UPDATE 1-Hudson's Bay gets Saks boost, Lord & Taylor chain still weak

Tue Jun 3, 2014 11:23am EDT
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(Adds details on results, official comments, market reaction)

TORONTO, June 3 (Reuters) - Canadian retailer Hudson's Bay Co returned to profit and saw sales more than double during the first quarter, bolstered by its purchase of U.S. luxury chain Saks Inc, but its U.S.-based Lord & Taylor chain continued to struggle.

The historic retailer, which bought Saks last year for $2.4 billion and plans to open two Saks Fifth Avenue locations in Toronto in the spring of 2016, said on Tuesday sales at established stores grew 2.8 percent, excluding the impact of foreign exchange.

The Bay, which launched its Kleinfeld bridal gown shop at its flagship store in Toronto last month, did much better than its Lord & Taylor stores in the United States, executives told analysts during a conference call.

While both chains were negatively impacted by a harsh winter, Lord & Taylor took a bigger hit, and its struggles were consistent with those of other department stores in the United States, executives said.

Hudson's Bay earned a net C$176 million ($161.55 million), or earnings per share of 97 Canadian cents, in the first quarter ended May 3. Last year, it recorded a net loss of C$82 million, or 68 Canadian cents a share, during the quarter.

Normalized earnings before interest, taxes, and other items (EBITDA) for the quarter was C$97 million, compared with C$29 million.

Retail sales were C$1.86 billion, up from C$884 million.

OFF 5th, Saks' outlet counterpart, posted same-store sales growth of 15.1 percent, powered in part by strong growth in its new online commerce business and success in moving residual Lord & Taylor products to OFF 5th.   Continued...