The Hudson’s Bay Co., dragged down by a onetime, non-cash goodwill impairment charge of 116 million Canadian dollars, or $87 million, related to its off-price businesses, had a net loss of 152 million Canadian dollars, or $113.8 million, in the fourth quarter ended Jan. 28.
Difficult trends were also cited at HBC’s department stores, but the company listed a battery of strategies geared to improve the operations of its retail nameplates.
Nevertheless, the stock price fell 2.4 percent to 9.70 Canadian dollars, or $7.27.
The loss last quarter compared to a profit of 370 million Canadian dollars, or $269.7 million in the year-ago quarter, which included 333 million Canadian dollars, or $249.47 million, in gains from the sale of investments in real estate joint ventures.
In the quarter ended Jan. 28, 2017, adjusted EBITDAR [earnings before interest, taxes, depreciation, amortization and rents] came to 564 million Canadian dollars, or $422.53 million. Excluding rent, EBITDA came to 404 million Canadian dollars, or $302.66 million.
Fourth-quarter sales were 4.6 billion Canadian dollars, or $3.44 billion, representing a 2.5 percent increase above the 4.49 billion Canadian dollars, or $3.36 billion, in the year-ago period. The gain was primarily driven by the addition of Gilt to the portfolio.
For the year, HBC posted a net loss of 516 million Canadian dollars, or $386.57 million, on sales of 14.46 billion Canadian dollars, or $10.83 billion.
In 2015, the Toronto-based retailer had a profit of 387 million Canadian dollars, or $289.93 million, on sales of 11.16 billion Canadian dollars, or $8.36 billion. The 2016 volume gain included 3 billion Canadian dollars, or $2.25 billion, from the addition of HBC Europe and Gilt. There were also five Saks Fifth Avenue and 32 Saks Off 5th store openings contributing 320 million Canadian dollars, or $239.73 million in sales.
Despite the state of some of the company’s operations, HBC is said to be pursuing an acquisition of the Neiman Marcus Group where the performance has been worse and largely impacted by poor sales trends and a heavy debt load of $4.9 billion.
HBC’s own debt at the end of the year stood at 3.26 billion Canadian dollars, or $2.44 billion, largely unchanged from the year before.
HBC did not provide any commentary on the Neiman’s speculation in its financial report Tuesday, but a conference call with investors is scheduled for Wednesday morning.
The company said it expects to save 75 million Canadian dollars, or $56.19 million, annually through cost savings and cutbacks; that it has significantly reduced its capital expenses to between 450 million and 550 million Canadian dollars [$337.12 million and $412.04 million] or by about 150 million Canadian dollars [U.S. $112.38 million] less than last year’s.
HBC also said it has begun “a cross-banner review” of its store operations and would provide details of the program later.
HBC said it is planning “a more elevated” merchandise mix at Saks Off 5th and will start selling Off 5th inventory via Gilt by the end of the year. At the Hudson’s Bay and Lord & Taylor department stores, there are intensified efforts to bolster the active, dress and home categories.
In Europe, HBC said it’s bringing in new brands to Galeria Kaufhof, and proceeding with plans to open Saks Off 5th and Hudson’s Bay stores.
HBC also said that Saks Fifth Avenue, where renovations are ongoing at the Manhattan flagship, will benefit from digital sales growth, and the introduction of buy-online, pick-up-in-store in the fall.
“In 2016, we took important steps to position all of our businesses for industry leadership,” said Richard Baker, HBC’s governor and executive chairman. “Our team remains focused on our all-channel model, anticipating our customers’ evolving needs and adapting to our customers’ expectations both in store and online. We executed on the organic growth of our existing store base and substantially increased our investment in digital. I am very proud of the hard work and dedication of all of our associates, who continue to focus on what matters most: our customers. We believe our winning model of combining world class real estate assets, which are less impacted by short-term trends, with our diverse retail businesses will continue to provide value for the company and our shareholders.”
Jerry Storch, HBC’s chief executive officer, added, “The past year was a disruptive one for the retail industry. While the department store sector remains challenging, we are taking decisive action and making the tough decisions to ensure continued performance should the current environment persist. We are cutting expenses, rationalizing and reallocating our capital spending, strengthening our balance sheet, and taking other necessary actions. Rest assured, as we remain focused on the continued growth of our company, we are aggressively positioning HBC to adapt to the changing retail environment.”