Hudson's Bay (TSE:HBC) has defied the department store blues with sales and earnings jumps, an increase in comp-store sales and strong digital growth. Even more growth is planned for 2016, with increased financial projections and close to 40 new stores.
Sales climbed 70 percent in the fourth quarter and 36.6 percent for the full-year in constant currency. Earnings for the quarter more than tripled to $370 million from $115 million in the same period last year. Earnings for the full year were $387 million compared to $233 million in 2014.
Consolidated comp-store sales of grew 1.8 percent for the quarter and 2.5 percent for the year.
Compared to recent financial reports from Macy's and Nordstrom, Hudson's Bay is outperforming its peers, thanks to the growth of its Saks Off 5th outlets and the Galeria acquisition in Germany.
"Our department store group performed extremely well, given market conditions, delivering comparable store sales growth of 4 percent on a constant currency basis," said CEO Jerry Storch. "We are focused on improving our presence online, enhancing our in-store experience, and increasing the efficiency of our shipping in order to deliver a seamless all-channel experience. These initiatives will help prepare HBC for the growth ahead of us and ensure that we are well positioned to take advantage of evolving trends in the retail industry."
Hudson's Bay acquired Gilt Group on Feb. 1 and has already integrated that brand into a new Off 5th store in New York City, with plans to expand the initiative.
"The pairing of these two brands allows us to bring an all-channel shopping experience to Gilt customers while improving inventory management at Gilt and introducing the Off 5th brand to Gilt's loyal and devoted millennial membership," said Storch. "We feel better than ever about our ability to advance our all-channel model and continue to grow our successful off price business."
Growth is the goal for 2016. The company increased its fiscal outlook and said it plans to open 32 Off 5th stores and seven Saks Fifth Avenue department stores, allocating 30 percent of its annual investment to new stores.
Another 40 percent will go toward remodeling existing units, including newly acquired locations in Europe, and 30 percent of the budget will be spent on digital and technology investments such as a new internet distribution center in the United States and adding robotic automation to a distribution center in Toronto.
Storch is optimistic about the near future and expects between 33 and 42 percent consolidated sales growth and low single-digit comp store gains as Hudson's Bay continues to expand the Off 5th format, add Gilt shops to stores and grow Saks Fifth Avenue department stores, particularly in Germany where up to 40 Off 5th stores are planned.
- see this Hudson's Bay press release
- see this conference call transcript
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