HBC details omnichannel growth agenda

The number of Saks Off 5th stores will surge dramatically as will investments in technology as Hudson’s Bay Company said it will make higher than normal investments in growth initiative this year.



Hudson’s Bay Company said its higher-than-normal capital budget will range from $750 million to $850 million, and about 70% of that amount will be allocated to growth initiatives with the remainder dedicated to maintenance expenditures. One of the company’s biggest growth initiatives this year involves expanding the Saks Off 5th and full line Saks Fifth Avenue footprint. Roughly 30% of the capital budget allocated to growth initiatives will be spent on 32 new Off 5th stores and seven new full line Saks stores. The company ended last year with 90 Off 5th stores and 38 Saks Fifth Avenue stores.



Also accounting for 30% of the growth initiative budget is spending related to digital and technology investments such as the robotic automation of the company’s distribution center in Toronto and a new e-commerce fulfillment center in the U.S. The remaining 40% of Hudson’s Bay Company’s growth budget is allocated to store renovations, including the remodeling of the high volume Saks Fifth Avenue flagship store in Manhattan.



The 2016 growth initiatives were revealed along with financial results for the fourth quarter which highlighted was a momentous year for Hudson’s Bay Company. The acquisition of German department store retailer Galeria was followed more recently by the acquisition of Gilt Groupe shortly after the end of the company’s fiscal year.



“The diversity of our banners in terms of geography and consumer segment helped us navigate a challenging retail environment and resulted in 2015 comparable store sales growth of 2.5% on a constant currency basis,” said Richard Baker, HBC’s governor and executive chairman.



The Galeria deal closed on Sept. 30, 2015 and boosted HBC’s revenue by nearly 70% in the fourth quarter to $4.5 billion Canadian.



In addition to acquisitions, CEO Jerry Storch said the company has been innovating on the digital front and is optimistic about future performance.



“Our 2015 comparable digital sales growth of 23.2% on a constant currency basis is the result of our innovative offerings delighting our customers, as well as enhancements that we have made to our e-commerce platforms and fulfillment capabilities,” Storch said. “Our all channel model is further enhanced with the February 1st acquisition of Gilt, and we are working on integrating its industry leading mobile and personalization capabilities across our banners.”