Hudson’s Bay Co.’s first quarter showed progress on initiatives to return the company to profitability, helped by comparable sales growth at its Saks Fifth Avenue and Saks Off 5th operations and the gain from the sale of the Lord & Taylor flagship building in New York City.
In a Nutshell: According to chief executive officer Helena Foulkes, the company is seeing progress on a number of fronts as it continues work to reposition Hudson’s Bay for the future. “Strategically, we have simplified the organization and place a greater emphasis on our North American retail operations,” Foulkes. She also spoke about the company’s exercise in financial discipline, as well as investments to further its core Hudson’s Bay and Saks Fifth Avenue businesses.
The company on Monday said it received an offer to take the company private in a deal valued at $1.31 billion. The offer was from a group of shareholders that include executive chairman Richard A. Baker.
The company also said on Monday that it was selling its interests in its European real estate joint venture and a related retail joint venture. The company said last month that it was pursuing options for its Lord & Taylor business.
Net Sales: Net sales for the quarter ended May 4 fell 3.3 percent to 2.12 billion Canadian dollars from 2.15 billion, or $1.59 billion from $1.61 billion. Conversions to the U.S. dollar are at the current exchange rate.
Comparable sales at Saks grew 2.4 percent, and now has a two-year stacked comp of 8.4 percent. The company said the business saw strength in men’s and women’s designer and ready-to-wear categories. Saks Off 5th saw the return to comparable sales growth since the second quarter of the fiscal year, with first quarter comp sales up 4.4 percent. Comp sales at Hudson’s Bay fell 4.3 percent, while those at Lord & Taylor dropped 17.1 percent.
Earnings: The company posted a profit for the quarter, ending the period at 275 million Canadian dollars, or 1.15 in diluted earnings per share (EPS), versus the net loss of 398 million Canadian dollars, or 72 cents diluted EPS, a year ago. The $206.4 million in net income was boosted by the gain from the sale of the iconic Lord & Taylor building, which closed in February. Excluding one-time items, the company would have narrowed its year-ago loss to 209 million Canadian dollars ($163 million).
CEO’s Take: Foulkes said, “Saks Fifth Avenue’s commitment to the luxury customer continues to pay off with widespread sales increases across key merchandise categories and locations, as well as among our top customers…. For Hudson’s Bay, we had some quick wins in service and marketing, which led to sequential improvements in our comps during each month of the quarter. We are incrementally more confident that our post-holiday diagnosis was correct and our fall assortment will better match our customers’ expectations of Hudson’s Bay.”