TORONTO — Canadian department store operator Hudson’s Bay Co said on Wednesday its second-quarter loss widened due to lower sales at its Lord & Taylor and Saks OFF 5th divisions.
Chief Executive Officer Helena Foulkes said the company, which announced a joint venture in Europe with Austrian rival Signa Holding on Tuesday, will focus on turning around the two underperforming divisions.
“We’ve made some poor decisions over the last few years that have hurt (the Saks OFF 5th brand’s) profitability,” Foulkes, who became chief executive in February, told Reuters. “But this is a business that fundamentally can be successful.”
Lord & Taylor was more challenging and a turnaround would take longer, she said, adding that the company was open to changes, including smaller stores.
Hudson’s Bay reported a net loss of $147 million, or 62 cents a share, in its North American operations for the quarter ended Aug. 4. That compared with a loss of $100 million, or 55 cents, a year earlier.
Sluggish sales have dogged the company as Amazon.com Inc and other online retailers lure consumers away from department stores. In all but one of the past 10 quarters, HBC has posted losses.
Shares have fallen 6.2 per cent this year, compared with a 0.7 per cent decline in the benchmark Toronto stock index.
Comparable sales in HBC’s department store group, which includes its Hudson’s Bay and Lord & Taylor banners, fell 3.8 per cent in the quarter from a year earlier, while sales at Saks OFF 5th, which offers discounted designer goods, dropped 7.6 per cent.
The company’s luxury Saks Fifth Avenue brand’s 6.7 per cent increase in sales couldn’t offset the declines in its other businesses.
Including its European business, Hudson’s Bay reported a net loss of $264 million, widening from $201 million a year ago, and deeper than the loss of $173 million that analysts expected, according to Thomson Reuters I/B/E/S.
Gross margins improved 240 basis points, lifting adjusted earnings before interest, taxes, depreciation and amortization, to $33 million from $3 million a year ago, the company said.
The European joint venture will merge HBC’s Galeria Kaufhof chain with Signa’s Karstadt brand to form the region’s third-biggest department store chain. The companies said on Tuesday that their combined regional sales in 2017 were 5.4 billion euros (US$6.25 billion).
That venture, which will include both HBC’s European retail operations and real estate assets, was the latest in the Toronto-based company’s efforts to boost its performance.
In June, the company said it would sell its unprofitable online banner Gilt, and close up to 10 Lord & Taylor stores including its Manhattan flagship, whose building it agreed to sell to Softbank-backed WeWork Cos. last year.
© Thomson Reuters 2018