Hudson's Bay optimistic despite widening Q3 loss - Just Style
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Hudson’s Bay optimistic despite widening Q3 loss

By Giacomo Lee 06 Dec 2018

Hudson's Bay Company (HBC) has widened its loss in the third quarter but the Canadian retailer remains optimistic as the recent closing of its European transaction lding will now allow it to concentrate on the North American business.

Hudson’s Bay optimistic despite widening Q3 loss

Hudson’s Bay Company (HBC) has widened its loss in the third quarter but the Canadian retailer remains optimistic as the recent closing of its European transaction with Signa Holding will now allow it to concentrate on the North American business.

For the 13 weeks ended 3 November, net loss from continuing operations totalled CAD124m (US$92.7m), compared to a loss of CAD116m in the year-ago period. The increase, HBC said, was primarily driven by higher depreciation and amortisation expenses and a higher reported loss from the company’s share in joint ventures, largely driven by the impact of non-cash foreign exchange.

Gross margin in the period was 39.4%, an improvement of 10 basis points, predominantly by improved full price and clearance margin rates.

Third-quarter revenue, meanwhile, amounted to CAD2.19bn, an increase of CAD115m or 5.6% from the prior year. Overall comparable sales increased 2.9%, with total comparable digital sales increasing 8%.

Comparable sales at Saks Fifth Avenue grew for the sixth consecutive quarter, increasing by 7.3%, while comparable sales at Saks Off 5th declined 2.3%. Meanwhile, at DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) comparable sales edged up 0.9%.

CEO Helena Foulkes said the company is encouraged by the ongoing improvement of its business, adding its “bold strategic actions” are beginning to pay off.

Earlier this year, the group sold its member-based digital shopping business Gilt to US apparel and homewares retailer Rue La La, and revealed plans to “right-size” its Lord & Taylor banner, including plans to shutter up to ten stores through 2019, including its flagship on New York’s Fifth Avenue. 

In addition, the group this week completed a deal with retail estate business Signa Holding to merge their respective retail operations and the formation of the companies’ real estate joint venture.

The move, which was first announced in September, was given the green light last month and sees the firms merge their respective HBC Europe and Karstadt Warenhaus GmbH’s retail operations as part of a bid to compete more effectively against e-commerce players.

It creates what is understood to be Germany’s leading retailer with 243 locations, 32,000 employees, and annual revenue in excess of EUR5bn (US$5.66bn), 49.99% of which will be owned by Canada’s Hudson’s Bay Company (HBC), while retail estate business Signa Holding, the owner of Karstadt, will own the remainder.

“The recent closing of the European transaction will now allow us to concentrate on the North American business,” Foulkes said.

However, while the firm is optimistic about the progress and opportunities that lie ahead, Foulkes adds there is more work to be done to further generate growth and greater profitability.

“We are driving our retail performance with a firm emphasis on fixing the fundamentals and improving our omnichannel customer experience,” she said.