Hudson’s Bay Turns Loss To Q2 Profit

For the second quarter ended August 1, Hudson’s Bay Co. posted net earnings of C$67 million, or 33 cents per diluted share, versus a net loss of C$36 million, or 23 cents per diluted share, in the year-prior period. In terms of United States currency, the company earned about $51 million, or 25 cents per diluted share, versus a net loss of $27 million, or 17 cents per diluted share, in the 2014 quarter.

An analyst average estimate from Thomson Reuters called for a loss of 15 cents per diluted share in Canadian currency.

Sales were C$2.04 billion versus $C1.77 billion, or about $1.54 billion versus $1.34 billion in U.S. currency, in the fiscal year earlier while comparable store sales gained 14.3%, or 4.2% on a constant currency basis. Comps for the department store group, including Hudson’s Bay department store locations, advanced 4.9%, while those for Saks Fifth Avenue increased 0.1% and those for Saks Off 5th increased 12.7%, all on a constant currency basis.

Menswear, ladies apparel, home products and ladies shoes drove sales growth at the department store group while womenswear gave Saks a boost and women’s shoes, women’s accessories and menswear provided Off 5th with a lift, Hudson’s Bay stated.

The company added that digital sales advanced 30% on a constant currency basis.

 “Our second quarter was characterized by very strong sales growth, led by the increasing traction of our digital platforms,” said Jerry Storch, HBC’s CEO. “We continue to drive growth today while executing on our strategies to build our businesses and invest in the long-term vision of HBC. These strategies include 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. These initiatives are a key part of HBC’s future growth, and we look forward to realizing the benefits of these investments in the coming quarters.”

Richard Baker, Hudson’s Bay governor and executive chairman, said, “This was a transformative quarter for us, with multiple major initiatives that will shape HBC for years to come. During the quarter we closed our joint venture with Simon Property Group as well as the first tranche of our joint venture with RioCan REIT, as we continue to execute on our strategies to highlight the value of our real estate assets. As part of these transactions, we paid down more than $1 billion in debt, providing us with additional flexibility to invest in our retail businesses. We also entered into a definitive agreement to acquire Galeria Kaufhof, Germany’s leading department store chain, which we expect to be significantly accretive to our shareholders. All of our businesses are in excellent shape for the fall and holiday quarters, putting HBC in a great position to deliver on our 2015 strategic priorities and initiatives.”