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Hudson's Bay loss widens, to shut flagship Lord & Taylor Manhattan store
[TORONTO] Canada's Hudson's Bay Co said on Tuesday it would sell its unprofitable online banner Gilt and up to 10 Lord & Taylor stores, including its flagship Manhattan outlet, as its quarterly loss widened on declines in its European and Saks OFF 5th divisions.
The department store chain, which owns the Saks Fifth Avenue luxury retailer, reported a net loss of C$400 million (S$412.9 million), or C$1.70 a share, in its first quarter ended May 5, following a net loss of C$221 million, or C$1.21 per share, a year earlier.
Its adjusted net loss excluding one-time items was C$286 million, compared with analyst expectations of C$200.5 million, according to Thomson Reuters I/B/E/S.
Boston-based e-commerce operator Rue La La, which is owned by billionaire Michael Rubin's Kynetic, said late on Monday it had agreed to buy Gilt, which Hudson's Bay acquired in January 2016 for $250 million.
The companies didn't disclose the price, but the Wall Street Journal reported Rue La La paid less than $100 million, citing people familiar with the deal.
"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," Hudson's Bay Executive Chairman Richard Baker said in a statement.
Hudson's Bay, which also owns GALERIA Kaufhof in Europe, is cutting costs and increasing efficiencies, as it wrestles with a run of earnings disappointments amid a shift in consumer preferences away from department stores to e-commerce and off-price offerings.
Its shares closed at C$10.62 on Monday, down 5.9 per cent for the year. That compares to a 1 per cent drop in the Toronto Stock Exchange benchmark, but Hudson's Bay shares have recovered 32 per cent since their March trough. On Monday, they surged 7 per cent to a four-month high.
Comparable sales rose 7.7 per cent in Hudson's Bay's digital division and 6 percent at Saks Fifth Avenue in the recent quarter. However, those gains were offset by a 6.6 per cent drop in comparable sales in its European division, which includes Kaufhof, Germany's largest retail chain, and new stores in the Netherlands, and a 3.5 per cent drop in its Saks OFF 5th banner.
The department store group, which includes the Hudson's Bay, Lord & Taylor and Home Outfitters brands, saw sales slip 0.6 per cent.
Hudson's Bay does not provide a breakdown of the earnings of individual divisions.
Hudson's Bay engaged investment bankers and consultants to advise on potential deals regarding its department store portfolio and/or a restructure of its business, and reached a conditional agreement to sell its Vancouver flagship store building, people familiar with the matters told Reuters in April and May.