Hudson’s Bay Co. lost $243 million in its latest quarter as overall revenue and comparable-store sales fell compared with a year ago.
The retailer said Wednesday the loss amounted to $1.33 per diluted share for the 13 weeks ended Oct. 28 compared with a loss of $125 million or 69 cents per diluted share a year ago.
Retail sales totalled $3.16 billion, down four per cent from $3.30 billion in the same quarter last year.
“While Saks Fifth Avenue and Hudson’s Bay are performing well, our overall third quarter results did not meet our expectations,” said Ed Record, the retailer’s CFO.
The company was hurt by foreign currency fluctuations and saw a dip in sales at its European operations and discount wing. It also was hurt by Hurricane Harvey and other weather events in the U.S.
Concentrating on digital
Consolidated comparable sales fell 3.2 per cent on a constant currency basis and 5.1 per cent as reported.
HBC’s other banners include Lord and Taylor, Gilt, Saks Off 5th, German department store group Galeria Kaufhof and Galeria Inno, a department store chain in Belgium.
Record said job cuts — made as part of HBC’s transformation plan — caused some operational challenges, particularly in its digital business.
“We know we can do better, and our highest priorities include increasing comparable sales, improving margins, and prioritizing our capital investments as we focus on further developing our digital business,” Record said in a statement.
“Our emphasis on digital continues to grow, and we are re-allocating resources to improve HBC’s digital platforms and online capabilities. We also plan on reducing total inventory as part of an effort to moderate promotional activity and increase full price selling.”
Deal for New York building
To pay down debt and appease activist investors, HBC is selling off real estate, including its sale of the Lord & Taylor Fifth Avenue building in New York to an affiliate of WeWork Property Advisors, which provides shared work spaces. The sale price was $850 million US ($1.1 billion Cdn).
Last week, an activist investor agreed to drop its opposition to an investment in HBC by private equity firm Rhone Capital, which has agreed to invest roughly $632 million Cdn in HBC in the form of mandatory convertible preferred shares.
Land & Buildings Investment Management LLC had criticized the Rhone deal and applied last month for Ontario Securities Commission to review a Toronto Stock Exchange conditional approval of the investment.
Land & Buildings agreed last week it was “pleased and encouraged” that HBC’s management and board indicated they would continue to take steps to monetize the company’s real estate assets.
WeWork Property Advisors is a joint venture between WeWork and Rhone and HBC plans to pursue a strategic alliance with WeWork regarding future real estate transactions.
During the third quarter, HBC opened two Saks Of 5TH stores in Canada, in Vancouver, British Columbia and Montreal and closed an HBC in Quebec City. In the U.S., it opened three Saks Off 5TH stores and in the Netherlands, it opened 10 Hudson’s Bay stores.