HBC Q2 loss grows as retailer repositions to focus on Hudson's Bay, Saks banners
David Paddon, The Canadian Press
Published Thursday, September 12, 2019 7:55AM EDT
Last Updated Thursday, September 12, 2019 10:58AM EDT
TORONTO -- Hudson's Bay Co. reported a $984-million loss in its latest quarter as its bottom line was eroded by a number of one-time charges and its flagship Canadian retail banner experienced weaker sales compared with last year.
The owner of the Hudson's Bay chain of department stores, as well as the New York-based Saks Fifth Avenue luxury chain and Saks Off 5th outlets, said the loss amounted to $5.35 per share for the quarter ended Aug. 3.
That compared with a year-earlier loss of $280 million or $1.45 per share.
Hudson's Bay officials said in a conference call that the second quarter was disappointing, but expressed confidence that they're taking the steps necessary build its retail business and find value from its real estate.
"At Saks Fifth Avenue, we feel strongly about our position in an increasingly competitive environment and remain committed to driving further up side to this business," HBC chief executive Helena Foulkes said.
"For Hudson's Bay, we are continuing to fix the fundamentals within our merchandise strategy and service model. And there is more to be done as we work to re-invigorate our presence in the market to appeal to customers."
The results came as HBC evaluates an offer by a group of shareholders led by executive chairman Richard Baker to take the company private at a price of $9.45 per share.
A special committee of HBC's independent directors said in August that its initial analysis shows Baker's offer was "inadequate."
The deal also faces opposition from other investment firms including Catalyst Capital Group Inc., which revealed in a regulatory filing this week that it controlled about a 16 per cent stake in HBC, and Land & Buildings Investment Management.
Among the one-time items in HBC's most recent quarter that added to the loss was a $150-million non-cash writedown of the value of Canadian deferred income tax assets, which may not be fully usable.
Other unusual items were related to the closure of HBC's Home Outfitters chain in Canada and some Saks Off 5th locations.
There were also items related to a change in vendor relationships as the remaining businesses, particularly Hudson's Bay, worked to bring a more upscale selection of merchandise to its locations.
Revenue totalled $1.9 billion, roughly the same as a year ago, while overall comparable sales fell 0.4 per cent.
Hudson's Bay's comparable sales fell 3.4 per cent in the quarter. Saks Fifth Avenue's comparable sales grew 0.6 per cent, while Saks Off 5th comparable sales increased 3.4 per cent.
Excluding one-time items, HBC says its normalized net loss for the quarter was $171 million or 93 cents per share, compared with a normalized net loss of $85 million or 46 cents per share in the same quarter last year.
Analysts had estimated an adjusted loss of 73 cents per share with about $2.1 billion of revenue for the quarter, according to financial markets data firm Refinitiv.
In August, HBC announced it will sell its Lord & Taylor banner to Le Tote, a clothing rental company.
That follows HBC's previously announced plan to sell its remaining German holdings for $1.5 billion to its joint venture partner, a deal that was announced almost simultaneously with the Baker group's offer to take the company private.
HBC executives said Thursday that the process for selling the German holdings has advanced but hasn't yet closed.