TORONTO Canadian retailer Hudson's Bay Co returned to profit and saw sales more than double during the first quarter, bolstered by its purchase of U.S. luxury chain Saks Inc, but its U.S.-based Lord & Taylor chain continued to struggle.
The historic retailer, which bought Saks last year for $2.4 billion and plans to open two Saks Fifth Avenue locations in Toronto in the spring of 2016, said on Tuesday sales at established stores grew 2.8 percent, excluding the impact of foreign exchange.
The Bay, which launched its Kleinfeld bridal gown shop at its flagship store in Toronto last month, did much better than its Lord & Taylor stores in the United States, executives told analysts during a conference call.
While both chains were negatively impacted by a harsh winter, Lord & Taylor took a bigger hit, and its struggles were consistent with those of other department stores in the United States, executives said.
Hudson's Bay earned a net C$176 million ($161.55 million), or earnings per share of 97 Canadian cents, in the first quarter ended May 3. Last year, it recorded a net loss of C$82 million, or 68 Canadian cents a share, during the quarter.
Normalized earnings before interest, taxes, and other items (EBITDA) for the quarter was C$97 million, compared with C$29 million.
Retail sales were C$1.86 billion, up from C$884 million.
OFF 5th, Saks' outlet counterpart, posted same-store sales growth of 15.1 percent, powered in part by strong growth in its new online commerce business and success in moving residual Lord & Taylor products to OFF 5th.
"We found that the Saks OFF 5th customer loved it and we sold through the products very quickly," said Chief Executive Richard Baker. "Which of course is good as part of our synergies and exiting product in an efficient manner from Lord & Taylor, but it also led us on a roadmap to change our assortment at Saks OFF 5th."
HBC reiterated its plans to save C$100 million over the next three years following the Saks acquisition, and said it was on track to cut costs of $50 million in fiscal 2014.
HBC, which holds a lucrative real estate portfolio including properties on Fifth Avenue in Manhattan, didn't say what it planned to do with its holdings.
Last summer, Baker said the company planned to create a REIT and earlier this year, it sold its flagship downtown Toronto store and neighboring office tower for C$650 million in an arrangement that included leasing back the space for 25 years with renewal terms.
The company reiterated its 2014 outlook first made in April. At the time, the forecast was weaker than those of analysts.
Shares pared earlier losses to trade down 1 percent at C$17.11.
(Reporting by Solarina Ho; Editing by Bernadette Baum)