Canadian department store operator Hudson’s Bay Co. on Thursday posted a higher than expected loss. Sales at its Lord & Taylor unit fell. However, the company said it was optimistic about its ability to deal with the impact of US-China trade negotiations and U.S. tariffs on Chinese goods. Hudson’s Bay also owns Saks Fifth Avenue. Hudson’s Bay said earlier this week it is evaluating a $1.74-billion take-private cash offer as it competes with discount direct-to-consumer brands and e-commerce behemoths like Amazon.com Inc. The company has success at Saks, especially in its fast-growing men’s business. Hudson's Bay Co. announced it will close its house wares chain Home Outfitters in Canada. ... There are 37 Home Outfitters locations across Canada. All will be closed by the end of 2019. There are benefits of cost-cutting and closing various underperforming shops.
Hudson’s Bay says it had not seen any impact from U.S. tariffs on Chinese imports. It expects to use effective inventory and supply chain management to offset a potential further round of American tariffs on Chinese goods. U.S. President Donald Trump has threatened to impose up to 25% tariffs on an additional $300 billion in Chinese imports if the 2 sides cannot reach a trade deal. More than 70% of the company revenue is in Canada and in luxury retail. Hudson’s Bay also said that it would sell its stake in its real estate joint venture in Germany to Signa Retail Holdings in a deal valued at $1.5 billion, with the proceeds to be used to pay down debt.
The company first-quarter comparable sales decreased 2.1%. Excluding Lord & Taylor and Home Outfitters, which are both undergoing strategic reviews, same-store sales rose 0.3%. Same-store sales at its namesake stores tumbled 4.3% in the quarter. The good point for Hudson’s Bay in the first quarter was its upscale Saks Fifth Avenue business registering a 2.4% rise in same-store sales. Customers spent more on men’s and women’s apparel. The retailer’s off-price business, Saks Off Fifth, saw a 4.4% bump in same-store sales due to investments made in targeted marketing and product assortment. The company reported net profit from continuing operations of $275 million, or $1.15 per share, in the first quarter ended May 4, compared with a loss of $132 million, or 72 cents per share, a year earlier. Total revenue fell to $2.12 billion from $2.19 billion a year earlier.