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Hudson’s Bay E-Commerce Sales Jump 53 Percent

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Hudson’s Bay Company has upped its spend in digital and it appears to be paying off.

In its fourth quarter and full year results released this week, Hudson’s Bay said digital sales at its department store banners jumped 20.9%, where comparable store sales across all of its banners fell 1.2%. For the full fiscal year 2016, digital sales are up 52.8% over the prior year period.

“Our team remains focused on our all-channel model, anticipating our customers’ evolving needs and adapting to our customers’ expectations both in store and online. We executed on the organic growth of our existing store base and substantially increased our investment in digital,” HBC’s governor and executive chairman Richard Baker said.

Retail sales for the fourth quarter ended Jan. 28 were up 2.5% to 4.6 billion Canadian dollars ($3.43 billion), which HBC attributed largely to its Gilt acquisition. Across its Lord & Taylor, Hudson’s Bay and Home Outfitters banners, comparable sales inched up 0.6%, up 0.1% at Saks Fifth Avenue, but a nearly 6% decline in HBC Off-Price dragged overall sales down in the quarter.

“Saks OFF 5th is in the process of re-merchandising its product mix to have a higher concentration of products at the top end of its offering range, which is expected to drive increased traffic and conversion as well as a higher overall basket size,” HBC said, explaining the poor performance of its off-price arm.

Earnings before interest tax and amortization (EBITDA) dropped 51 million Canadian ($38 million) to 404 million ($301 million).

“The past year was a disruptive one for the retail industry,” HBC CEO Jerry Storch said. “While the department store sector remains challenging, we are taking decisive action and making the tough decisions to ensure continued performance should the current environment persist. We are cutting expenses, rationalizing and reallocating our capital spending, strengthening our balance sheet, and taking other necessary actions.”

HBC has plans to cut expenses by reviewing its productivity enhancements and optimize its in-store operations. The company will also combine inventory at Saks OFF 5TH and Gilt by the end of the year, and OFF 5TH goods will be available for purchase through Gilt. For Hudson’s Bay and Lord & Taylor, the company will focus on growing its active, dress and home categories.

“Rest assured, as we remain focused on the continued growth of our company, we are aggressively positioning HBC to adapt to the changing retail environment,” Storch said.

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