For the quarter ended Feb. 1, the parent to Lord & Taylor, Saks Fifth Avenue and Hudson’s Bay posted net income of $29.1 million Canadian, or 6 cents a share, compared with $86.8 million Canadian, or 75 cents a share, a year ago.
7 Saks Planned for Canada
Retail sales were up 73.6% to $2.41 billion Canadian up 73.6% from $1.39 billion Canadian a year earlier, chiefly due to the inclusion of Saks. Consolidated comparable store sales were up 6.6%, or 2.1%, excluding the impact of foreign exchange.
By store division, Hudson’s Bay reported a 5.2% increase in comp sales and Saks had a 3.1% increase. Lord & Taylor posted a 1.3% decline.
Digital sales were $252.3 million, reflecting both the acquisition of Saks as well as a 59% gain in growth from Lord & Taylor and Hudson’s Bay.
The company’s shares fell as much as 9% in trading earlier on its weak forecast: $580 million to $620 million Canadian (about $526 million to $562 million) for the year, below the $685.9 million that analysts’ average expected.
Noting that results came in at the low end of HBC’s December forecast, CEO Richard Baker noted: “This was primarily attributable to difficult weather in many of our geographies in December and January, which affected consumer shopping behavior and traffic. Although Hudson’s Bay and Saks Fifth Avenue achieved mid-single digit same store sales growth, Lord & Taylor did not rebound as we had anticipated.”
Baker also laid out what he called a “strategic roadmap with four core growth strategies” taking into account the addition of Saks Inc.
“First is the expansion of HBC Digital to drive sales across all of our banners. Second, we will prioritize the expansion of OFF 5TH, Saks’ value-oriented format,” Baker said. “We intend to significantly increase OFF 5TH’s presence through new stores and digitally. Expansion of Saks into Canada is our third major strategy. We believe the Canadian market represents an opportunity for up to seven full-line Saks Fifth Avenue locations and up to 25 OFF 5TH stores, as well as digital commerce initiatives.
“Finally, we will drive sales at the top ten stores at each of our banners. These key locations offer considerable potential for outsized sales growth and set the tone that flows to our other stores, our digital businesses and our overall reputation.”
Baker said he also expects the company to realize $100 million in synergies by the end of 2016 with Saks Inc. fully integrated.
The company also plans to make an additional $40 million investment in 2014 to enhance its e-commerce offerings as part of its plans to achieve $10 billion Canadian in sales by fiscal 2018.