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Hudson’s Bay Posts Loss But Points To Improvement

In a fourth quarter when it continued to realign its business, Hudson’s Bay recorded a net loss but pointed to an overall improvement in its operations. 

The company recorded a net loss from continuing operations of $226 million, or 95 cents per diluted share, as compared with net earnings from continuing operations of $180 million, or 84 cents per diluted share, in the year-earlier period. All dollar figures are Canadian currency values.

Sales were $2.89 billion versus $3.05 billion in the year-prior period. Operating loss was $41 million versus an operating income of $40 million in the previous fourth quarter. 

Fourth quarter comparable sales slipped 1.4% year over year but digital comps gained 8.7%. Saks Fifth Avenue comps increased 3.9% from the year-previous period, while comps at DSG, the division that includes Hudson’s Bay, Lord & Tayor and Home Outfitters, decreased 5.2% and comps at Saks Off 5th decreased 2.1%.

After the fourth quarter ended, Hudson’s Bay announced that it was discontinuing the Home Outfitters business.

For the full fiscal year, Hudson’s Bay posted a net loss of $631 million, or $2.67 per diluted share, as compared with a net loss of $139 million, or 73 cents per diluted share, in the year earlier.

Sales were $9.38 billion versus $9.49 billion in the year prior. Operating loss was $420 million versus an operating loss of $397 million in the fiscal year before.

“We are a far stronger company today than a year ago, despite some of the top-line challenges this quarter,” said Helena Foulkes, HBC CEO. “We’ve returned to positive operating cash flow, improved the bottom line across all of our businesses, increased profitability by 30% and strengthened our balance sheet. We also made great strides in simplifying the business, strengthening operations and deepening understanding of our customers. While there is still more work to be done, these results further demonstrate that HBC is benefiting from the bold strategic actions taken throughout 2018. The strength of Saks Fifth Avenue continued thanks to our stores outside of New York City as the Fifth Avenue flagship remained under renovation. At Hudson’s Bay, we are capable of better results from what is a solid business. Merchandise choices sparked the top-line momentum shift at Hudson’s Bay, and we believe those are fixable with time. Saks Fifth Avenue and Hudson’s Bay offer HBC our greatest long-term growth opportunities, and we are encouraged about what lies ahead.”

Richard Baker, HBC’s governor and executive chairman, said, “Our ability to identify undervalued real estate with great potential is a key long-term differentiator for HBC. We recently completed two significant transactions that showcase the inherent value of the company. In the fourth quarter, we sold a portion of our 59 properties in Germany, receiving $634 million, which resulted in a gain of $348 million over our book value. After the quarter closed, the Lord & Taylor flagship building was sold for a transaction value of $1.1 billion, with HBC retaining a preferred equity interest in the building. Our gain on the Lord & Taylor flagship sale is approximately $800 million, which will be recognized in the first quarter.”