Hudson’s Bay Co. posts $54-million net loss on higher expenses in Q1

TORONTO – A busy season of various setbacks left Hudson’s Bay Co. (TSX:HBC) facing a $54-million loss in the first quarter, with administration expenses and higher cost of sales making a dent in its bottom line.

Other factors, like currency adjustments and the liquidation of Target Canada, also affected the performance of the department store chain though overall sales were higher, said Richard Baker, the company’s executive chairman.

A year ago, Hudson’s Bay reported an overall profit of $176 million, pushed higher by a $308-million gain from the sale and leaseback of its Queen Street flagship store and Simpson Tower office complex in Toronto.

Without that hefty benefit, the retailer was left to rely on its overall performance.

Adjusted losses, which filter out a number of one-time factors, deepened to $33 million from $27 million.

On a per share basis, the adjusted loss was 18 cents, compared to analyst estimates of five cents per share.

Overall sales were stronger, rising 11.7 per cent to $2.07 billion, on particularly strong growth in its Saks Off Fifth discount outlet stores.

Same-store sales, which measures the overall performance at stores that have been open for at least a year, were higher at all of its banners, rising 2.7 per cent after adjusting for currency fluctuations.

Hurting the results were higher selling and administrative expenses, which increased 15 per cent to $780 million, and the great cost of sales, which rose 7.6 per cent to $1.23 billion.

Though it wasn’t specifically addressed in the financial results, the closure of Target Canada left shoppers sifting through the final inventory of the discount-chic retailer, Baker said. Target Canada shuttered the last of its Canadian stores in early April.

“During some weeks (the impact on us) was negative as they were doing their fierce liquidation sale,” Baker said.

“In general, it’s a positive development for our business to have such a significant competitor no longer in business.”

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Note to readers: This is a corrected story. A previous version compared analyst estimates to a 30-cent loss per share. The estimate should be compared to an adjusted 18-cent per share loss.