In the first quarter, Hudson’s Bay Company reported a jump in revenues resulting in part from its Galeria acquisition in Europe, while restructuring charges impacted the department store retailer’s wider net loss.
For the first quarter ended April 30, Hudson’s Bay Company posted a net loss of $76 million, or 41 cents per diluted share, versus $38 million, or 21 cents per diluted share, in the year-prior quarter. According to Hudson’s Bay, the net loss resulted primarily from net rent expenses related to the company’s real estate joint ventures and restructuring charges related to operational efficiency initiatives.
Comparable sales gained 4.4% year over year in the quarter but slipped 1% on a constant currency basis. Retail sales were $2.59 billion, versus $1.62 billion in the year-prior period.
On a constant currency basis, comps advanced 2.3% at the department store group and 0.7% at HBC Europe, offset by declines of 4.1% at HBC off price and 5.7% at Saks Fifth Avenue, resulting in the total comp decline of 1%. Total digital sales increased by 86.2% in the quarter year over year, with comp digital sales increasing 7.4%.
During the first quarter, HBC completed the implementation of a revised pricing strategy at Off 5th designed to offer value on an everyday basis. The initiative resulted in a substantial reduction in overall Off 5th promotional activity, Hudson’s Bay said, and drove the majority of the decline in the off price division comparable sales results.
“With banners across multiple geographies and consumer segments, we believe HBC’s diversified retail platform positions us well for future sales and earnings growth in all of our businesses,” said Richard Baker, HBC’s governor and executive chairman. “In the first quarter, we continued to generate sales growth as a result of the Galeria and Gilt acquisitions and experienced continued strength at our Canadian operations. HBC’s real estate portfolio, which is less impacted by short-term trends in retail, continues to provide opportunities to create value. In preparation for our planned flagship Saks Fifth Avenue store in New Jersey at American Dream, we agreed to modify our lease at the Short Hills mall in New Jersey. We made modifications to our Saks Fifth Avenue lease in Honolulu, HI. These two lease modifications generated proceeds of $99 million for the company.”
Jerry Storch, HBC CEO, added, “In the face of a challenging retail environment, we continue to execute our strategy and are excited about growth prospects. Our newly opened Saks stores in Canada are off to an impressive start, while our overall results at Saks were impacted by the current pressures in luxury retail. The integration of HBC Europe and Gilt are proceeding well. As we look toward the rest of the fiscal year, we expect that our ongoing efforts to become more efficient, in conjunction with our all-channel strategy of combining exciting retail destinations with a best in class e-commerce platform, will drive both sales and earnings growth.”
Hudson’s Bay operates 470 stores across its retail banners.