Hudson's Bay reports larger Q3 loss, due to costs associated with Saks' purchase
TORONTO - Higher costs pulled Hudson's Bay Co. (TSX:HBC) to a deeper third-quarter loss as the department store operator moved forward with its acquisition of Saks Inc.
But the company said improved sales at its Lord & Taylor shops in the U.S. and better results from its e-commerce operations helped counter the expenses.
The national retailer reported a net loss of $124.2 million, or $1.04 per share for the three months ended Nov. 2. The results compare with a loss of $14.4 million, or 14 cents per share, a year earlier when the company faced lower sales at Home Outfitters and less favourable foreign exchange rates.
Adjusted earnings, which exclude costs from the Saks acquisition and restructuring, rose to $8.9 million or seven cents per share, from a loss of $300,000 or nil per share, for the 13-week period. The results fell three cents short of analyst expectations, according to a survey by Thomson Reuters.
Shares of the company fell nearly five per cent, or 97 cents, to $19.02 in morning trading on the Toronto Stock Exchange.
Hudson's Bay chief executive Richard Baker told analysts on a conference call that the company is focused on the integration of Saks, which it purchased for $2.4 billion earlier this year.
"I am fully confident in both our growth strategies for Saks and our ability to successfully integrate it with the HBC platform," he said.
Quarterly retail sales rose by 5.8 per cent to $984.1 million versus $930.4 million year-over-year. While consolidated same-store sales jumped 5.7 per cent, with those under the Hudson's Bay banner climbing 6.4 per cent and those at its recently-acquired Lord & Taylor stores increasing by 1.6 per cent.
HBC noted that it saw a significant jump in sales at its locations that were recently renovated. For instance, it said its Vancouver flagship store reported sales were up 30 per cent following a major renovation last year. Also, sales at its e-commerce business more than doubled during the 13-week period, compared to a year ago.
The Toronto-based company completed its acquisition of luxury U.S. retailer Saks last month for $2.9 billion including debt.
In its outlook, Hudson's Bay expects sales to come in between $1.37 billion and $1.41 billion, excluding the Saks operations.
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