SAKS FIFTH AVENUE DRIVES HBC’S FOURTH-QUARTER SALES
Hudson’s Bay and Saks Fifth Avenue continued to see strong performance in 2017, with retail sales for the fourth quarter hitting $4,695 million, an increase of $95 million or 2.1 percent, from last year.
Hudson’s Bay has generated double digit online sales growth while largely maintaining store traffic and sales. This trend is expected to continue as Hudson’s Bay benefits from the closure of Sears Canada, the only other national department store in Canada. Fourth quarter comparable sales growth at Saks Fifth Avenue was the highest in three years, and HBC expects that the luxury sector and Saks Fifth Avenue is expected to continue to grow during fiscal 2018.
Comparable sales at Saks Fifth Avenue grew for the third consecutive quarter, increasing by 2.1 percent. Comparable sales declined, however, by 2.6 percent at DSG (Hudson’s Bay, Lord & Taylor, and Home Outfitters), 3.4 percent at HBC Europe, and 7.6 percent at HBC Off-Price.
There is significant opportunity to improve topline sales at HBC Europe and stabilize operations at HBC’s Off-Price businesses. Management is focused on clearly identifying a path towards increased profitability for each of these banners and will provide additional details on these strategic initiatives in the coming quarters.
“While we are not pleased with our recent performance, we continue to capitalize on the value of our real estate portfolio and are taking action to improve our operating results,” said Richard Baker, governor and executive chairman of HBC. “Our valuable real estate assets provide HBC with a solid financial base, and the recent agreement to sell the Lord & Taylor flagship building further demonstrates our ability to monetize these assets and enhance liquidity. We are also working to better position our retail operations and have made several key leadership appointments which we believe will help drive business performance.”
“I am confident that the addition of Helena Foulkes and her transformational leadership will invigorate HBC with a fresh perspective as we position ourselves for the future,” continued Baker. “I would like to thank all of our associates for their hard work and dedication during a challenging time. Together, we are determined to grow sales and increase margins while evaluating all opportunities to create shareholder value.”
HBC remains on track to achieve its planned cost reductions during Fiscal 2018. HBC’s Transformation Plan is expected to generate annual savings of $350 million by the end of Fiscal 2018, which will mostly offset increased expenses associated with previously committed new store openings and stores opened during the back half of Fiscal 2017, as well as other operating activities. The Company is also committed to operating as efficiently as possible by reducing its overall inventory levels and improving working capital. This, combined with the anticipated improvement in results and reduced net capital investments, are expected to significantly improve cash flow from operations and free cash flow in Fiscal 2018.
“HBC is a unique company with iconic banners and a storied history,” added Helena Foulkes, chief executive officer of HBC. “I’ve spent the past six weeks visiting our stores and offices around the world, and it is clear to me that there is significant opportunity to build upon our solid foundation to realize the full potential of our business. In the coming weeks, I will continue to listen and learn from our associates and customers as I work with the leadership team to heighten accountability for driving business results, improve our culture, and develop a long-term strategic plan.”