As Hudson’s Bay released its second quarter results including a company-wide 0.4% decrease in comparable sales and a larger loss, the department store retailer said it is forming a strategic partnership for its European business.
For the quarter ended August 24, net loss from continuing operations was $203 million, or 48 cents, versus $154 million, or 42 cents, per diluted share, in the year-before period. Adjusted net loss from continuing operations was $95 million, versus $75 million, in the year-earlier quarter.
Although the overall company comp decreased 0.4%, Saks Fifth Avenue helped buoy other results with a 6.7% comp gain. However, the company’s department store group, including Hudson’s Bay, Lord & Taylor and Home Outfitters stores, posted a 3.8% comp decrease and Saks Off 5th posted a 7.6% comp decrease. Company comparable digital sales advanced 10.8%.
Revenue was $166 billion versus $1.69 billion in the quarter a year earlier while operating loss was $101 million, versus $133 million, in the year-before period.
Helena Foulkes, Hudson’s Bay CEO said, “We have been making the tough decisions necessary to set HBC up for long-term success and see even more opportunity to drive growth and profitability. By strengthening our retail portfolio, including a particular focus on the customer experience, and maximizing the value of our real estate, we expect to drive performance and unlock shareholder value. We continue to focus on increasing accountability and improving profitability, and our recent results are a step in the right direction. Saks Fifth Avenue’s strong performance is especially encouraging. While earnings have stabilized, there is still significant work to be done to improve our topline at Lord & Taylor and Saks Off 5th, which have not met expectations. With the right leadership team now in place, our banners are empowered to develop and implement strategies that will best drive their businesses forward.”
On September 11, Hudson’s Bay entered into definitive agreements with Signa Retail Holdings, a European retail and real estate operator, to form a strategic partnership for its retail and real estate assets in Europe.
HBC Europe’s retail operations will merge with Signa’s Karstadt Warenhaus GmbH. Hudson’s Bay will take a 49.99% interest in the combined businesses, which will united two European retail banners, HBC’s Galeria Kaufhof and Karstadt. Stephan Fanderl, CEO of Karstadt, will run the combined operation. HBC and SIGNA will share six board seats and joint oversight of major decisions.
Foulkes said the strategic partnership HBC has forged in Europe “significantly strengthens HBC’s retail portfolio and continues our track record of executing transactions that unlock the value of our real estate portfolio. This transaction highlights the significant value of our European assets, creating more than $1.1 billion in real estate value, and generates cash that will improve our liquidity and overall leverage. The combination of HBC Europe with the next largest retail group in Germany provides the groundwork for this newly formed operating company to stabilize performance and tackle the evolving European retail industry head-on.”