Hudson’s Bay posted a deeper net loss in the second quarter, although the retailer did see some sales growth improvement at Saks and digital channels.
For the second fiscal quarter, Hudson’s Bay Co. posted a net loss of $201 million, or $1.10 per share, versus $142 million, or 78 cents per share, in the previous-year period. Hudson’s Bay reported all monetary figures in Canadian currency.
Discrete charges aside, adjusted net loss was $164 million versus $122 million in the prior-year period. The company reported that the higher net loss resulted from lower gross margin dollars combined with higher SG&A and depreciation and amortization expenses, partially offset by a higher net earnings in joint ventures and a larger income tax benefit.
In the quarter, consolidated comparable sales across its store portfolio increased 0.4%. On a constant currency basis, comparable sales increased by 1.7% at Saks Fifth Avenue while declining by 1.6% at the department store group including Hudson’s Bay and Lord & Taylor stores, 2.3% at HBC Off Price, 2.8% at HBC Europe and 1.3% overall. Comparable sales were hit by lower traffic across retail banners, as well as the highly promotional retail environment.
Positive comps at Saks Fifth Avenue, the largest quarterly increase in more than two years, reflect ongoing improvements made to deliver a seamless luxury all-channel offering, HBC asserted. Although overall comps declined, comparable sales increased at Hudson’s Bay stores on a constant currency basis, driven primarily by strong overall digital sales. Ongoing initiatives to improve Hudson’s Bay performance include an increased focus on key categories as well as focused digital marketing designed to drive all-channel sales. Lower traffic at Saks Off 5th and Gilt hurt comps, partially offset by digital sales growth at Saks Off 5th. The company continues to focus on elevating the Off 5th assortment.
Digital sales increased by 12.7% in the quarter from the prior year, with constant currency online comps up 11%, reflecting the company’s continued strategic focus on growing this channel. Retail sales were up 1.2% to $3.29 billion from the year-earlier quarter.
Jerry Storch, Hudson Bay’s CEO, said, “We are growing our business globally, digitally, and physically. Just today we unveiled our first Hudson’s Bay store in the Netherlands and re-launched our Gilt website. We will be officially opening the renovated designer floor of our Saks Fifth Avenue flagship in New York. During the second quarter, our diversified banners demonstrated areas of strength, with Hudson’s Bay and Saks Fifth Avenue delivering positive comparable sales growth. Digital sales grew double digits at our department store banners, reflecting the ongoing execution of our long-term all-channel retail strategy.”