After posting a steep net loss in the fourth quarter, Hudson’s Bay said it was identifying ways to evolve its operations, including its digital initiatives.
For the fourth quarter ended January 28, Hudson’s Bay Co. lost $113 million, or 62 cents per diluted share, versus net earnings of $276 million, or $1.40 per diluted share, in the period a year prior.
EBITDA came in at $98 million versus $583 million and adjusted EBITDA, without certain non-recurring expenses including non cash charges, came in at $301 million versus $339 million in the year-earlier period.
On a constant currency basis, overall Hudson’s Bay consolidated comparable sales declined 1.2%. Comparable sales grew by 0.6% at the department store group, including the namesake banner and Lord & Taylor, and 0.1% at Saks Fifth Avenue, offset by declines of 2% at HBC Europe and 5.9% at HBC off price. Comps in the quarter fell prey to a highly promotional environment across markets, the company reported. Sales at HBC’s Gilt operation suffered from lower traffic, while Saks Off 5th experienced lower sales driven in part by the decision to introduce more moderately priced apparel. Saks Off 5th is re-merchandising its product mix to provide a higher concentration of products at the top end of its offering range. HBC expects the move to drive increased traffic and conversion as well as a higher overall basket size.
Digital sales increased by 52.8% from the quarter a year previous, and comparable digital sales on a constant currency basis gained 13.3%. Net sales were $3.43 billion as compared to $3.34 billion in the quarter a year earlier. Operating loss was $30 million versus operating income of $510 million in the period a year before.
For the full fiscal year, Hudson’s Bay Co. posted a loss of $384 million, or $2.11 per diluted share, versus net earnings of $288 million, or $1.40 per diluted share, in the period a year prior. EBITDA came in at $144 million versus $870 million and adjusted EBITDA came in at $474 million versus $582 million in the fiscal year earlier. Net sales were $10.77 billion as compared to $8.31 billion in the year earlier. Operating loss was $274 million versus operating income of $508 million in the period a year before.
“In 2016, we took important steps to position all of our businesses for industry leadership,” said Richard Baker, HBC’s governor and executive chairman. “Our team remains focused on our all-channel model, anticipating our customers’ evolving needs and adapting to our customers’ expectations both in store and online. We executed on the organic growth of our existing store base and substantially increased our investment in digital. I am very proud of the hard work and dedication of all of our associates, who continue to focus on what matters most: our customers. We believe our winning model of combining world class real estate assets, which are less impacted by short-term trends, with our diverse retail businesses will continue to provide value for the company and our shareholders.”
Jerry Storch, HBC’s CEO, said, “The past year was a disruptive one for the retail industry. While the department store sector remains challenging, we are taking decisive action and making the tough decisions to ensure continued performance should the current environment persist. We are cutting expenses, rationalizing and reallocating our capital spending, strengthening our balance sheet and taking other necessary actions. Rest assured, as we remain focused on the continued growth of our company, we are aggressively positioning HBC to adapt to the changing retail environment.”
