Top Stories
Top Stories
Wires

UPDATE 3-Hudson's Bay Co loss widens on early and deep discounts, lower sales

Melissa Fares

(New throughout, adds details and CEO comment, updates share price)

Sept 12 (Reuters) - Canadian department store operator Hudson's Bay Co reported a wider second-quarter loss on Thursday, hurt by store closures, deep discounts and declining sales at the retailer's name brand.

Shares of the company were down roughly 1.46% at C$10.02 after falling as low as $C9.77.

Hudson's Bay said the effects of a "hyper-promotional" retail environment were felt most at its luxury department store chain Saks Fifth Avenue. Like other brick-and-mortar stores, it has had to fend off fierce competition from e-commerce behemoths like Amazon.com Inc as shoppers migrate online.

Over the past few years, Hudson's Bay has been closing stores and selling units to focus on Saks Fifth Avenue and Hudson's Bay in Canada to shore up finances.

Last month, the company said it would sell its Lord + Taylor department store business to fashion rental service company Le Tote Inc for about $100 million.

Hudson's Bay Chief Executive Officer Helena Foulkes on Thursday highlighted continued investments in improving the e-commerce business by better-positioning inventory online and making the checkout process faster and easier. She also touted Saks' success, particularly in its fast-growing men's business.

Foulkes told Reuters that a continuing priority is to improve product assortments with more modern merchandise. She said Hudson's Bay will exit more than 300 "unproductive" brands and add roughly 100 new brands to its portfolio.

Hudson's Bay, North Americas oldest company, said second-quarter comparable store sales decreased 0.4% across all units and tumbled 3.4% at its namesake stores.

The company's second-quarter bright spot was its upscale Saks Fifth Avenue business registering a 0.6% rise in same-store sales as customers spent more on men's and women's ready-to-wear apparel, handbags, and beauty.

The off-price business, Saks Off Fifth, saw a 3.4% bump in same-store sales driven by new customer growth and investments in targeted marketing, with notable gains in jewelry, women's modern clothing and men's classic apparel.

Rivals Macy's Inc's off-price Backstage business and Nordstrom Inc's Nordstrom Rack discount stores have also hit a sweet spot with shoppers hunting for bargains.

Foulkes told analysts on a post-earnings call that the company is not ruling out entering growing businesses within retail, including rental, resale or subscription.

"We continue to look very hard at those emerging places within retail because we think that's what the customer wants," she said.

Total revenue fell to C$1.85 billion from C$1.86 billion and gross margin fell 530 basis points to 34%.

Net loss from continuing operations widened to C$462 million from C$104 million.

In June, Executive Chairman Richard Baker teamed with other shareholders to offer to take the retailer private in a C$1.74 billion cash deal.

A special panel of the company reviewing the bid said in August an initial analysis showed it was inadequate. (Reporting by Arundhati Sarkar in Bengaluru and Melissa Fares in New York; Editing by Shinjini Ganguli and David Gregorio)