Hudson's Bay posts Q4 net loss of 226 million Canadian dollars

Hudson’s Bay Company (HBC) has announced that sales totalled 9.4 billion Canadian dollars (7 billion dollars) for the year and 2.9 billion Canadian dollars (2.1 billion dollars) in the fourth quarter to February 2, 2019. The group’s continuing operations posted a net loss of 226 million Canadian dollars (169.9 million dollars) in the fourth quarter compared to net earnings of 180 million Canadian dollars in the same quarter a year ago. Net loss for the full year was 631 million Canadian dollars (474.3 million dollars).

“We are a far stronger company today than a year ago, despite some of the top-line challenges this quarter,” said Helena Foulkes, HBC CEO in a statement, adding, “We’ve returned to positive operating cash flow, improved the bottom line across all of our businesses, increased profitability by 30 percent and strengthened our balance sheet."

Review of HBC’s fourth quarter and full year results

For the year, HBC’s comparable sales declined 0.2 percent, while fourth quarter comparable sales decreased 1.4 percent, with comparable digital sales up 8.7 percent. Saks Fifth Avenue’s fourth quarter comparable sales grew 3.9 percent, which the company said, was its seventh consecutive quarter of comparable sales growth despite being hampered by construction on the main floor during the holiday season at the New York flagship. On a two-year stack, Saks Fifth Avenue comp was 7 percent. DSG (Hudson's Bay, Lord & Taylor and Home Outfitters) comparable sales decreased 5.2 percent and Lord & Taylor sales continued to decline year-over-year. Saks Off 5th comparable sales declined 2.1 percent.

Commenting on the company’s performance, Richard Baker, HBC’s Governor and Executive Chairman added to the statement: “We recently completed two significant transactions that showcase the inherent value of the company. Our sharpened financial discipline and streamlined focus creates a solid foundation to build upon in 2019.”

Operational highlights of HBC's Q4 and full year results

For HBC, gross profit as a percentage of sales was 36.7 percent in the fourth quarter compared to 38.7 percent in the same quarter a year ago. The company said, 200 basis point decline was driven by closing eight stores, including the Lord & Taylor New York City flagship during the quarter, and an inventory provision for the pending closure of Home Outfitters. In fiscal 2018, gross profit margin was 38.9 percent, a slight increase over the prior year. Excluding the impact from closed stores, the company added, gross profit margin was 39.9 percent, up 110 bps from the prior year, with each business unit contributing to the improvement.

2018 combined adjusted EBITDA increased 63 percent to 426 million Canadian dollars (320 million dollars), including 275 million Canadian dollars from the fourth quarter. Excluding the impact from the European retail joint venture, Adjusted EBITDA from continuing operations increased 30 percent year-over-year to 338 million Canadian dollars (254 million dollars) in 2018.

Fourth quarter adjusted EBITDAR increased 81 million Canadian dollars to 384 million Canadian dollars (288.6 million dollars), due to the inclusion of the European retail joint venture in 2018 financial results including 26 million Canadian dollars of third-party rent. For Fiscal 2018, adjusted EBITDAR rose 30 percent to 784 million Canadian dollars (589.4 million dollars).

Picture:Facebook/Saks Fifth Avenue