Hudson's Bay
by Brian Lipton

Hudson's Bay CompanyHudson’s Bay Company, the owner of such retailers as Saks Fifth Avenue and Lord & Taylor, has announced its second quarter financial results for the 13-week period ended July 30, 2016.

The Canadian company (which releases figures in Canadian dollars) reported that its Adjusted EBITDAR increased 113.8% to $263 million; while its adjusted EBITDA increased 55.8% to $81 million. Consolidated retail sales increased 59.6% to $3.25 billion, primarily as a result of the addition of HBC Europe and Gilt as well as an increase in comparable sales of 1.9%. However, there was a net loss of $142 million, compared to net earnings of $59 million in 2015.

“The second quarter was another solid quarter for HBC,” stated Richard Baker, HBC’s governor and executive chairman. “We continued to execute on our expansion plans in Europe with the announcement that we would be introducing our iconic Hudson’s Bay banner to the Netherlands. We currently plan to open up to 20 stores, and during the quarter signed long term lease agreements for 11 locations accounting for approximately 1,526,000 square feet. We also announced the first five Saks OFF 5TH locations in Germany, which we expect to open next summer. In New York we closed a U.S. $400 million, five-year mortgage on our Lord & Taylor flagship location on 5th Avenue which valued the property at U.S. $655 million based on an independent appraisal commissioned by the lenders. This transaction, as well as the attractive rate we secured, exemplifies both the value of our real estate portfolio and the significant financial flexibility that it provides to HBC as we work through a challenging retail environment”

Added Jerry Storch, HBC’s Chief Executive Office:, “In the second quarter we made good progress on focusing on expenses and leveraging our scale to increase efficiencies. Additionally, our sales associates continued to delight our customers and were able to drive sales in a challenging market. Gross margins increased 200 basis points as a result of the inclusion of HBC Europe as well as our revised pricing strategy at Saks OFF 5TH. To support our digital growth we are bringing industry-leading robotic technology to Canada which we expect will reduce digital order processing time and generate significant savings. We expect the first installation to be fully functional this fall, and are currently the only company in Canada to utilize this technology. We are also proud to support Team Canada in the Rio Olympic and Paralympic games, and it was great to see the iconic Hudson’s Bay stripes in both the opening and closing ceremonies and on the medal podiums. As we look towards the second half of 2016, we are monitoring the retail environment closely and are taking prudent steps to ensure that HBC is in a position to capitalize on the opportunities presented as we anniversary last year’s tough third and fourth quarters. Despite the uncertainty in the current environment, we remain focused on executing on our long term strategy for profitable growth.”

The company currently operates Saks Fifth Avenue, Saks OFF 5TH, Gilt Groupe, Lord & Taylor, Hudson’s Bay, Home Outfitters GALERIA Kaufhof, Galeria INNO, and Sportarena During the second quarter, the Company opened one Saks Fifth Avenue store located in Greenwich, Connecticut and two Saks OFF 5TH stores located in Chicago, Illinois and Plymouth Meeting, Pennsylvania. The Company closed one Home Outfitters store in Anjou, Quebec.