Hudson's Bay losses deepen as Lord & Taylor suffers
today Jun 13, 2019
Hudson’s Bay Co on Thursday posted a wider-than-expected loss as it closed some stores and sales at its Lord & Taylor unit fell, adding to pressure on the struggling department store chain as its chairman seeks to take it private.
The owner of Saks Fifth Avenue, North America’s oldest company, is currently evaluating a C$1.74 billion ($1.3 billion) take-private cash offer as it tries to fend off competition from online giants like Amazon Inc.
The offer was put together by Executive Chairman Richard Baker and the retailer’s other shareholders.
The company said first-quarter comparable sales decreased 2.1%. Excluding Lord & Taylor and Home Outfitters, which are both undergoing strategic reviews, same store sales rose 0.3%.
Same-store sales at its namesake stores tumbled 4.3% in the quarter.
The company also said it would sell its stake in its real estate joint venture in Germany to Signa Retail Holdings in a deal valued at C$1.5 billion, with the deal proceeds expected to pay down debt.
Lower debt would also make chairman Baker’s take-private deal more easy to finance.
“Strategically, we have simplified the organization and placed a greater emphasis on our North American retail operations”, said Chief Executive Officer Helena Foulkes in a statement.
However, she added that the company has “more work to do fixing the fundamentals and strengthening operations.”
The bright spot for Hudson’s Bay in the first quarter was its upscale Saks Fifth Avenue registering a 2.4% rise in same store sales as customers spent on men’s and women’s designer and apparel.
The company reported net profit from continuing operations of C$275 million ($206.80 million), or C$1.15 per share, in the first quarter ended May 4, compared to a loss of C$132 million, or 72 Canadian cents per share, a year earlier.
First quarter net income was buoyed by a C$817 million gain from the sale of the Lord & Taylor flagship building in New York.
Excluding items, the company posted a loss of 87 Canadian cents per share, wider than the 56 Canadian cents loss based on average estimates from 2 analysts, according to IBES data from Refinitiv.
Total revenue fell to C$2.12 billion from C$2.19 billion, a year earlier.
Shares of the company had fallen 12.6% this year before chairman Baker’s offer earlier this week pushed shares up by as much as 48%.
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