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A bronze plaque identifies the Hudson's Bay Company flagship store in Toronto, in this January 26, 2006 file photo. (J.P. MOCZULSKI/REUTERS)
A bronze plaque identifies the Hudson's Bay Company flagship store in Toronto, in this January 26, 2006 file photo. (J.P. MOCZULSKI/REUTERS)

Hudson’s Bay posts sales gains but profit falls short of forecasts Add to ...

Hudson’s Bay Co. says makeovers at several stores are paying off with strong sales growth, but the retailer’s second-quarter profit fell below expectations as it prepares for its acquisition of luxury department store chain Saks Inc.

The company said on Thursday it plans to cut the quarterly dividend in half to five cents as it moves to pay down debt following the Saks purchase.

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The company posted second-quarter normalized net earnings of $3.9-million or three cents per share, compared with a loss of $2-million or 2 cents in the year-earlier period.

According to Bloomberg, analysts had been expecting HBC to book a profit of 13.2 cents a share for the quarter ended Aug. 3.

Sales in the second quarter reached $947.7-million, up 3.9 per cent over the same-period last year. That beat analysts’ expectations of $939-million.

The net overall loss in the quarter was $82.3-million or 69 cents, compared with a profit of $22.2-million or 21 cents in the year-earlier period.

The company said financing costs for the 13-week period ended Aug. 3 were $76.9-million, up from $24.9-million a year earlier. Of the $76.9-million, $59.9-million is related to the pending Saks acquisition.

HBC is also expected to move to lower its debt by spinning off its real estate assets – including those of Saks – into a real estate trust.

There was strong same-store sales growth at the Hudson’s Bay outlets and rising e-commerce sales in the second quarter, the company said.

Consolidated same-store sales grew 3.5 per cent, while Hudson’s Bay same-store sales were up 6.2 per cent.

E-commerce sales were $37.3-million, up 56.1 per cent from the year-earlier period.

However, Lord & Taylor same-store sales fell 1.2 per cent on a U.S. dollar basis.

“Hudson’s Bay continues to demonstrate industry-leading sales growth,” HBC governor and chief executive officer Richard Baker said in a news release.

“We are seeing strong performance from stores and departments that have recently received capital investments.”

HBC also said on Thursday that the 40-day “go-shop” period on the Saks deal ended last Friday.

“Go-shop” allows the seller to solicit alternative bids from third parties. Saks is now subject to the traditional “no-shop” provisions which preclude the soliciting of any other offers.

The takeover of Saks – which will bring Saks stores to Canada – is expected to go through by the end of the year.

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