TORONTO (Reuters) - The purchase of upscale U.S. retailer Saks Inc helped Canadian department store operator Hudson’s Bay Co (HBC.TO) nearly double retail sales and post a smaller quarterly loss on Tuesday.
While its earnings per share were slightly below expectations, Hudson’s Bay stock rebounded from early losses to rise 2.1 percent to C$23.99 in Toronto. The stock has taken much of its recent direction from the retailer’s moves to extract greater value from its real estate portfolio.
The shares hit a record high in November after the company took a $1.25 billion, 20-year mortgage on its flagship Saks Fifth Avenue store in New York. The property was appraised at C$4.1 billion ($3.59 billion), well above the $2.4 billion that Hudson’s Bay, a centuries-old company with roots in the fur trade, paid to buy all of Saks last year.
“This transaction is just one part of our comprehensive real estate strategy,” Chief Executive Richard Baker said on a conference call, adding the company will provide further details in the spring.
For the third quarter ended Nov. 1, same-store sales at its department store group, which includes the Hudson’s Bay chain in Canada and its U.S.-based Lord & Taylor chain, rose 1.7 percent.
Lord & Taylor’s performance showed improvements but continued to be a drag, executives said.
Comparable sales at Saks Off 5th outlets jumped 19.2 percent, while those at Saks Fifth Avenue stores increased 1 percent.
Online sales hit C$228 million, which included a combined 73 percent surge at Hudson’s Bay and Lord & Taylor.
Net loss from continuing operations narrowed to C$13 million, or 7 Canadian cents per share, from C$126 million, or C$1.05 per share, a year earlier.
Normalized net earnings from continuing operations, adjusted to exclude such items as acquisition and restructuring costs, were 2 Canadian cents per share, versus the 7 Canadian cents reported last year.
Retail sales nearly doubled to C$1.91 billion.
Analysts had expected earnings per share of 5 Canadian cents on revenue of C$1.89 billion, according to Thomson Reuters estimates.
Acquisition-related finance costs plunged to C$12 million from C$123 million.
Hudson’s Bay said it cut C$16 million in costs during the quarter and was on track to hit C$50 million for the year.
The company maintained its financial forecasts for the full year and executives said it should hit the upper end of its 2014 sales forecast of C$7.8 billion to C$8.1 billion.
With additional reporting by Ashutosh Pandey in Bengaluru; Editing by Kirti Pandey and Peter Galloway