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Hudson's Bay Company: Q2 revenues decline 2 percent


During the second quarter, Hudson’s Bay Company (HBC), which announced a
plan to sell its controlling interest in HBC Europe and to form a strategic
partnership for its European businesses yesterday, reported revenue of
2,160 million Canadian dollars (1,653 million dollars), a decrease of 44
million Canadian dollars (33.6 million dollars) or 2 percent, from the
prior year. Overall comparable sales declined 0.4 percent, with total
comparable digital sales increasing 10.8 percent.

“We have emphasized improving bottom line performance across all of our
banners, resulting in a significant increase in adjusted EBITDA during Q2
and year to date. This improvement is encouraging, and was driven by higher
gross margins and better inventory management,” said Helena Foulkes, HBC’s
Chief Executive Officer in a statement.

Highlights of HBC’s Q2 results

Comparable sales at Saks Fifth Avenue increased 6.7 percent, while
comparable sales at DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters)
decreased of 3.8 percent. Saks OFF 5TH comparable sales for the quarter
decreased 7.6 percent.

For HBC overall, gross profit as a percentage of revenue was 39.9
percent, an improvement of 240 basis points compared to the prior year.
Adjusted EBITDAR for the quarter was 119 million Canadian dollars (91
million dollars), an increase of 30 million Canadian dollars compared to
the prior year. The increase in adjusted EBITDAR, the company said, can
primarily be attributed to an increase in gross profit dollars, partially
offset by nominally higher adjusted SG&A1 expenses.

Net loss from continuing operations was 147 million Canadian dollars
(112 million dollars) compared to 100 million Canadian dollars in the prior
year driven by a higher reported loss from the company’s joint ventures,
largely driven by the impact of foreign exchange and a decrease in income
tax benefits. Normalized net loss was 124 million Canadian dollars compared
to 97 million Canadian dollars in the prior year, driven by lower income
tax benefits, increased depreciation and amortization expenses and higher
finance costs, partially offset by a reduced operating loss.

HBC Europe sales rose 1.9 percent in Q2

HBC Europe, which has been classified as a discontinued operation, HBC
added, generated sales of 970 million Canadian dollars (742 million
dollars), an increase of 1.9 percent compared to the prior year. Comparable
sales declined 4.7 percent, while adjusted EBITDAR was 72 million Canadian
dollars (55 million dollars), compared to 114 million Canadian dollars in
the prior year, driven by lower comparable sales and gross profit dollars
and higher rent expenses, largely driven by new store openings over the
last 12 months. Net loss for the period was 121 million Canadian dollars
(92.5 million dollars), compared to 81 million Canadian dollars (61.9
million dollars) in the prior year.

“Our recent strategic partnership in Europe significantly strengthens
HBC’s retail portfolio and continues our track record of executing
transactions that unlock the value of our real estate portfolio. This
transaction highlights the significant value of our European assets,
creating more than 1.1 billion dollars in real estate value, and generates
cash that will improve our liquidity and overall leverage,” added Richard
Baker, HBC’s Governor and Executive Chairman.

Picture:Facebook/Saks Fifth Avenue



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