Sales Decline Pressures Hudson’s Bay Turnaround Strategy

With a new CEO at the helm, Hudson’s Bay’s turnaround strategies helped it improve results and post a profit in the fourth quarter, but sales continued to decline.

For the fourth quarter, Hudson’s Bay posted net earnings of $84 million, or 39 cents per diluted share, versus a net loss of $152 million, or 83 cents per diluted share, in the year-prior period. All dollar values reported are in Canadian currency. Adjusted net income was $20 million versus $2 million in the year-earlier period.

Comparable sales slipped 2.4% in the quarter year over year with comps at the department store group down 2.6%, comps at HBC Europe down 3.4% and comps at HBC off price down 7.6%. Sak’s Fifth Avenue was a bright spot, with comps up 2.1%. Comparable digital sales increased 2.8% and 9% excluding the Gilt operation.

Net revenues were $4.7 billion versus $4.6 billion in the year-previous period. Operating income was $4 million compared with an operating loss of $40 million in the year-before quarter.

For the full fiscal year, Hudson’s Bay posted a net loss of $581 million, or $3.04 per diluted share, versus a net loss of $516 million, or $2.83 per diluted share, in the year prior. Adjusted net loss was $564 million versus a net loss of $313 million in the year earlier.

Net retail sales in the fiscal year were $14.35 billion versus $14.46 billion in the fiscal year previous. Operating loss was $646 million compared with $368 million in the year before.

“While we are not pleased with our recent performance, we continue to capitalize on the value of our real estate portfolio and are taking action to improve our operating results,” said Richard Baker, HBC’s governor and executive chairman. “Our valuable real estate assets provide HBC with a solid financial base, and the recent agreement to sell the Lord & Taylor flagship building further demonstrates our ability to monetize these assets and enhance liquidity. We are also working to better position our retail operations and have made several key leadership appointments which we believe will help drive business performance. I am confident that the addition of Helena Foulkes and her transformational leadership will invigorate HBC with a fresh perspective as we position ourselves for the future.”

Foulkes, the company’s new CEO, said, “HBC is a unique company with iconic banners and a storied history. I’ve spent the past six weeks visiting our stores and offices around the world, and it is clear to me that there is significant opportunity to build upon our solid foundation to realize the full potential of our business. In the coming weeks, I will continue to listen and learn from our associates and customers as I work with the leadership team to heighten accountability for driving business results, improve our culture and develop a long-term strategic plan.”

Previous to her appointment as CEO, Foulkes was evp/CVS Health and president of CVS Pharmacy.