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Saks Sees Third Straight Quarter of Sales Gains, But Turnaround Challenges Continue for HBC

Hudson’s Bay Co. today reported improved fourth-quarter earnings, evidencing that some of its turnaround efforts are taking hold at Saks Fifth Avenue, while some challenges persist at other banners.

The Canada-based parent of Saks, Lord & Taylor and Gilt said today that it bounced back from last year’s Q4 net loss to post net income of $84 million in Canadian dollars, or $65 million at current exchange. After suffering a rough patch in recent years, Saks also posted its third consecutive comparable sales gain — this time advancing 2.1 percent.

At the Department Store Group, consisting of Hudson’s Bay, Lord & Taylor and Home Outfitters banners, comparable sales fell 2.6 percent. At HBC Europe — which encompasses Galera Kaufhof, Galeria Inno, Hudson’s Bay Netherlands and Saks Fifth Avenue Off 5th Europe — comps decreased 3.4 percent. HBC Off Price (Saks Fifth Avenue Off 5th and Gilt) logged a 7.6 percent decline in comps.

Overall, retail sales were CA$4.7 billion, an increase of 2.1 percent from the prior year.

HBC governor and executive chairman Richard Baker said he was not pleased with the firm’s recent performance but hoped to continue to capitalize on the value of its real estate portfolio as well as the recent appointment of HBC CEO Helena Foulkes.

“Our valuable real estate assets provide HBC with a solid financial base, and the recent agreement to sell the Lord & Taylor flagship building further demonstrates our ability to monetize these assets and enhance liquidity,” he said, adding that the firm plans to work to better position its retail operations. “I am confident that the addition of Helena Foulkes and her transformational leadership will invigorate HBC with a fresh perspective as we position ourselves for the future … Together, we are determined to grow sales and increase margins while evaluating all opportunities to create shareholder value.”

Foulkes, who joined HBC in February from CVS, said she sees “significant opportunity” in the firm’s “iconic” banners.

“I will continue to listen and learn from our associates and customers as I work with the leadership team to heighten accountability for driving business results, improve our culture and develop a long-term strategic plan,” she added.

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