December 5, 2018 / 12:37 PM / 4 days ago

Hudson's Bay adjusted earnings rise, Black Friday sales hearten

TORONTO (Reuters) - Canadian department store chain Hudson’s Bay Co reported a jump in adjusted earnings on Wednesday on higher sales and margins, and its chief executive told Reuters that encouraging Black Friday sales bode well for the current quarter.

FILE PHOTO: A woman holds a Hudson's Bay shopping bag in front of the Hudson's Bay Company (HBC) flagship department store in Toronto January 27, 2014. REUTERS/Mark Blinch

But HBC, the owner of the Saks Fifth Avenue luxury retailer, reported a net loss from continuing operations that widened to C$124 million ($93.4 million), or 52 Canadian cents a share, from C$116 million, or 64 cents, a year earlier.

HBC has embarked on a mission to boost flagging sales as the company combats market share erosion by e-commerce behemoths including Amazon.com Inc.

“We’re starting to make some progress, but we’re certainly not done yet,” CEO Helena Foulkes told Reuters. “We are pleased with customers’ response to Black Friday and throughout the weekend into Cyber Monday. All of that bodes well.”

HBC’s shares climbed as much as 4.8 percent and were trading up 1.6 percent at 11:05 a.m.

HBC 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. [nL5N1VX1PT]

Still for some investors, the measures have not gone far enough. Hedge fund Land & Buildings said last week that HBC most do more to unlock shareholder value. It has estimated the value of its real estate at C$$31 per share.

HBC shares are down almost 19 percent this year, triple the Toronto stock benchmark’s decline.

Land & Buildings, which owned 5 percent of HBC in July 2017, last week called for HBC to sell the Saks Fifth Avenue and Lord & Taylor brands and its 50 percent interest in the European joint venture.

“We agree with Land and Buildings’ thesis that HBC is undervalued,” Foulkes said. “We continue to say that everything is on the table in terms of increasing value for our shareholders.”

Foulkes said the company is no longer actively marketing its Vancouver store property, which it said it was seeking to sell last year, as its other transactions have helped reduce debt.

Adjusted earnings before interest, taxes, depreciation and amortization jumped 58 percent to C$63 million ($47.41 million) the three months ended Nov. 3, beating estimates of C$54.2 million, as sales grew 5.6 percent and gross margin improved by 10 basis points. Digital sales rose 8 percent. Including its European operations, the company posted a net loss of C$164 million, or 69 Canadian cents a share, compared with C$243 million, or C$1.33 a share, a year earlier.

Reporting by Nichola Saminather; Editing by Jeffrey Benkoe

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