April 3, 2019 / 11:32 AM / 3 months ago

Hudson's Bay profit beats estimates on Saks Fifth Avenue, online strength

(Reuters) - Hudson’s Bay Co on Wednesday reported a quarterly profit that topped estimates, as sales at its Saks Fifth Avenue stores rose during the holiday shopping season and the Canadian company benefited from an increase in online sales.

FILE PHOTO: Workers on automated systems at the Hudson's Bay Company distribution centre in Toronto, Ontario, Canada May 29, 2017. REUTERS/Fred Thornhill/File Photo

Comparable sales at Saks rose almost 4 percent, while the company’s total comparable digital sales, which includes online transactions, rose 8.7 percent in the quarter.

Chief Executive Helena Foulkes said Saks Fifth Avenue stores outside New York City fueled sales, as the iconic Fifth Avenue flagship in Manhattan was undergoing renovation.

“Saks has been particularly good at identifying both top stores and top customers to invest in, and I see that as a real opportunity at Hudson’s Bay,” Foulkes told Reuters.

The company’s total fourth-quarter comparable sales decreased 1.4 percent. Same-store sales at Hudson’s Bay, Lord & Taylor and Home Outfitters tumbled 5.2 percent in the quarter.

Foulkes said the company had an opportunity to win Sears Canada Inc customers after the struggling retailer shuttered its stores but “took it too far” by adding too much merchandise at too many Hudson’s Bay department stores aimed at appealing to a lower-end customer.

HBC, which has been shutting underperforming stores to cut costs, posted a C$226 million ($170 million) loss from continuing operations in the fourth quarter, on the back of a restructuring charge of C$194 million.

The company also entered into a joint venture for its European business, sold its unprofitable online brand Gilt and has said it will close up to 10 struggling Lord & Taylor stores after selling the brand’s flagship building in Manhattan.

After adjusting for one-time items, the company earned 41 Canadian cents per share, beating the analyst average estimate of 25 Canadian cents, according to IBES data from Refinitiv.

Hudson’s Bay shares were flat in early Wednesday trade.

Reporting by Melissa Fares in New York and Arundhati Sarkar in Bengaluru; Editing by Arun Koyyur

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