Hudson’s Bay Sales Rise In Q3 Despite Saks Decline

For its third quarter ended October 31, Hudson’s Bay Co. posted net earnings of Canadian $1 million, or U.S. $730,000, compared with a loss of Canadian $13 million, or U.S. $9.45 million, in the previous third quarter.

Adjusted third quarter earnings per share came in at a loss of Canadian four cents per share, the company noted, missing a published analyst average estimate of Canadian seven cents per share gain.

Consolidated same store sales gained 12.9% or 2% on a constant currency basis. Also on a constant currency basis, according to the company, the department store group, including Hudson’s Bay and Lord & Taylor, posted a comparable store sales gain of 5.1%, while comps for Saks Fifth Avenue decreased by 3.6% and comps for Saks Off 5th increased 2.8%. Comps for HBC Europe increased 6.6% on a constant currency basis in the one month of ownership after the parent company’s acquisition of the retailers Galeria Kaufhof, Galeria Inno and Sportarena.

Overall sales increased to Canadian $2.57 billion, U.S. $1.87 billion, versus Canadian $1.91 billion, U.S. $1.39 billion, in the 2014 third quarter, the company stated. Operating loss was Canadian $48 million, U.S. $34.9 million, versus operating income of Canadian $13 million, U.S. $9.45 million, in last year’s quarter.

Digital sales increased $23.9% on a constant currency basis, the company maintained.

“This was an important quarter for our retail business as we continued to execute our strategy of delivering operational improvements while growing and diversifying our retail offerings through targeted acquisitions,” said Richard Baker, HBC’s governor and executive chairman. “With the addition of HBC Europe during the quarter, we now generate the majority of our sales outside the U.S., and have a significant European retail platform from which we can explore additional growth opportunities. We closed the Galeria acquisition, with HBS Global Properties purchasing 41 of the properties, and subsequently sold a portion of our equity in HBS Global Properties during the fourth quarter, using the proceeds to de-leverage HBC’s balance sheet. Our strategy of utilizing real estate to help finance targeted acquisitions should enable us to continue to drive profitable growth in our retail operations.”

Jerry Storch, HBC CEO, added, “We grew sales in both our stores and on the Internet, and our results reflect the benefits of our focus on SG&A and the diversity of our retail business in both geography as well as consumer segment. In particular, our department store group performed extremely well given overall market conditions. HBC Europe and Off 5th segments also saw solid growth, while the luxury business at Saks Fifth Avenue continues to face headwinds. We made good progress on our initiatives in the quarter as we continue to drive profitability while investing in the long-term vision of HBC. We also remain focused on 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 businesses.”

During the third quarter, Hudson’s Bay opened six new Off 5th stores. The company’s overall store count in the third quarter was 466.