Helena Foulkes is looking to play to Hudson’s Bay Co.’s strengths at Saks Fifth Avenue and Hudson’s Bay while the future of the overall business as a public company remains in flux.
“We are weighing all of our strategic actions through the lens of our top priority — driving growth at Saks Fifth Avenue and Hudson’s Bay, enhancing the customer experience across all channels, fixing the fundamentals of our business and capitalizing on the value of our real estate,” said Foulkes, who is chief executive officer, on a conference call with analysts for the firm’s first-quarter report Thursday.
The results showed that, while there are pockets of improvement, there’s still plenty of work to be done — a process that could move quickly if executive chairman Richard Baker and his partners get their way and take the company private in a deal that values HBC’s equity at 1.7 billion Canadian dollars, or $1.28 billion.
HBC’s reinvention is already in high gear. This week, the company reached a deal to divest most of its European operations for 1.5 billion Canadian dollars. (Baker and his partners want to use that money to help fund the buyout of the 43 percent the company they don’t own.)
HBC’s earnings for the quarter totaled 275 million Canadian dollars and included a boost of 817 million Canadian dollars from the sale of the Lord & Taylor Fifth Avenue flagship. With that gain, the quarter marked an improvement from year-ago losses of 398 million Canadian dollars.
Revenues for the three months ended May 4 slipped to 2.12 billion Canadian dollars from 2.19 billion Canadian dollars. Comparable sales inched up 0.3 percent, excluding the Home Outfitters and Lord & Taylor units, which might be sold.
While a committee of the company’s board evaluates Baker’s takeover offer, Foulkes is focusing on driving operations.
“Our largest business, Saks Fifth Avenue, had breakaway performance in the first quarter,” she told analysts. “Industry-leading comps of 2.4 percent resulted in a two-year stock comp of 8.4 percent. Saks’ long-term strategy to elevate the brands through a differentiated fashion-forward offering is driving widespread gains across the fleet, online and in every major merchandise category.”
The company is finishing up a renovation of its New York flagship and is set to unveil a new men’s shoe section this summer.
Foulkes sought to reframe the brand into something more modern than a department store, which has become something of a bad word in investment circles.
“The Saks Fifth Avenue ecosystem is a combination of the physical and digital experience,” the ceo said. “More and more, our associates are leveraging technology and social media to initiate and grow client relationships. As we are increasing our customer experience with personalization, individuality and the ease, we will continue to redefine luxury shopping and move the business forward.”
The company’s off-price business is also being presented in a fresh way.
Foulkes noted: “At Saks Off 5th, we implemented a new strategy in 2018, which included shifts in our buying, marketing and service model. We want to operate less like a small department store and more like our version of an off-price retailer, providing fashionable on-trend items at a great value.”
Off 5th saw comp sales rise 4.4 percent in the first quarter and the company has plans to shutter 15 of its 129 doors this year.
At the firm’s Canadian chain, Hudson’s Bay, comps fell 4.3 percent.
Foulkes said there were efforts under way to operate more efficiently, for instance in the area of labor.
“We want to take less from back-of-house noncustomer-facing activity, put more of it into the customer,” she said. “So that’s been a very focused set of activity that we’ve been working on across of our business units and that work starts to take hold in the second half as well.”
For Hudson’s Bay specifically, she said: “A real opportunity for us has been thinking move holistically about labor. And one opportunity we see, for example, is we ask our store teams to do a lot, which quite frankly could be done upstream in our distribution centers and would allow us to take costs out of the business.
“Another area of opportunity is around how we schedule our stores and really scheduling to the needs of the customers,” she said. “So we’re rolling out more robust scheduling tools that will allow us to optimize labor schedule.”