During the third quarter, Hudson’s Bay continued to reposition its department store business even as its off-price Saks Off 5th operation generated positive comps in a period when the company’s luxury customers were bargain shopping.
Third quarter net loss from continuing operations was $175 million, or 95 cents per share, versus a net loss from continuing operations of $70 million, or 38 cents per diluted share, in the year-earlier period. Adjusted net loss was $128 million versus adjusted net loss of $56 million in the quarter a year past.
Company comparable sales decreased 1.7% in the quarter year over year as, by division, Saks Fifth Avenue’s comps decreased 2.3%; Hudson’s Bay comps decreased 3.9%; and Saks Off 5th comps increased 4.9% with digital sales giving the result a substantial boost.
Retail sales were $1.82 billion versus $1.86 billion in the year-previous quarter, while total revenue slipped to $1.84 billion from $1.89 billion in the period year over year. Digital sales gained 15% as compared to the 2018 quarter.
Operating income was $106 million versus an operating loss of $87 million in the quarter a year before.
HBC maintained that its comp decline came as the company lapped the top-performing quarter in 2018. The sale of the company’s interest in a European real estate joint venture and strategic changes in vendor relationships also weighed on the company’s profitability, HBC stated. The company sold its remaining stakes in the European real estate and retail joint ventures for $1.5 billion while acquiring total ownership of HBC Netherlands.
“In the third quarter, we faced our toughest comp, soft industry-wide luxury sales and the challenge of winning back market share in Canada,” said Helena Foulkes, HBC’s CEO. “Strong digital growth, continued cost containment and inventory control were not enough to deliver the financial performance we wanted. We must quicken the pace of improvement while bearing the ongoing costs of our strategic portfolio reset and the headwinds impacting our industry. I’m confident that we are on the right journey with each of our businesses as we sharpen our focus to deliver on the potential of HBC.”
Foulkes added, “With last year’s historically high comparable sales growth for Saks, we knew the third quarter would be challenging. Across the industry, there was a pullback among luxury consumers, allowing shoppers to more frequently take advantage of markdowns, which ultimately reduced full-price sales. As expected, reigniting sales at Hudson’s Bay is taking time as we replace unproductive brands and improve service. Our better, more modern merchandise had good performance, reinforcing confidence in our strategy, which we are accelerating for the upcoming spring season. Across HBC, we will continue to make the necessary investments to capitalize on our greatest opportunities, Hudson’s Bay and Saks Fifth Avenue, as we drive the upside in our digital business and deliver the kind of excitement and experiences shoppers expect from our iconic brands.”