By Solarina Ho
April 11 Hudson's Bay Co's chief
executive said on Thursday that the best opportunities for the
343-year-old company are at its namesake Canadian department
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
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
and Nordstrom Inc 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
In the fourth quarter ended Feb. 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
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.