Saks Fifth Avenue Parent Company Posts Net Loss as Luxury Fashion Struggles

Hudson’s Bay Co. today reported third-quarter results after the market close.

The Canada-based owner of Saks Fifth Avenue, Lord & Taylor and other department stores said its Q3 revenues increased 28.6 percent year-over-year, to $3.3 billion CAD, or $2.5 billion.

Net losses totaled $125 million CAD, or $94.2 million, compared to net earnings of $7 million CAD, or $5.25 million, in the prior year. The company said its prior year earnings included a net gain of $91 million CAD, or $68.3 million, related to its joint ventures, which contributed to the gains. Normalized net loss was $102 million CAD, or $76.5 million, compared to a loss of $1 million CAD, or $750,000 in the prior year. HBC attributed the increase in loss to increased rent expenses for the joint ventures and third parties, higher depreciation and amortization expenses, lower comparable sales and increased finance costs. (All conversions assumes 1 CAD = 0.75 USD.)

Total comparable sales declined 3.6 percent during the quarter. On a constant currency basis, comparable sales declined 4.6 percent at Saks Fifth Avenue; 2.4 percent at the Department Store Group; 2.2 percent at HBC Europe; and 8.4 percent at HBC Off Price. Total digital sales increased by 73 percent from the prior year, with total digital comparable sales increasing by 5.4 percent on a constant currency basis.

Richard Baker, HBC’s governor and executive chairman, said the company’s luxury chains continued to battle a retail environment marred by challenges in the women’s apparel, department store and luxury segments.

“To address this we are continuing to move aggressively, making specific improvements both in our digital and brick-and-mortar operations that will allow us to better serve our customers,” Baker said in a release.

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