Hudson's Bay loss widens as sales drop at Lord & Taylor, Saks Off 5th

Canadian department store operator Hudson’s Bay Co said on Wednesday its second-quarter loss widened due to lower sales at its Lord & Taylor and Saks Off 5th divisions.

Hudson’s Bay, which announced a joint venture on Tuesday of its European operations and Austrian rival Signa Holding, reported a net loss of C$147 million ($112.65 million), or 62 Canadian cents a share, in its North American operations for the quarter ended Aug. 4. That compared with a loss of C$100 million, or 55 cents, a year earlier.

Sluggish sales have dogged the company as Amazon.com Inc and other online retailers lure consumers away from department stores. In all but one of the last ten quarters, HBC has posted losses.

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Shares have fallen 6.2 percent this year, compared with a 0.7 percent decline in the benchmark Toronto stock index.

“There is still significant work to be done to improve our topline at Lord & Taylor and Saks Off 5th, which have not met expectations,” Chief Executive Officer Helena Foulkes said in a statement on Wednesday.

Comparable sales in HBC’s department store group, which includes its Hudson’s Bay and Lord & Taylor banners, fell 3.8 percent in the quarter from a year earlier, while sales at Saks Off 5th, which offers discounted designer goods, dropped 7.6 percent.

The company’s luxury Saks Fifth Avenue brand’s 6.7 percent increase in sales couldn’t offset those declines.
Including its European business, Hudson’s Bay reported a net loss of C$264 million, widening from C$201 million a year ago, and deeper than the loss of C$173 million that analysts expected, according to Thomson Reuters I/B/E/S.

The joint venture with Signa is the latest in the Toronto-based company’s efforts to boost its performance. The deal, which will include both HBC’s European retail operations and real estate assets, is expected to create the region’s third-biggest department store chain.

In June, the company said it would sell its unprofitable online banner Gilt, and close up to 10 Lord & Taylor stores including its Manhattan flagship, whose building it agreed to sell to Softbank-backed WeWork Cos. last year.