Hudson's Bay CEO says best opportunities at Canadian arm
(Reuters) - Hudson's Bay Co's (HBC.TO) chief executive said on Thursday that the best opportunities for the 343-year-old company are at its namesake Canadian department store chain.
The company, which owns two of the most venerable names in department stores - Hudson's Bay in Canada and Lord & Taylor in the United States, has seen its stock tumble 12 percent since its listing on the Toronto Stock Exchange in November.
"It seems we have greater opportunity at Hudson's Bay than we do at Lord and Taylor," said CEO Richard Baker in an interview. "There's so much for us in Canada."
Baker spoke on Thursday after the company posted fourth quarter earnings, reporting that same-store sales rose 6.1 percent at the company's Canadian stores, but fell 2.9 percent in the United States as superstorm Sandy hampered sales at Lord & Taylor.
The company also expects slower sales growth this year compared with last year.
The chief executive is facing a big challenge convincing investors about the company's growth prospects, especially as much-anticipated U.S. competitors such as Target Corp (TGT.N) and Nordstrom Inc (JWN.N) make splashy entrances into Canada.
Baker told analysts during a conference call on Thursday that it was too early to draw any meaningful conclusions from Target's official opening last week.
"The handful of stores that have opened, what we have found is very little impact at our stores. Generally speaking, more traffic near our stores is good for sales, less traffic is bad for sales," said Baker.
"But obviously we're watching it very closely and we're comfortable with our previous statement as to what we believe is going to happen there."
The company previously said it did not anticipate Canadian customers would take their business elsewhere when Target made its debut.
In the fourth quarter ended February 2, HBC said sales rose 6.7 percent to C$1.39 billion. The quarter was a week longer than the comparable period a year earlier and contributed C$50 million in sales.
The company's net income from continuing operations fell to C$93.6 million, or 81 Canadian cents per share, from C$99.2 million, or 95 Canadian cents, a year earlier.
The shares finished up 1.7 percent, at C$15.00 on the Toronto Stock Exchange on Thursday, after rising as much as C$15.41 and falling as far as C$14.00. Volume was a modest 120,294.
TAKING THE INITIATIVE
HBC said its initiative to bring in UK retailer Topshop - currently available at just five locations in Canada - has resulted in annual sales in excess of $600 per square foot, calling it a "tremendous success."
Going forward, the company plans to open five new Canadian Topshop locations and hinted at coming partnerships with other foreign retailers. Baker declined to give specifics.
On the e-commerce front, where HBC's share of the burgeoning online market has lagged other retailers, there were signs of improvement. The company, which plans to re-launch its websites for the two banner stores, said online sales grew 63 percent in 2012, compared with the prior year.
Baker, a real estate investor whose NRDC Equity Partners bought HBC in 2008, expects the online business in Canada to bring in about C$300 million over the next four to five years. Hudson's Bay's advantage, he said, will be in offering products online that are not available at other stores.
STRONGER SECOND HALF
The company, which expects a stronger second half, forecast same-store sales would grow 3 percent to 5 percent in 2013. Same-store sales rose 4 percent last year. It is targeting sales of $240 to $250 per square foot at Lord & Taylors and C$170 to C$180 per square foot at Hudson's Bay.
First quarter sales have been below expectations so far and the company said growth would slow for the full year because a late spring hurt sales at its Lord & Taylor's stores.
The company expects total sales to rise 1.5 percent to 3.5 percent in 2013. Sales rose 5.9 percent to C$4.0 billion ($3.94 billion) last year.
($1 = $1.0146 Canadian)
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