Hudson's Bay outlook disappoints; loss widens on Saks deal

Wed Dec 11, 2013 3:12pm EST
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By Solarina Ho

(Reuters) - Hudson's Bay Co (HBC.TO: Quote) cut its 2013 outlook on Wednesday on expectations of heavier holiday discounting and as overall sales were weaker than expected in the third quarter, depressing the retailer's stock 5 percent.

The company, which completed its $2.4 billion purchase of U.S. luxury chain Saks Inc last month, reported a wider net loss primarily due to costs related to the acquisition.

Excluding acquisition-related and restructuring costs, Hudson's Bay reported earnings that fell short of analysts' expectations.

Shares of the Lord & Taylor chain operator fell 94 Canadian cents to C$19.00 on the Toronto Stock Exchange. They had risen about 17 percent since its last quarterly report in September.

"We expect shares to weaken in trading. ... Despite the guidance reduction, we believe the foundation of the turnaround is in place," said RBC Capital Markets analyst, Tal Woolley in a client note.

"Without minimizing the impact of the reduced guidance announced this morning, we remain constructive on HBC shares."

Hudson's Bay, which traces its roots to the Canadian fur trade in the late 1600s, owns The Bay and Home Outfitters in Canada as well as lucrative real estate such as Lord & Taylor's flagship store on Fifth Avenue in Manhattan. The company has long indicated it might spin off some of its property into a real estate investment trust, but declined to provide a time frame.

"We're working with a variety of consultants to look at every possible scenario one could do with our real estate," Chief Executive Richard Baker told analysts during a conference call after the results were released.   Continued...

Commuters wait for buses in front of a Hudson's Bay store in downtown Ottawa July 16, 2008. REUTERS/Chris Wattie