Company-wide first quarter sales at Hudson’s Bay Company were up more than 10% as the company’s continued focus on driving e-commerce sales led to a sales jump of more than 37%.
Retail sales for the 13-week period ending May 2, which include digital sales from all banners, were $2.1 billion, an increase of $217 million or 11.7% from sales of $1.85 billion in the prior year. On a constant currency basis, consolidated same store sales increased by 2.7%. Same store sales on a constant currency basis increased by 4.9% in the company’s Department Store Group, by 0.6% at Saks Fifth Avenue and by 10.3% at OFF 5TH.
Digital commerce sales increased by 37.2% when compared to the prior year, reflecting the company’s continued strategic focus on growing this channel, officials said.
In terms of merchandise category performance, sales growth at DSG was driven by menswear and home products. Sales growth at Saks Fifth Avenue was driven by womenswear while at OFF 5TH, sales were strong across all categories.
“We are energized by our progress and the opportunities ahead, and will continue to make the right investments to drive long-term sales growth and capitalize on margin enhancement opportunities,” said Jerry Storch, HBC’s CEO. “This includes strengthening our digital capabilities, expanding OFF 5TH, bringing Saks Fifth Avenue and OFF 5TH to Canada and leveraging our scale to capture synergies and promote efficiencies across our business.”
Gross profit as reported was $846 million compared to $716 million for the prior year. Adjusting the prior year for the negative $38 million impact associated with the amortization of inventory related purchase accounting adjustments, the comparable gross profit in the first quarter of fiscal 2014 was $754 million, resulting in a year-over-year improvement of $92 million. Improved performance at DSG and Saks, combined with a favorable currency conversion benefit on U.S. dollar denominated sales, drove the increase in gross profit dollars, company officials said.
Gross profit rate as reported was 40.8% of retail sales, or a 220 basis point improvement over the first quarter of the prior year. Adjusting for the negative impact associated with the amortization of inventory related purchase accounting adjustments in the first quarter of fiscal 2014, the comparable gross profit rate was 40.6%, resulting in a year-over-year improvement in gross profit rate of 20 basis points.
Normalized EBITDA was $96 million compared to $97 million for the first quarter of fiscal 2014, a decrease of $1 million. As a percentage of retail sales, normalized EBITDA was 4.6% compared to 5.2% for the first quarter of fiscal 2014. As previously stated, the company intends to invest a total of $50 million in strategic initiatives during fiscal 2015, with the impact of these investments expected to be more pronounced during the first half of the year, given the sales and earnings profile of the company.