In the wake of Marigay McKee’s sudden departure as president of Saks Fifth Avenue, parent Hudson’s Bay Co. posted a better-than-expected Q4 performance, with profits tripling.
The Toronto-based retailer — which also operates U.S.-based Lord & Taylor department stores — said its net earnings for the quarter ended Jan. 31 grew to $111 million, compared with $29 million in the year-ago period.
Saks — which will now be run by McKee’s lesser-known successor, Marc Metrick — saw same-store sales rise by 2.6 percent during the quarter, while its Off-Fifth stores’ sales were up 12.1 percent.
On a full-year basis, Saks’ same-store sales increased 2.1 percent, with Off 5th seeing a 15.1 percent jump in same-store sales.
In Tuesday’s earnings conference call, Hudson’s Bay Co. CEO Gerald Storch reiterated the company’s earlier statements regarding its game plan for Saks.
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“As for the strategy of Saks Fifth Avenue … it’s the same one that was designed and developed in developing the acquisition case for the company, the same strategy the team started, including Marc, who was here throughout this period [and] instrumental in that strategy,” said Storch.
Cowen & Company analyst Oliver Chen said he was impressed with Saks’ performance in Q4 — which was “much better than feared” — and is generally optimistic about the brand’s ability to remain consistent.
“The bottom line is that the company has good leadership and a good person filling [McKee’s] post,” said Chen.
McKee’s arrival at Saks in late 2013 was much heralded, and the former chief merchant of London’s Harrods boasted billion-dollar turnaround plans for Sak’s 41 U.S.-based outposts.
“Undergoing change always carries risk, and Saks has been undergoing a lot of change in product assortment, brand portfolio, customer-relationship management systems, online integration, inventory management and new ownership,” explained Chen.
McKee’s ambitious plans for Saks, she had said, included modernizing the chain without disrupting its core identity and adding exclusive merchandise to the stores’ offerings.
“[We estimate] it takes about a year for a new leader to really drive change at a retail company,” said Chen. “So I think there was sort of an ‘unknown factor.’”
McKee’s departure came after just 15 months on the job, sparking industry-wide speculation about what led to the highly celebrated leader’s abrupt exit.