3 billion in the third quarter, up 28.6 per cent from $2.6 billion a year ago, largely due to the addition of HBC Europe and online retailer Gilt to the company’s retail network. But comparable sales, a leading indicator of retail performance, fell four per cent, or 3.6 per cent on a constant currency basis, led by a steep 8.4 per cent comparable sales decline at HBC’s off-price division, which includes Saks Off Fifth and Gilt.

Digital sales rose by 73 per cent year-over-year, the company said.

Last month HBC cut its estimates for the period, citing weaker than anticipated sales. The retailer also announced it would pull back on its planned capital expenditures for 2016. Its shares had fallen seven per cent in the last month as of Monday’s close.

HBC trimmed its estimate for 2016 sales to between $14.5 billion and $14.9 billion from its previous outlook, issued in September, of $14.9 billion to $15.9 billion.

The company has been investing heavily in technology to bolster its overall performance and provide consumers with multiple platforms on which to shop and browse.

HBC invested $60 million in upgrades to its Toronto distribution centre in order to hasten fulfilment and delivery time in order to better compete with Amazon.com Inc. and other online retailers.