CANADA: Hudson's Bay swings to Q2 loss
- Swings to Q2 loss of CAD82.3m, from CAD22.2m profit
- Sales rose 3.9% to CAD947.7m from CAD911.9m
- Same store sales up 3.5%
Canadian department store retailer Hudson's Bay Company swung to a loss during the second quarter, weighed down by CAD59.9m (US$58m) in costs related to the pending acquisition of US luxury retailer Saks.
The company, which announced the US$2.9bn deal in July, said net loss was CAD82.3m for the 13 weeks to 3 August, compared to a CAD22.2m profit in the same period of the prior year.
The move will create a leading North American retailer operating across the luxury, mid-tier and outlet sectors.
Sales at Hudson's Bay Company rose 3.9% to CAD947.7m in the quarter, up from CAD911.9m last year, while same store sales were up 3.5% and 3% on a constant currency basis.
Gross margin slipped slightly to 38.8%, from 40% in the previous year, due to higher markdowns from liquidating seasonal inventories.
CEO and governor Richard Baker said: "Hudson's Bay continues to demonstrate industry-leading sales growth. This performance has been driven by a continued focus on our stated strategic initiatives. We are seeing strong performance from stores and departments that have recently received capital investments."
During the first half, the company's net loss widened to CAD163m from CAD107.5m a year earlier, while sales were up 4.1% to reach CAD1.83bn.
"We are confident that our inventory is well-positioned for the fall season and expect stronger financial performance from Lord & Taylor and the overall business in the back half of the year," Baker added.
Hudson's Bay's acquisition of Saks, which is expected to close before the end of the calendar year, has sparked further M&A within the luxury market.
Upscale US department store retailer Neiman Marcus earlier this month agreed to be bought by Ares Management and Canada Pension Plan Investment Board (CPPIB) in a deal worth US$6bn.
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