UPDATE 2-Hudson's Bay to invest in online retailing, warns on profit

Thu Apr 3, 2014 12:48pm EDT
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(Adds CEO, analyst comment, details from conference call)

By Ashutosh Pandey

April 3 (Reuters) - Canadian department store operator Hudson's Bay Co, which bought U.S. luxury chain Saks Inc last year, forecast weaker-than-expected 2014 earnings as it spends more to build up its online shopping sites.

Hudson's Bay shares fell as much as 9 percent, making the stock one of the biggest losers on the Toronto Stock Exchange as the company also reported a steep fall in fourth-quarter profit.

The company said it expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of C$580 million ($525.96 million) to C$620 million, well below the average analyst estimate of C$680.1 million, according to Thomson Reuters I/B/E/S.

"In the near-term, investments in our growth strategy will initially moderate our EBITDA growth and margin expansion," Chief Executive Richard Baker said.

The company said it plans to make an additional C$40 million investment in 2014 to enhance its e-commerce offerings as part of its plans to achieve C$10 billion in sales by fiscal 2018.

Hudson's Bay also said it expects to open up to seven full-line Saks Fifth Avenue stores and up to 25 Off 5th stores in Canada over the next few years, leveraging its pool of real estate and logistics capabilities.

The company holds a lucrative real estate portfolio, including the flagship Saks Fifth Avenue store in Manhattan.   Continued...