August 11, 2016: Hudson’s Bay Company (HBC) announced in-line second quarter results during market hours. This quarter, company’s comparable sales increased by 1.9%; however down on constant currency basis. The comparable Sales at Saks improved considerably, increased by 2.7%; but down by 1.3% on a constant currency basis. Considerably, trends improved at Saks Fifth Avenue comparable (for example ‐1.3% in Q2 vs. ‐5.7% in Q1), is a positive sign. Although company’s off price saw trends declined (‐11.4%), showing tough year over year comparison (+12.7%), impact of more disciplined approach to markdowns, and higher returns at Gilt.
DSG comparable sales increase of 1.1%. HBC Europe (GALERIA Kaufhof, Galeria INNO and Sportarena) comparable sales decrease of 0.9% was flattish to first quarter. Digital sales ex HBC Off Price increased by 17.3%. U.S. luxury segment remains tough, however better than estimated results give some back-up for second half. Moreover, reported inventory levels seem cleaner entering into second half, a positive. Dept. stores stocks moved higher on the better‐than‐estimated second quarter trends. HBC is based on long‐term potential to drive retail productivity and significant RE value.
HBC is likely to announce full financial results for the quarter ended July 30, 2016 after the market closes on September 6, 2016. Recently Scotiabank, Royal Bank of Canada and CIBC rated HBC stocks to “Sector Outperform” with target price of C$26, C$31 (+C$4) and C$20.00 (-C$3) respectively. TD Securities decreased target price on shares of Hudson’s Bay Co from C$31.00 to C$30.00 with a “Buy” rating.
Hudson’s Bay Co is a Canada-based department store retailer. The Company’s retail portfolio includes approximately nine banners, ranging from luxury to better department stores to off price, with over 460 stores across the world.