Rising sales, e-commerce boost Hudson's Bay to profit
Michael J. Knell -- Furniture Today, September 17, 2013
TORONTO — Rising e-commerce sales and improving same-store sales north of the border were cited as the driving forces behind improved sales and earnings for department store operator Hudson's Bay Company.
For its fiscal second quarter ended Aug. 2, HBC has reported consolidated sales of C$947.9 million, a 3.9% gain from the C$911.9 million for the comparable period of 2012.
Consolidated same-store sales were up 3.5%, or 3% on a constant currency basis. Leading the charge was the Hudson's Bay banner (which includes Home Outfitters), which were up 6.2%. However, the company's U.S. banner, Lord & Taylor, suffered a same-store decline of 1.2% in U.S. dollars.
Also growing were e-commerce sales, which the company pegged at C$37.3 million, a year-over-year increase of 56.1%.
Normalized net earnings for the 13-week period ended Aug. 3 were C$3.9 million, compared with a normalized net loss of C$2 million in the 13-week period ended July 28, 2012. Normalized net earnings per share were three cents, compared to a normalized net loss of two cents per share in the comparable period. Hudson's Bay went public in November of last year.
"Hudson's Bay continues to demonstrate industry-leading sales growth," HBC Governor and CEO Richard Baker said in a statement. "We are seeing strong performance from stores and departments that have recently received capital investments."
He said he also was pleased with the e-commerce sales growth, which accelerated in the second quarter after the relaunch of both of its banners' websites. "Our online business was a key factor in our results, and reflects our increased investment in this component of our business," Baker said.
For the 26 weeks ending Aug. 3, HBC's retail sales were C$1.83 billion, an uptick of 4.1% over the C$1.76 billion for the first half of the last fiscal year.
Consolidated same-store sales increased by 3.8% while Hudson's Bay same-store sales grew 6.9% and Lord & Taylor's declined 1.3% in U.S. dollars.
Normalized net loss from continuing operations was C$10.4 million or 9 cents per share in the first half, an improvement from the normalized net loss of C$25.2 million or 24 cents per share for the comparable period.
HBC also reported the "go shop" period on its proposed acquisition of Saks Inc. has expired and the deal is expected to close before the end of the year. In July, HBC said it agreed to acquire the iconic U.S. department store for approximately US$2.9 billion.
HBC is expected to bring the banner to Canada sometime next year.
The company also announced it was halving its quarterly dividend after the next payout in October to five cents a share to help pay down debt in the short term.
When the Saks acquisition closes, HBC will operate a total of 321 stores, including 179 full-line department stores, 73 outlet stores and 69 home stores in the U.S. and Canada, along with three e-commerce sites. The combined company would have generated pro forma sales of approximately C$7.2 billion in 2012.