The Hudson’s Bay Co., continuing to suffer same-store sales declines across most of its divisions, is pressing ahead with trimming costs and its stores — including the closure of its iconic Lord & Taylor flagship on Fifth Avenue in Manhattan.
The news confirms WWD reports over the last few months.
HBC revealed the planned closure of the L&T flagship as the group reported a net loss of 400 million Canadian dollars, or $308 million, for the first quarter ended May 5, compared to a loss of 221 million Canadian dollars, or $170 million, in the year-ago period.
All subsequent figures are in Canadian dollars.
Adjusted earnings before interest, taxes, depreciation, amortization and rents came to 173 million Canadian dollars, versus 162 million Canadian dollars in the year-ago quarter.
Total sales increased 1 percent to 3.1 billion Canadian dollars, while comparable sales declined 0.7 percent.
The company is in the process of shedding weak retail assets. It’s also grappling with new rent expenses resulting from monetizing retail real estate holdings, forming joint ventures and expansion in Europe. On Monday, HBC disclosed its sale of the Gilt Groupe to Rue La La, and today the company said it plans to close up to 10 Lord & Taylor stores through 2019, while focusing on the brand’s digital business. These include the Fifth Avenue property, which is being sold to WeWork. The deal with WeWork to sell the L&T flagship property was announced in October and at that time HBC indicated it would maintain a smaller L&T presence at the site, on Fifth Avenue between 38th and 39th Streets.
Among the results,
- Saks Fifth Avenue had a 6 percent comparable sales increase.
- DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) saw comparable sales decrease 0.6 percent.
- Saks Off 5th’s comparable sales fell 3.5 percent.
- HBC Europe (Galeria Kaufhof and Galeria Inno) saw comparable sales decrease 6.6 percent.
“Results in North America were encouraging, highlighted by better performance across the group and comparable-sales growth of 6 percent at Saks,” said Richard Baker, HBC’s governor and executive chairman. “We have significant opportunity to build on this trend, and are taking action to strengthen the foundation of the company and position HBC for profitable growth. Our decision to divest Gilt will allow us to focus our time and resources on the businesses with the greatest potential to drive operating performance, and I am confident that the retail operations are moving in the right direction under Helena’s leadership. In addition to making the right strategic decisions to improve our business, we will continue to explore all opportunities to leverage the strength of our real estate portfolio to create value for our shareholders.”
Helena Foulkes, HBC’s chief executive officer, added, “Over the last month, we have worked rapidly to put in place a leadership team focused on driving business results, streamlining our processes and fostering a culture of accountability. We need to improve across all areas of the business, and this begins with rededicating ourselves to putting the customer first in everything we do. This customer-focused mindset will dictate how we think about key functions of the business, and I see opportunity to dramatically improve our marketing and digital operations while also refining company wide processes that impact our end to end customer experience. In Europe, we have de-layered management, allowing me to be closer to that business as we take actions that are expected to stabilize the topline and improve our cost structure in this important market. Accountability begins with our leadership team, and I am confident that we now have the right people in place across HBC to drive actions that will result in profitable growth.”
With Lord & Taylor, she said, “We will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities. The Lord & Taylor flagship on walmart.com, which launched last week, is a great example of this and represents how we are thinking about the entire business.”