Hudson's Bay still eyeing acquisitions but focusing on cutting costs
Saks Fifth Avenue and Hudson’s Bay Queen Street pictured three days prior to the opening of the new Canadian flagship Saks store, Toronto, Ont., Feb. 15, 2016. (THE CANADIAN PRESS IMAGES/Rachel Verbin)
Linda Nguyen, The Canadian Press
Published Wednesday, April 5, 2017 11:22AM EDT
TORONTO -- Hudson's Bay Co. says it's focused on cutting costs as it faces a challenging retail environment in Canada and abroad, but hasn't completely shut the door on buying up more banners.
HBC"s top executives, who spoke to analysts Wednesday from The Netherlands where the Toronto-based company plans to open 10 Hudson's Bay department stores by the end of this year, wouldn't identify any of the potential acquisitions.
"We're very focused on our core operations," said Richard Baker, HBC governor and executive chairman, in a conference call.
He said acquisitions is part of HBC's strategy but the company doesn't comment on rumours or speculation.
But rumours have been swirling for months that the owner of various banners including luxury retailer Saks Fifth Avenue is looking to acquire struggling U.S. retail chains Neiman Marcus or Macy's.
Chief executive Jerry Storch said the retailer, and the industry as a whole, continue to face several challenges including lower sales and less foot traffic in shopping malls, where many of its businesses are located.
"We are cutting expenses, rationalizing and reallocating our capital spending, strengthening our balance sheets," he said during the call.
"Because I just don't know when the market is going to get less promotional, or when or if traffic is going to improve in malls, but I do know that we can control what we spend."
On Tuesday, HBC reported after stock markets closed that it had a $152-million net loss in the fiscal fourth quarter ended Jan. 28, boosting its loss for the fiscal year to $516 million.
A year ago, it had earnings of $370 million for the quarter and $387 million for the year.
Storch noted that cutting costs is the best way for the company to ensure it's in the best financial position to face these headwinds.
HBC says it will budget between $450 million and $550 million in capital spending this year, about $150 million less than it spent last year. In January, the company also announced it would cut $75 million from annual costs.
The fourth-quarter loss includes a one-time non-cash goodwill impairment charge of $116 million driven by weak sales at Gilt, one of HBC's e-commerce businesses, as well as at its Saks Off 5th fashion stores.
For the same period, it saw 2.5 per cent increase in retail sales to $4.6 billion and a 13 per cent increase in comparable digital sales on a constant currency basis.
Founded in 1670, Hudson's Bay operates more than 470 stores under banners such as the Bay, Saks Fifth Avenue, Lord & Taylor, Gilt, and Saks Off 5th. It also owns Galeria Kaufhof, Galeria INNO and Sportarena in Europe.
Shares in Hudson's Bay (TSX:HBC) saw a small gain Wednesday, up 0.82 per cent, or eight cents, to $9.78 on the Toronto Stock Exchange in mid-morning trading.