Saks Fifth Avenue remains the golden child of Hudson’s Bay Co.’s portfolio, as the retail group reported falling revenues but improved profits for the fourth quarter.
On Wednesday, HBC said overall comparable-store sales for the three months ended Feb. 2 were down 1.4 percent from the prior year but up 3.9 percent at Saks, resulting in a two-year stacked growth of 7 percent at the luxury retailer.
The department store’s sunny results were offset, however, by declines in HBC’s other ventures, including its Hudson’s Bay, Lord & Taylor and Home Outfitters stores, which fell by 5.2 percent. Comparable sales at Saks Off Fifth, its off-price business, also sank by 2.1 percent.
Fourth-quarter revenues were C$2.9 billion ($2.2 billion), a drop of C$167 million from the same period in 2017, which included an extra week. Excluding the extra week, revenues were down 1.6 percent, or C$47 million. While it posted a net loss of C$226 million, or 95 cents per share, from its continuing operations, its discontinued operations boosted overall net profits for the quarter to C$286 million, or C$1.20 per share for the quarter, up from C$84 million, or 39 cents per share last year.
HBC CEO Helena Foulkes, who joined the company in February 2018, has been hard at work shedding unprofitable parts of the business, including the flash sale site Gilt Groupe, its New York City Lord & Taylor flagship and a large part of its European retail and real estate holdings. In December, it announced that it would close Saks Fifth Avenue’s downtown Manhattan location at Brookfield Place a little over two years after it opened, and in February, it said it would close up to 20 Saks Off Fifth stores as well as its Home Outfitters chain in Canada, amid competition.
“Financial discipline is not a one-year event,” said Foulkes on a call with analysts and investors, explaining the end goals of focusing the company’s energies on its most promising ventures. “We will continue to improve our cost structure while making strategic investments in technology, marketing, digital and our stores. We’ve streamlined the organization, which has allowed us to focus on our North American operations.”
In terms of Saks’ performance specifically, she credited the strong results to merchandising investments, which have allowed the company to stand out in the marketplace even amid significant competition, as well as its personalization efforts in store and online.
The department store opened its redesigned main floor in February, and Foulkes said the store has seen “a nice increase in traffic and sales” since then. Construction is continuing this quarter in women’s shoes (“one of the most popular, highly trafficked departments” and The Vault, the store’s upcoming luxury jewelry section on the lower level.