(Reuters) - Retailer Hudson’s Bay Co (HBC.TO) forecast higher-than-expected sales for the coming year on Tuesday, saying it will benefit from robust online demand and strong growth at its Saks Fifth Avenue and OFF 5th stores.
Shares in the Canadian-U.S. department store operator hit a record high following the news, jumping as much as 8.2 percent to C$29.00 in Toronto.
HBC acquired Saks in 2013 for $2.4 billion, and its inclusion in HBC’s results has been a profit driver as have improvements at its other retail banners, company executives told analysts during a conference call.
The company said it will open its first two Canadian Saks stores in the spring of 2016 as well as its first Canadian OFF 5th stores.
HBC, whose roots in Canada date back to 1670, also owns U.S. department store chain Lord & Taylor, Hudson’s Bay department stores in Canada, and Canadian house wares chain Home Outfitters.
Executives expressed interest in luxury-retail acquisitions, but told analysts that while HBC has the financial means for a deal, it is taking a conservative approach.
“We are always looking for the right type of transaction and one that’s going to be economically favorable to us,” Executive Chairman Richard Baker said.
Earlier this year, HBC said it was forming two real estate joint ventures - one with U.S.-based Simon Property Group Inc (SPG.N) and one with Canada’s RioCan Real Estate Investment Trust (REI_u.TO) - in a deal that would cut its debt by roughly C$1.1 billion ($880 million) and pave the way for an initial public offering of the ventures, or an alternative transaction. [ID:nL1N0VZ0V9]
HBC forecast sales of C$9 billion to C$9.3 billion for fiscal 2015, ending at the end of January 2016, higher than analysts’ average estimate of C$8.17 billion, according to Thomson Reuters I/B/E/S.
HBC said that in fiscal 2014’s fourth quarter, comparable-store sales rose 2.3 percent in its department store group, which excludes Saks and Saks’ outlet chain. Saks’ sales rose 2.6 percent, and at OFF 5th outlets they jumped 12.1 percent.
Online sales surged 35 percent to C$304 million.
HBC reports in Canadian dollars, and fourth-quarter results were helped by the U.S. dollar’s 12.1 percent appreciation against the Canadian currency during the period.
Net profit from continuing operations rose to C$111 million, or 61 Canadian cents per share, from C$37 million, or 21 Canadian cents per share, a year earlier.
Sales rose 9.3 percent to C$2.63 billion.
Additional reporting by Anannya Pramanick in Bengaluru; Editing by Sriraj Kalluvila and Peter Galloway