Canadian retailer posts lower Q4 sales

Weaker results in its European, Saks Off 5th and Gilt operations contributed to lower fourth quarter sales for Hudson’s Bay Company



For the fourth quarter ended January 28, 2017, the company’s consolidated comparable sales decreased 1.2%. Specifically, DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) same-store sales increased 0.6%, and Saks Fifth Avenue comparable sales increased 0.1%.



However, HBC Off Price (Saks Off 5th and Gilt) comparable sales decreased 5.9%, while HBC Europe (GALERIA Kaufhof, Galeria INNO and Sportarena) comparable sales slipped 2.0%.



This was offset by strong total digital sales, which increased 13.3%. Excluding Gilt, “digital sales grew by 20.9% at our department store banners in the fourth quarter of 2016, and we remain excited about the future of our online business,” said Jerry Storch, Hudson’s Bay’s CEO.



“We believe the all-channel model is the future of retail, and we are focused on combining best-in-class retail destinations and an advanced digital platform, which will allow our customers to shop whenever, wherever, and however they choose,” he added.



The company continues to review its operations, continuously looking for opportunities to streamline business processes to drive profitable growth, improve back of store productivity and enhance customer service. Through this review, HBC expects to increase synergies across its portfolio of businesses, sharpen capabilities that will give the company a competitive edge and re-align its expenses so it can specifically focus on its customers.



For example, on Thursday, Feb. 23, Hudson’s Bay announced its efficiency initiative, which focuses on reducing corporate overhead throughout North America. Besides driving a more efficient, agile organizational structure across HBC’s banners and centers of excellence, the program is expected to save the company approximately $75 million annually.



In conjunction with this initiative, the company anticipates incurring one-time severance charges approaching $30 million, the retailer said.



“Our operational review is ongoing, and we will continue to evaluate additional opportunities to improve productivity, enhance our operating model, and optimize in-store operations,” Storch said. “We believe this cost reduction initiative will help us mitigate the pressures facing our company and the department store industry as a whole, and expect to provide further updates on other initiatives when appropriate.”