Hudson’s Bay revenue slips as sales fall at all stores except Saks Fifth Avenue
Hudson’s Bay Company reported last week that its fourth-quarter revenue slipped to $2.89 billion, down 5.2% from $3.05 billion a year earlier when the quarter included an extra week.
Excluding the extra week, revenue in the quarter ended Feb. 2 was down $47 million or 1.6% compared with a year ago.
Overall same-store sales for the quarter were down 1.4%, while they increased 3.9% at HBC’s Saks Fifth Avenue stores and fell 5.2% at its Hudson’s Bay, Lord & Taylor and Home Outfitters stores. Saks Off Fifth same-store sales declined 2.1%.
HBC reported a net profit of $286 million or $1.20 per share for the quarter, up from $84 million or 39 cents per share in the same quarter last year.
However, the retailer said it lost $226 million or 95 cents per share from its continuing operations compared with a profit of $180 million or 84 cents per share a year ago.
HBC announced in February it would shutter its Home Outfitters business and was eyeing the closure of up to 20 of its Saks Off Fifth locations in a bid to increase profitability.
A shift to lower-priced merchandise across the Hudson’s Bay retail chain last year was a fixable mistake that resulted in disappointing revenue levels in the fourth quarter, chief executive Helena Foulkes commented.
The strategy was successful in attracting former Sears Canada customers shortly after the rival chain closed, Foulkes said, but “I think we took it too far.”
“The good news about all this is that it’s fixable,” Foulkes she added.
Hudson’s Bay has a new chief merchandise officer who will have a better product mix ready for stores later this year, she said.
Foulkes also said the overall company “is a stronger and more capable company than a year ago.”
“We will continue to improve our cost structure while making strategic investments in technology, marketing, digital and our stores,” Foulkes said.
For the full year, sales totalled $9.4 billion for the year with same-store sales down 0.2% consistent with previous year. Meanwhile, gross profit margin was 38.9%, a slight increase over the prior year.
- Source: The Canadian Press
Dollarama’s fourth-quarter profit misses estimates
Dollarama Inc. narrowly missed estimates for fourth quarter profit and same-store sales, as the retailer was impacted by severe competition and a softening economy that prevented the company from raising prices.
The company said competition from rivals, including Dollar Tree, had led it to scale back price increases in an attempt to retain customers, reducing gross margins to 40.4% in the fourth quarter from 41.4% a year ago.
As expected by analysts, the results showed that the discount chain was benefiting from consumers opting for more of their shopping with cheaper retailers in the wake of weakening Canadian economy.
But while customers spent more at its stores on average, the number of transactions fell in the quarter and same-store sales rose just 2.6%, compared to analysts’ forecasts of 3% and 5.5% rise, respectively, a year ago.
The company also expected same-store sales growth to be in the range of 2.5% to 3.5% in fiscal 2020.
Dollarama had warned three months ago that it was concerned that fewer customers were shopping at its stores due to price hikes in recent years.
Total quarterly sales rose 13% to $1.06 billion, missing estimates of $1.07 billion and net income rose to $171.98 million ($128.1 million), or 54 cents per share, from $162.83 million, or 48 cents per share.
Analysts, however, had expected the company to report a profit of 55 cents per share, according to IBES data from Refinitiv.
During the fourth quarter, Dollarama opened 33 net new stores, compared to 25 net new stores during the corresponding period of the previous fiscal year.
For the full year (Fiscal 2019), sales increased by 8.6% to $3,548.5 million and same-store sales were up 2.7%. Gross margin was 39.3% of sales, compared to 39.8% of sales the previous year and net earnings per common share increased by 9.9% to $1.67 from $1.52.
During Fiscal 2019, the company opened 65 net new stores, the same number of net new stores opened during Fiscal 2018.
- Source: Dollarama, Reuters
Sears to set to open first batch of smaller stores
After its journey through bankruptcy, Sears is getting ready to open its first batch of smaller stores in the U.S. that won’t carry clothing but will focus on appliances, mattresses and home services.
The first three stores called Sears Home & Life will open on Memorial Day weekend and are a fraction of the size of the company’s traditional stores.
Peter Boutros, chief brand officer for Sears and Kmart, declined to say how many of the stores are in the works but said locations have been identified. However, he said the new-format stores will not take the place of Sears’ remaining 425 stores.
The company also plans to ramp up TV advertising and is planning to extend its Kenmore brand beyond major appliances into kitchen accessories, plates and knives.
The new smaller stores will be located in Overland Park, Kansas; Lafayette, Louisiana; and Anchorage, Alaska, Boutros said. They range in size from about 10,000 to 15,000 square feet. The average Sears is about 155,000 square feet.
The moves come nearly two months after Sears Chairman Eddie Lampert bought the Hoffman Estates, Illinois-based company for $5.2 billion in a bankruptcy auction through an affiliate of his hedge fund. With the deal, Sears retained the Kenmore appliances and Diehard battery brands and continues to sell
Craftsman tools through licensing partners. The company sold Craftsman tools to Black & Decker in 2017.
Sears filed for Chapter 11 bankruptcy in October 2018.
“We need to instil confidence that we are open for business,” said Boutros in an interview with The Associated Press, declining to comment on recent sales trends.
Lampert is restructuring the business, but Sears’ long-term survival remains an open question. It has to contend with increasing competition from the likes of Best Buy, Home Depot and Walmart.
Each of the new stores will sell both major and small kitchen appliances. Customers can meet with experts to explore how new appliances will look in their home. They will also have kiosks where shoppers can order items available online and in the regular stores and can have them be delivered to the store or delivered at home.
Boutros declined to comment on sales projections for the new store formats.
- Source: The Associated Press