HBC is envisioning a (mostly) digital future
Hudson's Bay Co. will shut down 20% of its store footprint through 2019 as the company looks to create a new department store model less dependant on physical presence.
The announcement comes on a day that HBC reported that total sales increased 1% in the first quarter to $3.1 billion; same store sales declined 0.7%.
The company also revealed it was selling its online banner Gilt Groupe to Rue La La. The sale of this business is expected to close during the second quarter of 2018. Gilt generated less than 4% of the company’s total sales in Fiscal 2017, and the disposition is expected to improve Adjusted EBITDA1 by $10 to $15 million on an annualized basis.
“Our decision to divest Gilt will allow us to focus our time and resources on the businesses with the greatest potential to drive operating performance, and I am confident that the retail operations are moving in the right direction under Helena’s leadership. In addition to making the right strategic decisions to improve our business, we will continue to explore all opportunities to leverage the strength of our real estate portfolio to create value for our shareholders,” said Richard Baker, HBC’s Governor and Executive Chairman.
HBC said its comparable digital sales increased by 7.7%. The company said its overall loss for the quarter came in at $400 million, compared to a loss of $221 million a year ago. HBC's loss from its continuing operations came in at $314 million, up from $214 million in the same period last year. On a normalized basis, HBC says its loss per share for the quarter amounted to $1.22 compared with a normalized loss of $1.15 per share a year ago.
"Over the last month, we have worked rapidly to put in place a leadership team focused on driving business results, streamlining our processes and fostering a culture of accountability," said Helena Foulkes, HBC's Chief Executive Officer. “We need to improve across all areas of the business, and this begins with rededicating ourselves to putting the customer first in everything we do. This customer-focused mindset will dictate how we think about key functions of the business, and I see opportunity to dramatically improve our marketing and digital operations while also refining company wide processes that impact our end to end customer experience. In Europe, we have de-layered management, allowing me to be closer to that business as we take actions that are expected to stabilize the topline and improve our cost structure in this important market. Accountability begins with our leadership team, and I am confident that we now have the right people in place across HBC to drive actions that will result in profitable growth.”
During the first quarter, HBC opened one Saks Fifth Avenue store and one Saks OFF 5TH store in Canada which are located in Calgary, Alberta and Markham, Ontario, respectively. In the United States, the Company opened two Saks OFF 5TH stores located in West Hartford, Connecticut and Bridgewater, New Jersey. In Europe the Company opened one Saks OFF 5TH Europe store in Bonn, Germany and three Hudson’s Bay stores in the cities of Amersfoort, Enschede and Haarlem in the Netherlands. The company closed two Lord & Taylor stores located in Annapolis, Maryland and Skokie, Illinois and two Home Outfitters stores in Toronto, Ontario and Richmond, British Columbia.
“We are also taking action to reposition Lord & Taylor for improved results and increased profitability. With a new leader dedicated to evolving our experience and merchandise assortment to best meet customer expectations and shopping preferences, we will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities,” said Foulkes. “The Lord & Taylor flagship on Walmart.com, which launched last week, is a great example of this and represents how we are thinking about the entire business.”