HudsonвЂ™s Bay reports bigger loss, will close Lord & TaylorвЂ™s Fifth Avenue store after 104 years
HudsonвЂ™s Bay Co., the owner of Saks Fifth Avenue, said it will close as many as 10 Lord & Taylor stores вЂ” including the flagship Manhattan location вЂ” in an attempt to revive its struggling units.
The closures will occur through 2019, the company said Tuesday. HudsonвЂ™s Bay had originally planned to keep a Lord & Taylor presence in the Italian Renaissance building on Fifth Avenue, which it agreed to sell for US$850 million in October. The store opened there in 1914.
вЂњAn increased focus on driving Lord & TaylorвЂ™s digital business, combined with new leadership and an optimized store footprint, is expected to reduce costs and improve the overall performance of this business,вЂќ HudsonвЂ™s Bay said in a statement Tuesday.
The Canadian department-store company, which agreed to sell flash-sale website Gilt on Monday, reported a normalized loss of $1.22 a share that was wider than analystsвЂ™ estimates of 76 cents. Comparable store sales fell 0.7 per cent in the quarter ended May 5. The results sent the shares plunging as much as 13 per cent in Toronto, the most since December. The stock was down 3.6 per cent to $10.24 at 10:58 a.m.
New Chief Executive Officer Helena Foulkes is adding to measures to turn around the company that have included job cuts, unloading a minority stake to a private equity firm to reduce debt, and striking partnerships with Walmart Inc. and WeWork Cos.
Recent reports paint an uneven picture of retailersвЂ™ health. While MacyвЂ™s Inc. posted a second straight quarter of sales gains and raised its full-year earnings outlook, J.C. Penney Co. cut its profit forecast after sales trailed estimates during an unseasonable cold spell. Among mall-based stores, Lululemon Athletica Inc.вЂ™s comparable sales growth accelerated, in contrast with a drop at Gap Inc.вЂ™s namesake stores.
Saks Fifth Avenue was a bright spot for HBC, with same-store sales increasing 6 percent last quarter. In contrast, that measure was down 6.6 percent at its European chains, which Foulkes said was partly due to bloated inventories. She said she reorganized management there to have experienced executives run different regions and report directly to her.
Still, HudsonвЂ™s BayвЂ™s debt levels are too high and it burned too much cash last year, Chief Financial Officer Ed Record said on a conference call with analysts, promising to вЂњdramatically improveвЂќ free cash flow this year.
вЂњThe actions we have taken show that we are serious about improving results and better positioning HBC to deliver profitable growth,вЂќ Foulkes said on the call, adding several times that вЂњeverything is on the tableвЂќ to help turn the company around.