Hudson’s Bay Co reported better-than expected quarterly sales
Canadian retailer Hudson’s Bay Co reported better-than expected quarterly sales as it benefited from its expansion in Europe and the acquisition of online retailer Gilt.
Hudson’s Bay bought Galeria Kaufhof and its Belgian subsidiary Inno from German retailer Metro for about $2.7 billion last year to mitigate the impact of decreased consumer spending in the United States and Canada.
The oldest continuously operating company in North America received a third of its revenue from Europe in the first quarter.
However, the company reported a bigger-than-expected loss for the quarter ended April 30, hurt by higher costs and rent expenses related to the company’s real estate joint ventures.
Same-store sales at the company’s department store group, which includes Hudson’s Bay and Lord & Taylor chains, rose 2.3 percent. Total same-store sales rose 4.4 percent.
Same-store sales at its upscale Saks Fifth Avenue fell 5.7 percent as consumers continued to shun luxury items.
Total sales rose 59.4 percent to C$3.30 billion ($2.6 billion). Analysts on average had expected revenue of C$3.28 billion, according to Thomson Reuters.
The company also maintained its full-year sales forecast at a time when U.S. department store operators such as Macy’s Inc and Nordstrom Inc cut their 2016 profit estimates as shoppers spend less on apparel.
Hudson’s Bay said it still expects to spend between C$750 and C$850 million.
The company said it expects to meet or exceed its annualized savings target of C$75 million, related to the realignment of its North American operations.
Hudson’s Bay also said it has begun a voluntary restructuring program in its European merchandising department and outsourced its IT systems maintenance in North America to save about C$16 million annually.
The company expects to record charges of about $21 million related to these two initiatives, of which $12 million was recorded in the first quarter.
The company’s net loss widened to C$97 million, or 53 Canadian cents per share, in the first quarter from C$49 million, or 27 Canadian cents per share, a year earlier.
Excluding items, the company reported a loss of 50 Canadian cents per share, larger than the average analyst estimate of 36 Canadian cents.