Byline: Brian Dunn

MONTREAL — The decision last summer by Hudson’s Bay Co. to update its Bay department store chain and change its image from “reliable” to “desirable” appears to be paying off.
Aided by strong Christmas sales and the demise of the T. Eaton Co., the Toronto-based company surprised many analysts by doubling its fourth-quarter profit to $61.5 million, or 80 cents per share, from $30.7 million, or or 43 cents. All results are converted from Canadian dollars at the current rate.
The improved results are also due to higher sales and margins at both the company’s Zellers discount division and 99 Bay stores, according to George Heller, president and chief executive officer. He said he expects better results for the current fiscal year.
For the fourth quarter ended Jan. 31, sales improved 4.1 percent to $1.63 billion from $1.56 billion. The Bay chain increased same-store sales by 9.7 percent, while the figure at the Zellers discount division was 4.3 percent.
Net earnings for the year leaped 131.5 percent to $65.3 million, or 79 cents, from $27.9 million, or 38 cents. Annual sales rose 3.1 percent to $4.9 billion from $4.7 billion.
For the year, same-store sales at the Bay were up 4.7 percent and 2.3 percent at Zellers. By comparison, same-store sales at Wal-Mart Canada are believed to be in double-digits.
Analysts suggested Zellers still needs to boost its sales per square foot to combat Wal-Mart Canada, which has half the number of stores but similar sales. Additionally, the Bay will see more competition next fall when Sears Inc. unveils a new format for its recently acquired Eaton’s stores.
Hudson’s Bay shares gained 1 to close at 14 on the Toronto Stock Exchange Friday.

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