Hudson’s Bay Co. Narrows Q1 Loss Despite L&T Sales Miss

Lord & Taylor's Fifth Avenue flagship store

Lord & Taylor’s Fifth Avenue flagship store

Toronto—The Hudson’s Bay Company, which operates chains in Canada and Lord & Taylor in the United States, today reported that its first quarter loss narrowed as sales increased in its Canadian stores. But unseasonably cool weather hurt sales at Lord & Taylor.

For the quarter ended May 4, HBC posted a net less of $14.3 million, or 12¢ a share, compared with a loss of $23.3 million, 22¢ a share, in the same quarter of 2012.

Net retail sales rose 4.2% to $884 million. Comparable store sales at its Hudson Bay stores rose 7.6%. However, sales at the 48-unit Lord & Taylor declined 1.4%. Consolidated comp store sales were up 4%. Online sales also jumped 33% to $31.1 million.

The company said its a reduced net loss and Canadian sales results were encouraging.

“Our strong sales growth can be attributed to several factors, including improvements in store productivity, increased e-commerce sales, and our partnership with Topshop/Topman,” said Richard Baker, chief executive. “These strategic initiatives drove gains at Hudson’s Bay, which continues to outperform its competitors.”

Bestsellers: Handbags, Accessories

Hudson’s Bay stores, which reported bestselling merchandise as women’s shoes, cosmetics, accessories, and men’s apparel, had the benefit of better weather in its Western provinces which helped.

On the other hand, Lord & Taylor felt the impact of unfavorably cooler spring weather. Bestselling categories were men’s apparel, handbags, accessories and cosmetics “offset by underperformance of women’s apparel and shoes.”

“We’re disappointed with how the sales trend did in the U.S.,” Baker told investors on a conference.

Hudson’s Bay, which went public in late November, has faced weather issues, including Superstorm Sandy, which have affected Lord & Taylor’s results in a more competitive retail market than the one in Canada.

Analysts says those factors are pressuring the company’s executives to speed up renovating stores, adding exclusive partners such as Topshop, and expanding high-margin private label merchandise.

And while HBC’s “normalized” first quarter loss of 12 cents a share was below analysts’ consensus for 7 cents a share, its $31 million of earnings before interest, interest, taxes and depreciation (EBITDA) were well ahead of forecast, said Tal Woolley, retail analyst at RBC Capital Markets.

 

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Jeff Prine

Jeff Prine, Editor at Large, Accessories Magazine
Jeff returns as a regular contributor to Accessories magazine. Initially Jeff worked as senior editor at Accessories more than 20 years ago and his love of the industry has followed him until present. Since his tenure here, Jeff has continued to report jewelry, watch and other luxury goods trends as executive editor at Modern Jeweler magazine, fashion director at Lustre, and as contributor on products and trends for consumer and trade publications and websites. In addition to his editorial experience, Jeff also served as an adjunct instructor for accessories merchandising at Fashion Institute of Technology. jeffp@busjour.com