Hudson's Bay
by Brian Lipton

Hudson's Bay CompanyHudson’s Bay Company, owner of Saks Fifth Avenue and Lord & Taylor, announced its comparable sales results for the nine week period ending December 31, 2016, and provided an update on its financial outlook for Fiscal 2016.

On a constant currency basis, consolidated comparable sales decrease of 0.7 percent. Saks Fifth Avenue posted a comparable sales decrease of 0.5 percent; HBC Off Price (Saks OFF 5TH and Gilt) posted a comparable sales decrease of 5.2 percent, an HBC Europe (GALERIA Kaufhof, Galeria INNO and Sportarena) posted a comparable sales decrease of 0.6 percent.

On the positive side, DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) had a comparable sales increase of 1.2 percent, and the company’s department store banners showed an overall digital sales growth of 21.7 percent.

“Our holiday sales trend improved considerably from what we experienced in the third quarter,” said Jerry Storch, the company’s CEO. “However, the sales improvement that we experienced was not strong enough to achieve the results we had expected. The retail environment has remained challenging in the U.S. and Europe and the significant promotional activity during the holiday period had a negative impact on our margins. This margin pressure was compounded by a declining value of the Euro compared with the Canadian dollar which impacts our translated earnings from HBC Europe.”

Given the Company’s sales results for the holiday selling period and lower than expected gross margins realized to date during the fourth quarter, management is reducing its sales outlook for Fiscal 2016 to $14.4 to $14.6 billion (Canadian dollars); its Adjusted EBITDAR outlook to $1.34 to $1.39 million; and its Adjusted EBITDA outlook to $615 to $665 million.

Nonetheless, Storch reiterated that the company would continue to focus on improving its performance. “As we head into the new fiscal year, we are focused on continuing to delight our customers with exclusive product offerings and custom all-channel shopping experiences, and by creating exciting retail destinations to increase foot traffic in our stores. The retail environment is clearly changing, and we continue to work diligently across all of our banners to adapt rapidly. This involves evaluating all opportunities to increase the profitability of HBC, and we expect to provide further details on this process in the coming months.”