How Hudson’s Bay Pulled Off A 60 Percent Sales Gain In Q2

Robust activity in the merger-and-acquisition space is beginning to pay off for Hudson’s Bay Co.

The Canada-based owner of Lord & Taylor, Saks 5th Avenue and Saks Off 5th said today that the addition of HBC Europe and e-tailer Gilt to its portfolio played a primary role in helping the company land a 60 percent sales gain in Q2. Specifically, HBC’s consolidated retail sales soared to $3.3 billion CAD, or $2.6 billion, while comparable sales advanced of 1.9 percent in the second quarter.

We continued to execute on our expansion plans in Europe with the announcement that we would be introducing our iconic Hudson’s Bay banner to the Netherlands,” Richard Baker, HBC’s governor and executive chairman, said of the company’s ongoing growth goals. “We currently plan to open up to 20 stores, and during the quarter signed long-term lease agreements for 11 locations accounting for approximately 1,526,000 square feet. We also announced the first five Saks Off 5th locations in Germany, which we expect to open next summer.”

Meanwhile, HBC also posted a net loss of $142 million CAD, or $110.8 million, compared with a profit of $59 million CAD.

On a constant currency basis, comparable sales grew 1.1 percent at the Department Store Group, offset by declines of 0.9 percent at HBC Europe, 11.4 percent at HBC Off Price and 1.3 percent at Saks Fifth Avenue, resulting in a total comparable sales decline of 1.3 percent, according to HBC.

The company announced in Q1 that it had significantly reduced its promotional activity at Saks Off 5th compared to the prior year, which continues to help the firm’s margins but at the expense of sales.

HBC said it also migrated the Saks Off 5th website to a new platform, which caused some disruption and impacted digital sales at the banner. The firm also reworked its return policy at Gilt, making it more liberal. The company said it expects the new return policy and its digital changes will result in stronger relationships with its customers over the long term.

HBC CEO Jerry Storch said digital sales — which grew 84 percent in Q2 — continue to be a top priority at the firm as it dives into the second half.

To support our digital growth we are bringing industry-leading robotic technology to Canada which we expect will reduce digital order processing time and generate significant savings,” Storch said in a release. “We expect the first installation to be fully functional this fall, and are currently the only company in Canada to utilize this technology.”

(All translations based on current exchange rates.)

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