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Jun 5, 2018

‘Every option is on the table’: HBC scales back as sales stumble

HBC needs to 'reinvigorate the business': Retail consultant

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The head of Hudson’s Bay Company says “every option is on the table” after the company reported disappointing first-quarter results, putting the struggling retailer’s future in the spotlight.

The company disclosed on Tuesday its sales at stores that have been open for more than a year fell 0.7 per cent in the first quarter and its net loss from continuing operations widened to $314 million.  

“Yes, [HBC has] created a very different – I think a better – retail environment, but with the movement of eyeballs online, they’re swimming against the stream,” said Paul Taylor, chief investment officer of asset allocation at BMO Global Asset Management, in an interview with BNN Bloomberg Tuesday.

Taylor said he “winced” hearing the same-store sales figure because “it underscores how challenging the retail landscape is.”    

In addition to its quarterly results, HBC also announced Tuesday it will close up to 10 Lord & Taylor stores over the next year-and- a-half and that it intends to exit the flagship Lord & Taylor location on Fifth Avenue in Manhattan.

The scaled-back vision for a key banner came one day after Hudson’s Bay Co. announced another strategic retrenchment, with the sale of Gilt Groupe to Rue La La. The divestment comes barely two years after HBC picked up Gilt for US$250 million. Terms of the deal with Rue La La were not disclosed, but The Wall Street Journal reported the price is “well below US$100 million.”

And HBC CEO Helena Foulkes suggested on Tuesday the company won’t leave any stone unturned in an attempt to bolster its bottom line.

“We still have a lot of work to do, but we’re committed to making the right business decisions to turn our results around,” she said on a conference call with analysts. “Every option is on the table.”

One retail expert told BNN Bloomberg she thinks selling Gilt was a “smart move.”

“They need to reinvigorate the business,” said Farla Efros, president at HRC Retail Advisory, in an interview Tuesday. “I think the unloading of Gilt was just step one, and the reason is they need to unload all and every distraction.”

Efros added the retailer needs to focus on its in-store experience to stay competitive.

“They have a real consumer problem going on because consumers aren’t shopping in their stores,” she said.

“They really need to carve out kind of what their niche is in the marketplace.”

Taylor added the “strategic direction of the firm has to be questioned as we go forward –what their brick and mortar retail footprint is versus their online presence.”  

“Lots of strategic decisions to be made at HBC,” he said.