During the second quarter, Hudson’s Bay Company (HBC), which announced a plan to sell its controlling interest in HBC Europe and to form a strategic partnership for its European businesses yesterday, reported revenue of 2,160 million Canadian dollars (1,653 million dollars), a decrease of 44 million Canadian dollars (33.6 million dollars) or 2 percent, from the prior year. Overall comparable sales declined 0.4 percent, with total comparable digital sales increasing 10.8 percent.
“We have emphasized improving bottom line performance across all of our banners, resulting in a significant increase in adjusted EBITDA during Q2 and year to date. This improvement is encouraging, and was driven by higher gross margins and better inventory management,” said Helena Foulkes, HBC’s Chief Executive Officer in a statement.
Comparable sales at Saks Fifth Avenue increased 6.7 percent, while comparable sales at DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) decreased of 3.8 percent. Saks OFF 5TH comparable sales for the quarter decreased 7.6 percent.
For HBC overall, gross profit as a percentage of revenue was 39.9 percent, an improvement of 240 basis points compared to the prior year.
Net loss from continuing operations was 147 million Canadian dollars (112 million dollars) compared to 100 million Canadian dollars in the prior year driven by a higher reported loss from the company’s joint ventures, largely driven by the impact of foreign exchange and a decrease in income tax benefits. Normalized net loss was 124 million Canadian dollars compared to 97 million Canadian dollars in the prior year, driven by lower income tax benefits, increased depreciation and amortization expenses and higher finance costs, partially offset by a reduced operating loss.
HBC Europe, which has been classified as a discontinued operation, HBC added, generated sales of 970 million Canadian dollars (742 million dollars), an increase of 1.9 percent compared to the prior year. Comparable sales declined 4.7 percent, while adjusted EBITDAR was 72 million Canadian dollars (55 million dollars), compared to 114 million Canadian dollars in the prior year, driven by lower comparable sales and gross profit dollars and higher rent expenses, largely driven by new store openings over the last 12 months. Net loss for the period was 121 million Canadian dollars (92.5 million dollars), compared to 81 million Canadian dollars (61.9 million dollars) in the prior year.
“Our recent strategic partnership in Europe significantly strengthens HBC’s retail portfolio and continues our track record of executing transactions that unlock the value of our real estate portfolio. This transaction highlights the significant value of our European assets, creating more than 1.1 billion dollars in real estate value, and generates cash that will improve our liquidity and overall leverage,” added Richard Baker, HBC’s Governor and Executive Chairman.
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