TORONTO (Reuters) - Canadian retailer Hudson’s Bay Co said on Friday it was streamlining operations across its various department store chains to better compete in what it called a “brutal” market.
The 347-year-old company, known as HBC, announced jobs cuts across North America late on Thursday. It is the latest department store chain to unveil plans to try to address industry-wide turmoil amid intense competition in a saturated market.
A shift in shopping trends to online retailers led by Amazon.com Inc has left many traditional department operators struggling to boost sales and cut costs.
“We know we can do better and we are taking bold decisive action,” said Chief Executive Officer Gerald Storch in a conference call, as HBC shares plunged to record lows.
“Rather than chase the rapid industry trends, our transformation plan will reposition HBC to get ahead and stay ahead,” he said.
HBC operates Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue and other chains. Under the plan announced on Thursday, the company said it will decrease its number of vendors for back-office operations such as buying computers and marketing, centralize store operations, and move toward a “shared services” structure to standardize processes across department stores.
Shares tumbled 9.6 percent, to C$8.70 in early afternoon trading, recovering from a record low of C$8.44 after the company posted a wider-than-expected quarterly loss on Thursday.
Speaking on the conference call, Executive Chairman Richard Baker also reiterated the possibility HBC would sell additional equity in its real estate joint venture assets, or potentially launch an initial public offering of one or both joint ventures, a move investors have been waiting for since the transactions were announced in early 2015.
But Veritas Investment Research analyst Kathleen Wong questioned whether monetizing its real estate would help the company.
“If you get market value for the real estate, you have to rent it back at market rent,” said Wong. “If your retail operation is not doing well, how can you afford to pay the market rent?”
On Thursday, HBC said it was cutting 2,000 positions in North America, or about 3 percent of its more than 66,000 global employees.
“The nature of the business right now is that you have declining store traffic and you have a brutal competition on price and promotion taking place,” Storch said on the conference call.
U.S. department store operator Nordstrom Inc said Thursday that members of the Nordstrom family were exploring the possibility of taking the company private, potentially facilitating its own restructuring efforts.
HBC, an iconic Canadian brand and North America’s oldest company, said its restructuring was centered on North America, but that its team in Europe was also focused on managing costs.
Unlike some of its competitors, HBC has no plans to shutter stores as part of its overhaul and is planning to move ahead with growth plans, company executives said.
“There are no stores we can close to make our business better,” Baker said.
He added that the company was looking carefully at opening any stores it did not presently have commitments for, however.
HBC did say its plans for Saks Fifth Avenue were intact and that it remained committed to Montreal, where it will open Canada’s largest Saks store in fall 2018. Reuters reported earlier that the company had yet to file for a construction permit with the city for that location.
Reporting by Solarina Ho; Editing by Meredith Mazzilli and Tom Brown