Hudson's Bay Q4 Net Falls 66.5 Percent
April 3, 2014,
TORONTO-Increased costs, especially those stemming from its acquisition of Saks, hurt Hudson's Bay Co.'s bottom line for both the fourth quarter and fiscal year.
Net income for the quarter finished at C$29.1 million ($27.2 million, according to the average exchange rate for the quarter), down 66.5 percent from last year's fourth quarter. The retailer posted a net loss for the fiscal year ending on Feb. 1 of C$258.1 million ($248.9 million, according to the average exchange rate for the year), compared to a net loss of C$35.1 million (roughly the same in U.S. dollars).
Selling, general and administrative expenses in the quarter ballooned by 120.3 percent in dollars and 700 basis points as a percentage of sales, to 33 percent--reflecting both the addition of Saks' numbers and the costs of the acquisition, which closed on Nov. 4. Hudson's Bay also bore the brunt of additional costs from an increase in noncash share compensation, a decrease in noncash pension income and a hike in costs associated with its strategic initiatives.
In the current fiscal year, the first full year with Saks in its corporate family, Hudson's Bay said it expects sales to total from C$7.8 billion to C$8.1 billion (about the same in U.S. dollars, according to today's exchange rate). Richard Baker, the retail company's governor and CEO, said it has developed a strategic roadmap of four core strategies now that Saks is fully in its fold.
The first of these core strategies will be the expansion of HBC Digital to drive sales across all of the company's banners. Second will be the expansion of Off 5th, Saks' value-oriented format. Third will be the expansion of Saks into Canada, and fourth will be the driving of sales at the top 10 stores in each of the company's banners.
"These locations offer considerable potential for outsized sales growth and set the tone that flows to our other stores," Baker said.