HBC correcting merchandising misstep, managers get better tools: CEO

TORONTO — Shoppers at Hudson's Bay stores may see more personnel on the floors at the busier locations later this year, and more upscale merchandise than last year, as the retailer's management team works to revive the chain's sales growth.

Hudson’s Bay Co. chief executive Helena Foulkes told analysts Thursday that the Toronto-based company's main Canadian banner recognizes that it put too much emphasis last year on mid-priced products.

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Foulkes made the comments on a conference call after the company — which also owns the Saks Fifth Avenue chain of luxury department stores and other banners — discussed its results for the fiscal first quarter ended May 4.

What HBC missed last year while it was working to attract former Sears Canada customers, Foulkes said, was that its shoppers were looking for "a better, more fashion-forward mix" especially at the metropolitan stores.

"I feel very confident that the team has corrected that for the second half of the year. And the improvement we did see in the quarter was due to changes that were made around our marketing mix, our service."

The quarterly report was issued three days after HBC made a pair of major corporate announcements: a potential going-private offer from a group of its own shareholders and a deal to sell the last of its German holdings for $1.5 billion.

The company's 50-50 joint venture with Signa Retail Holdings made it unnecessarily challenging for the operating team at Galeria Kaufhof and "so we simplified it for that team, which is great for them," Foulkes said.

"But mostly it allows us to focus on North America. We always said that was our end game and goal," she added.

At the Hudson's Bay division, Foulkes said "there's probably potentially more labour needed in our top stores — certainly no less — but in our lower-volume stores we see an opportunity on the labour side . . . from re-thinking the model."

That model would include centralized cashier desks in stores with less customer traffic, rather than desks throughout the store, and additional planning tools to help store managers gauge local consumer preferences.

"You will see in the second half of the year and in 2020 the impact of those changes because we're able now to buy better and more effectively," Foulkes predicted.

"We're also using data to help us understand (where we should) be putting labour in our stores."

She added that top management is also making adjustments at its other store banners as well as its digital sales channel, specifically mentioning the "opportunity" to improve its record of in-stock online merchandise.

"I think a lot of things are going on in the business. Some of it corporately, some of it very locally with people taking a higher sense of accountability for the performance of the business," Foulkes said.

Earlier Thursday, Hudson's Bay Co. reported a profit of $275 million in its latest quarter, boosted by the sale of its flagship Lord and Taylor building in New York.

The retailer says the profit amounted to $1.15 per share for the quarter ended May 4 compared with a loss of $398 million or $2.17 per share in the same quarter last year.

Excluding one-time items, HBC said its normalized net loss was $209 million or $1.14 per share for its most recent quarter compared with a normalized loss of $114 million or 62 cents per share a year ago.

Retail sales in the quarter totalled $2.08 billion, down from $2.15 billion in the same quarter last year.

Companies in this story: (TSX:HBC)

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