Hudson’s Bay Company (HBC) Fiscal 4Q16 Results: Weak Comps, Merchandising Improvement in Progress

Executive Summary

• Hudson’s Bay Company reported fiscal 4Q16 normalized EPS of C$0.01, versus C$0.79 in the prior-year quarter. Revenue was C$4.6 billion, up 2.5% year over year.
• Comparable store sales declined by 1.2% for the overall company, primarily due to high levels of markdowns. Comps grew by 0.6% at DSG (the Lord & Taylor, Hudson’s Bay and Home Outfitters banners) and by 0.1% at Saks Fifth Avenue. Those increases were offset by declines of 2% at HBC Europe (the Galeria Kaufhof, Galeria Inno and Sportarena banners) and 5.9% at HBC Off Price (the Saks Off 5th and Gilt banners).
• The company shared its plans to optimize assortments across banners. It expects to combine inventory at Saks Off 5th and Gilt by the end of the year. At Hudson’s Bay bannered department stores and Lord & Taylor stores, the company plans to grow key categories such as active, dress and home. Saks Fifth Avenue stores will introduce buy-online, pick-up-in-store service in the fall.