HBC reports wider-than-expected Q1 loss; shares fall

Hudson's Bay Sells Gilt to Rue La La

Hudson's Bay sells Gilt to Rue La La. , Bloomberg News

A list of other locations set to close was not immediately available but if the number reaches 10 it would represent 20 percent of the 50 Lord & Taylor stores still in operation.

During the quarter, the company recorded a 16 million Canadian dollars (12.3 million dollars) inventory reserve related to the planned store closures at Lord & Taylor, and a 4 million Canadian dollars (3 million dollars) markdown charge related to the closure of two Lord & Taylor stores during the quarter.

In Europe the company opened one Saks Off 5th Europe store in Bonn, Germany and three Hudson's Bay stores in the cities of Amersfoort, Enschede and Haarlem in the Netherlands.

The 10 closures, which will occur through 2019, are part of a plan for Lord & Taylor to focus on its digital strategy over bricks and mortar.

"We still have a lot of work to do but we're committed to making the right business decisions to turn our results around", Ms. Foulkes said on Tuesday after the department-store retailer released first-quarter results that missed analysts' expectations.

HBC further said that it has entered into agreements to sell Gilt, and the sale of this business is expected to close during the second quarter of 2018. The company board of directors rejected the bid unanimously in February.

Hudson's Bay, which also owns GALERIA Kaufhof in Europe, is cutting costs and boosting efficiencies as it wrestles with a run of earnings disappointments as consumers shift away from department stores to e-commerce and off-price offerings. At the time, HBC said it was committed to investing in online shopping and expanding its European footprint. That compares to a 1 per cent drop in the Toronto Stock Exchange benchmark, but Hudson's Bay shares have recovered 32 per cent since their March trough.

Saks Off 5th's comparable sales fell 3.5 percent.

"It looked like pretty lousy results, but the market may be taking some encouragement that they're retrenching more rapidly", said Brian Madden, portfolio manager at Goodreid Investment Counsel in Toronto, who has avoided buying HBC shares. Walmart announced last November that Lord & Taylor will have a flagship store on Walmart.com.

Saks Fifth Avenue had a 6 percent comparable sales increase. The loss amounted to $1.70 per share compared to $1.21 per share in the same quarter a year ago.

Hudson's Bay, which owns the Saks Fifth Avenue luxury retailer, reported a net loss of C$400 million ($308.5 million), or C$1.70 a share, in its first quarter ended May 5, following a net loss of C$221 million, or C$1.21 per share, a year earlier.

On a normalized basis, HBC said its loss per share for the quarter amounted to $1.22 compared with a normalized loss of $1.15 per share a year ago.

Revenue totalled almost $3.09 billion, up from almost $3.06 billion a year ago. "Accountability begins with our leadership team, and I am confident that we now have the right people in place across HBC to drive actions that will result in profitable growth".

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