Lord & Taylor Is Closing 10 Stores Including Its Fifth Avenue Flagship

Roman Schwartz
June 7, 2018

Shares of Canada's Hudson's Bay Co pared losses on Tuesday as its plan to sell its unprofitable online banner Gilt and close up to 10 Lord & Taylor stores soothed investors' worries after the company reported a wider quarterly loss. It's also grappling with new rent expenses resulting from monetizing retail real estate holdings, forming joint ventures and expansion in Europe.

Hudson's Bay, which owns the Saks Fifth Avenue luxury retailer, reported a net loss of C$400 million ($308.5 million), or C$1.70 a share, in its first quarter ended May 5, following a net loss of C$221 million, or C$1.21 per share, a year earlier. Hudson's Bay said late Monday that it "has decided not to maintain a presence at [the Fifth Avenue] location following turnover of the building to WeWork". Companywide, top-line sales increased 1% to $3.1 billion. On Monday, HBC disclosed its sale of the Gilt Groupe to Rue La La, and today the company said it plans to close up to 10 Lord & Taylor stores through 2019, while focusing on the brand's digital business. In Europe, where it bought chains such as Galeria Kaufhof and Galeria INNO, and where it expanded Hudson's Bay, a Canadian brand, into the Netherlands, comparable sales fell 6.6%.

"Results in North America were encouraging, highlighted by better performance across the group and comparable sales growth of 6 percent at Saks".

"Our decision to divest Gilt will allow us to focus our time and resources on the businesses with the greatest potential to drive operating performance", Hudson's Bay Executive Chairman Richard Baker said in a statement.

The results came partly because of HBC's missteps and overall retail trends in that region, Foulkes said.

Other parts of HBC's business did much better during the quarter: Comparable sales, a metric that includes online sales but excludes stores opened or closed in the last 12 months, rose 6% at Saks Fifth Avenue, its strongest result in years.

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With 48 stores in the USA - mostly in the Northeast - Lord & Taylor is leaning heavily on its new partnership with Walmart.com, with which it launched a dedicated website last week.

The retailer says the loss amounted to $1.70 per share for the fiscal first quarter ended May 5 compared with a loss of $1.21 per share in the same quarter a year ago.

With Lord & Taylor, she said, "We will take advantage of having a smaller footprint to rethink the model and focus on our digital opportunities".

"We know that this is a business that is changing rapidly and we need to be nimble and focused on where we can improve profitability". Absent these charges, the company said, gross profit as a percentage of sales would have improved 90 basis points.

Hudson's Bay engaged investment bankers and consultants to advise on potential deals regarding its department store portfolio and/or a restructure of its business, and reached a conditional agreement to sell its Vancouver flagship store building, people familiar with the matters told Reuters in April and May.

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