Hudson's Bay Net Falls 46.4 Percent in Q4; Posts Loss for Fiscal Year
TORONTO-Fourth-quarter net income for Hudson's Bay Co. fell 46.4 percent to C$105 million. For the fiscal year, the Canadian retail giant reported a net loss of C$44.8 million, compared to net income of C$1.4 billion for the prior year.
The shortfalls on the bottom line occurred due to declines in net income from discontinued operations, primarily from Zellers stores which were closed or sold to Target as the linchpin of the latter's expansion into Canada. For the quarter, the profit from discontinued operations fell 88.2 percent, while for the year those operations reported a net loss of C$76.3 million, compared to profit of C$1.4 billion for the prior year. (The Canadian dollar was equivalent to the U.S. dollar for both fiscal years.)
Net sales in the quarter increased 6.7 percent to C$1.4 billion, including a pickup of 2.1 percent in same-store sales. For the year, net sales were up 5.9 percent to C$4.1 billion, including a 4 percent gain in same-store sales.
Richard Baker, Hudson's Bay governor and CEO, said 2012 was "an encouraging year" for the company, with same-store sales gains for both Hudson's Bay stores and Lord & Taylor. For the latter, this occurred in spite of the damage inflicted by Hurricane Sandy during the fourth quarter, which hit in the U.S. Northeast, where the majority of the Lord & Taylor stores are located.
Gross margin in the quarter dropped 120 basis points to 37.6 percent. Selling, general and administrative expenses increased 6.8 percent in dollars but were flat with the previous year's fourth quarter at 27.9 percent.
For the current fiscal year, Baker said Hudson's Bay is relaunching the websites for both Hudson's Bay and Lord & Taylor, opening new stores for both banners and for Canadian Topshop (under its partnership with the women's apparel brand), and performing "significant renovations" of locations under both banners. The company's target is for same-store sales growth of from 3 to 5 percent this year, he added.