Hudson's Bay Posts Q2 Loss on Costs for Acquisition of Saks; Sales Rise 3.9 Percent
TORONTO-Expenses regarding the company's pending acquisition of Saks put Hudson's Bay's bottom line in the red in its fiscal second quarter, to the tune of C$82.3 million (U.S.$79.6 million on the current exchange rate).
Net sales totaled C$947.7 million (U.S.$916.3 million), an increase of 3.9 percent, in the quarter which ended on Aug. 3. The sales gain included a rise of 6.2 percent at Hudson's Bay stores, offset by a decrease of 1.2 percent at the company's Lord & Taylor stores. E-commerce sales jumped 56.1 percent.
Richard Baker, Hudson's Bay's governor and CEO, said the company's top line is benefiting from "a continued focus on our stated strategic initiatives." These include capital investments in certain stores and departments, plus the relaunch during the quarter of the company's banner websites, thebay.com and lordandtaylor.com. "Our online business was a key factor in our results, and reflects our increased investment in this component of our business," Baker said.
However, the net loss reflected acquisition-related costs of C$59.9 million (U.S.$57.9 million) in the quarter. In addition, gross margin fell 120 basis points to 38.8 percent. Selling, general and administrative expenses rose 4.1 percent in dollars and were flat as a percentage of sales at 37.9 percent.
Baker said, "We are confident that our inventory is well positioned for the fall season, and expect stronger financial performance from Lord & Taylor and the overall business in the back half of the year."