HBC marks $54M loss in Q1 despite growing sales
Hudson's Bay Company grew both department store and digital sales in the quarter ended May 2, but still ended with a net loss of a $54-million or 30 cents a share.
HBC said its net results were hurt by the low Canadian dollar, higher operating costs and higher capital costs.
The retailer, which owns Saks Fifth Avenue, the Off 5th fashion chain and Lord & Taylor as well as The Bay, said its total sales were $2.072 billion, up 11.7 per cent. Discounting the impact of currency, same-store sales, a key metric for retailers, increased 2.7 per cent.
In the quarter, HBC opened one new Saks Fifth Avenue store and four new Off 5th locations.
In the remainder of the year it plans to spend between $350 million and $400 million to open another Saks Fifth Avenue store and between 12 and 14 Off 5th stores.
HBC's older department store group saw improved sales for the quarter, driven by menswear and home products.
But the key improvement was in digital sales, an area where HBC is concentrating after arriving late to ecommerce.
The retailer says digital sales grew 37 per cent, compared to the previous year, but did not give a dollar figure.
CEO Jerry Storch is projecting 2015 total sales of between $9 billion and $9.3 billion.
Douglas Stephens, founder of Retail Prophet, said HBC's results are indicative of the retailer's addiction to discounting
"I always find HBC to be kind of schizophrenic brand in the sense that they often talk about being a fashion house, they talk about a higher level of personal shopping," Stephens told CBC News.
"There's this one side that wants to be a great shopping experience. On the other side, they seem to be addicted to promotion. It's hard to walk into a Hudson's Bay store without seeing a slew of promotional signs and constant discounting," he continued.
Stephens said it's going to be hard for HBC to break the discounting habit, as loyal customers come to count on it.
In future, the stores may not be able to grow sales without discounts and that will hurt the bottom line, he said.
