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Saks Deal Weighs on Hudson’s Bay’s Bottom Line

Financing costs push firm's second-quarter net losses to $79.2 million.

The Hudson's Bay flagship in Toronto.

Costs associated with its pending acquisition of Saks Inc. pushed Hudson’s Bay Co. into the red during the second quarter.
 
Hudson’s net losses for the quarter totaled 82.3 million Canadian dollars, or $79.8 million, and compared with earnings of 22.2 million Canadian dollars, or $21.8 million, a year earlier.

Financing costs more than tripled to 76.9 million Canadian dollars, or $74.5 million, in the quarter as the company prepared for its $2.9 billion acquisition of Saks.

Hudson’s Bay said normalized net earnings for the quarter tallied 3.9 million Canadian dollars, or $3.8 million, versus losses of 2 million Canadian dollars, or $2 million, a year ago.

Sales for the three months ended Aug. 3 increased 3.9 percent to 947.7 million Canadian dollars, or $918.6 million.

U.S. dollar figures are presented at exchange rates for the respective periods.

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Hudson’s Bay comparable-store sales grew by 6.2 percent, while Lord & Taylor’s comps slipped 1.2 percent. E-commerce sales jumped 56.1 percent to $37.3 million.

“This performance has been driven by a continued focus on our stated strategic initiatives,” said Richard Baker, the company’s governor and chief executive officer.

“We are seeing strong performance from stores and departments that have recently received capital investments,” he said. “We are also pleased by the continued growth of our e-commerce sales, which accelerated in the second quarter and are up approximately 45 percent year-to-date following our re-launch of both banner websites. Our online business was a key factor in our results, and reflects our increased investment in this component of our business. We are confident that our inventory is well-positioned for the fall season and expect stronger financial performance from Lord & Taylor and the overall business in the back half of the year.”