Hudson’s Bay put a positive spin on its second quarter, although its net loss increased, with the department store retailer highlighting the performance of Saks and Saks Off 5th as it works to improve business operations.
Net loss from continuing operations was $462 million, or $2.51 per share, versus a loss from continuing operations of $104 million, or 58 cents per share, in the year-previous quarter. All figures are in Canadian currency. Adjusted for one-time events, net loss was $171 million versus $85 million in the quarter a year previous.
The retailer’s second quarter comparable sales slipped 0.4% year over year.
Second quarter revenues totaled $1.85 billion with retail sales of $1.83 billion, including a 19% increase in digital sales, driven by marketing, assortment balance and technology improvements. The result compared with revenues of $1.86 billion with retail sales of $1.83 billion in the year-prior quarter. Operating loss was $261 million and an operating loss of $97 million in the period a year earlier.
As for individual businesses, Saks Fifth Avenue’s second quarter comparable sales grew by 0.6% year over year, helped by men’s, women’s ready-to-wear, handbags and beauty.
Hudson’s Bay stores comparable sales decreased 3.4% in the quarter versus the year-past period. As the company works to correct previous unsuccessful merchandise choices, it pointed out, Hudson’s Bay stores have been modernizing their marketing mix, which increased omnichannel customers and nearly doubled the digital growth rate from a year ago.
Saks Off 5th has been initiating a new strategy, which includes updating the buying, marketing and service model. In the second quarter, the Saks Off 5th comp advanced 3.4% from the period a year previous with notable gains in jewelry, women’s modern clothing and men’s classic apparel.
In addition, HBC recently sold its Lord + Taylor business to Le Tote.
“We continue to concentrate on controlling the ‘controllables,’ serving our customers and lowering expenses and inventory while making strategic investments for our future,” said Helena Foulkes HBC’s CEO. “While we’ve progressed in simplifying the business and strengthening operations, the second quarter demonstrates that we are still in the early stages of what HBC can become. This quarter we responded as the market moved early to discount merchandise in both luxury and Canadian retail. Our digital performance was a standout with a sharp increase in growth as our changes in strategy, people and infrastructure are paying off. With the Lord + Taylor sale agreement, our focus is now squarely on Saks Fifth Avenue and Hudson’s Bay, businesses that have the greatest potential for HBC amid the consolidating industry.”
As a positive, Foulkes pointed out, “Saks Fifth Avenue has been posting quarter-after-quarter of industry-leading sales growth by focusing on its New Luxury strategy, which includes merchandise and experiences that can only be found through Saks. The second quarter was bolstered by strong sales through the Fifth Avenue Club, our personal shopping service, and an acceleration in digital growth. The promotional activity in luxury was exceptionally intense in the second quarter and a notable change from the first quarter. For Hudson’s Bay, we are working to fix this business to recapture market share over time. Our merchants are modernizing our merchandise mix by exiting more than 300 unproductive brands and adding 100 new and emerging brands to reset the fall assortment. We expect these changes may take time to resonate. Finally, the positive change in Saks Off 5th’s performance demonstrates the power of a strategic shift in how we appeal to customers.”