Richard Baker wants to take Hudson’s Bay Co. private to rejigger the company and first-quarter results showed that, while Saks Fifth Avenue sales were a bright spot and much progress has been made, there is still plenty of work to do.
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.
Baker, who is executive chairman, is part of a group of investors that moved this week to take the company private to continue to revamping work being done by chief executive officer Helena Foulkes.
“We are seeing progress on a number of crucial fronts from our continued work to fix the fundamentals and reposition HBC for the future,” Foulkes said. “Strategically, we have simplified the organization and placed a greater emphasis on our North American retail operations. We are exercising financial discipline while making the necessary investments to capitalize on our greatest opportunities — Hudson’s Bay and Saks Fifth Avenue.”
Comp sales at the Saks Fifth Avenue unit grew 2.4 percent, making for a two-year stacked comp of 8.4 percent.
“Saks Fifth Avenue’s commitment to the luxury customer continues to payoff with widespread sales increases across key merchandise categories and locations, as well as among our top customers,” Foulkes said. “Our New York City clients have embraced the flagship’s new main floor, which redefines the luxury shopping experience with a one-of-a-kind handbag assortment featuring exclusive products and brands only available through Saks.”
The results came just three days after the company reached a deal to divest most of its European operations for 1.5 billion Canadian dollars. Baker and other shareholders proposed using that money take the company private at 9.45 Canadian dollars per share.
That price values HBC’s stock at 1.7 billion Canadian dollars, or $1.28 billion.
A special committee of the firm’s board is evaluating the proposal from the group, which includes Baker, Rhône Capital, WeWork Property Advisors, Hanover Investments and Abrams Capital Management. Together the group already own about 57 percent of the company.
“The significant challenges, risks and uncertainties facing HBC in the rapidly evolving retail environment are best addressed in a private market setting,” Baker said Monday.
“Improving HBC’s performance will require significant time and patient long-term capital that is better suited in a private company context without the emphasis on short-term results and returns,” he said.
Already, HBC has been rapidly changing tack since Baker was in empire-building mode and acquired Saks Fifth Avenue for $2.9 billion in 2013.