Third-quarter loss widens at Hudson's Bay Co.
Michael J. Knell -- Furniture Today, December 12, 2012
TORONTO — In its first report since becoming a public company last month, retailer the Hudson's Bay Co. said its third quarter loss widened slightly, although same store sales on both sides of the border were stronger than anticipated.
"Hudson's Bay and Lord & Taylor continued to deliver solid mid-single-digit same-stores sales increases for the third quarter of 2012, including an 8% same store sales increase in October at both banners," Richard Baker, HBC governor and CEO, said in a statement.
He added that the company will also begin paying a quarterly dividend of 9.4 cents a share on its stock beginning this month.
The company reported retail sales for the 13-week period ending Oct. 27 of C$930.4 million, up 3.8% from the corresponding period a year earlier.
Consolidated same store sales were up 3.5% in the third quarter - with an increase of 4.5% at Hudson's Bay (which includes The Bay and Home Outfitters) and 5.2% on a U.S. dollar basis at Lord & Taylor.
HBC attributed the upticks in same-store sales to strong promotional events at Hudson's Bay and Lord & Taylor. Consolidated same store results were hurt by currency exchange rates as well as by lower sales at Home Outfitters.
The net loss from continuing operations was C$8.5 million or 8 cents a share, compared with a net loss of C$7.5 million or 7 cents per share a year ago.
For the 39-week period ended Oct. 27, retail sales were C$2.69 billion, up 5.5% from C$2.55 billion in the corresponding period of last year.
Consolidated same-store sales increased by 4.9%, with gains of 5% at Hudson's Bay and 4.6% on a U.S. dollar basis at Lord & Taylor.
However, the net loss from continuing operations widened to C$62.1 million or 59 cents per share from C$41.9 million or 40 cents per share.
Michael Culhane, the company's chief financial officer, said that as a result of the IPO during the third quarter, "We have reduced our net debt and we are in a strong position to continue growing our business."
HBC also said in the earnings report that 80% of its Lord & Taylor stores were negatively impacted by Hurricane Sandy, including closings and limited operating hours. "The effects of the storm may negatively impact fourth quarter sales by approximately US$20 million and result in moderately higher inventory levels at Lord & Taylor," Baker said.
The disruption caused by the hurricane resulted in flat same-store sales for November, the company reported, with comps up 9% at Hudson's Bay and down 12.4% at Lord & Taylor.
Adjusting for the US$20 million impact of Sandy, HBC said same-store sales at Lord & Taylor would have increased 3.7% on a U.S. dollar basis, and consolidated same store sales would have increased 5.7%. Both banners experienced uplift in sales performance as a result of promotional activity during Black Friday sales in late November.
In a conference call, Baker - who is a real estate developer - said HBC is considering spinning off its real estate holdings into a REIT (real interest income trust), although no firm plans have been set. A number of other large Canadian retailers, most notably the grocery giant Loblaw Cos. Ltd., have spun off their real estate to increase shareholder equity.
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