- Prachi Singh |
Retail sales at Hudson’s Bay Company (HBC) were 3,160 million Canadian dollars (2,495 million dollars) in the third quarter, a decrease of 140 million Canadian dollars (111 million dollars) or 4.2 percent, from the prior year. Net loss was 243 million Canadian dollars (192 million dollars) compared to 125 million Canadian dollars (99 million dollars) in the prior year.
Commenting on the results, Ed Record, HBC's Chief Financial Officer, said in a media release: "While Saks Fifth Avenue and Hudson's Bay are performing well, our overall third quarter results did not meet our expectations. The workforce reductions made as part of our transformation plan caused some operational challenges, particularly in our digital business. We also plan on reducing total inventory as part of an effort to moderate promotional activity and increase full price selling. Finally, our transformation plan remains on track to generate annual savings of 350 million Canadian dollars."
Financial highlights of HBC’s Q3 results
The company said, the decrease in retail sales was driven primarily by lower overall comparable sales of approximately 104 million Canadian dollars (82 million dollars) and negative foreign exchange impacts of 64 million Canadian dollars (51 million dollars). Additionally, the company added that closed stores had a 34 million Canadian dollars (27 million dollars) negative impact on overall sales, partially offset by the opening of new stores, which added approximately 61 million Canadian dollars (48 million dollars) in sales during the quarter.
Consolidated comparable sales decreased by 3.2 percent on a constant currency and 5.1 percent reported. On a constant currency basis, comparable sales at Saks Fifth Avenue grew 0.2 percent, while comparable sales at Hudson's Bay grew for the 29th consecutive quarter. On a constant currency basis, comparable sales declined by 3 percent at HBC Europe, 3.7 percent at DSG and 7.6 percent at HBC Off Price. HBC said, comparable sales during the quarter were impacted by lower traffic across HBC's banners, higher promotional activity, operational challenges and the effects of the hurricanes in Texas, Florida and Puerto Rico.
On a constant currency basis, digital sales increased by 2.1 percent or by 9 percent excluding Gilt. The workforce reductions, HBC added, that were made as part of HBC's transformation plan caused some marketing and merchandising challenges during the quarter. These challenges had an adverse impact on the business, particularly digital, and process changes are underway to improve operations. Separately, the company continues to work on transitioning Gilt into a more intent based shopping destination and, subsequent to the quarter end, began selling inventory from Saks Off 5th on Gilt.com.
Q3 net loss widens to CAD243 million at HBC
For HBC overall, gross profit as a percentage of retail sales was 41.6 percent, a decline of 60 basis points compared to the prior year. Adjusted EBITDA was 34 million Canadian dollars (27 million dollars), a decrease of 55 million Canadian dollars (43 million dollars) compared to the prior year. Net loss was 243 million Canadian dollars (192 million dollars) compared to 125 million Canadian dollars (99 million dollars) in the prior year.
During the third quarter, HBC opened two Saks Off 5th stores in Canada, which are located in Vancouver, British Columbia and Montreal, Quebec. In the US, the company opened three Saks Off 5th stores located in New York City, New York; Seattle, Washington and East Hanover, New Jersey. The company also opened ten Hudson's Bay stores in the Netherlands located in the cities of Amsterdam, Rotterdam, The Hague, Leiden, Breda, Maastricht, Almere, Zwolle, Tilburg and Den Bosch and one Saks Off 5th store in Rotterdam. The company closed one Hudson's Bay Store in Quebec, one Home Outfitters store in Kitchener, Ontario, one Galeria Kaufhof store in Berlin, Germany and one Sportarena store in Dresden, Germany.
"Our multifaceted strategic partnership with WeWork will provide a unique way to better utilize our physical space while increasing traffic and improving the economics at our stores. The investment by Rhône Capital and sale of the Lord & Taylor Fifth Avenue building will generate total proceeds of 1.6 billion dollars and substantially strengthen our balance sheet. This will allow us to navigate our rapidly changing industry from a position of strength. Our agreement to create a Lord & Taylor flagship on Walmart.com significantly extends the reach of this business, and we know that all of our banners have meaningful runway to continue to grow their online presence," stated Richard Baker, HBC's Governor and Executive Chairman and Interim CEO in a statement.
Picture:Facebook/Saks Off 5TH