Hudson’s Bay Co. (HBC) reported a growing net loss on Thursday, as the retailer closes stores, changes its product lineup and grapples with struggling sales at its namesake department store chain.
HBC reported a net loss from continuing operations of $462 million in the 13-week period ending August 3, a sharp increase of 25 per cent when compared to the same time last year.
While operations at Saks Fifth Avenue and Saks Off Fifth were a bright spot in the second quarter, Hudson’s Bay remained a weak spot, as the retailer was forced to respond to heavy discounting across the market and tweaked its merchandise lineup that has not been resonating with customers. Comparable sales – a key metric in the retail industry – fell 2.4 per cent at Hudson’s Bay, the most among HBC’s three department store chains. Saks Fifth Avenue saw comparable sales increase by 0.6 per cent, while Saks Off Fifth saw a jump of 3.4 per cent.
“The promotional activity in luxury was exceptionally intense in the second quarter and a notable change from the first quarter,” chief executive Helena Foulkes said in a statement released alongside the quarterly results.
“For Hudson’s Bay, we are working to fix this business to recapture market share over time.”
Foulkes said the company has been modernizing the product offering at Hudson’s Bay, abandoning more than 300 “unproductive brands” and adding 100 new and emerging ones ahead of the fall season. However, Foulkes warned that “these changes may take time to resonate in the market.”
“While we’ve progressed in simplifying the business and strengthening operations, the second quarter demonstrates that we are still in the early stages of what HBC can become,” Foulkes said.
Since joining HBC last February, Foulkes has been shedding struggling businesses and shifting the focus to the company’s two largest divisions – Saks Fifth Avenue and Hudson’s Bay.
Last month, HBC announced that it had reached an agreement to sell its Lord and Taylor division to clothing rental subscription service Le Tote.
The moves come as a group of majority shareholders, led by HBC’s executive chairman Richard Baker, try to take the retailer private at $9.45 per share. The bid has been slammed by activist investor Jonathan Litt, as well as HBC’s special committee analyzing the offer, for being “inadequate.”