(Reuters) – Hudson’s Bay Co (HBC.TO) reported a bigger third-quarter loss on Tuesday, hit by deeper discounts at luxury chain Saks Fifth Avenue and weak sales at its namesake stores, as the Canadian department store operator tries to take itself private.
FILE PHOTO: A man exits a Hudson’s Bay department store in Toronto, Ontario, Canada June 6, 2016. REUTERS/Chris Helgren
Shares of North America’s oldest company slipped 2% in early trading.
“Across the industry, there was a pullback among luxury consumers, allowing shoppers to more frequently take advantage of markdowns, which ultimately reduced full-price sales,” Chief Executive Helena Foulkes said in a statement.
For Saks, the lull in luxury spend started in August and was most notable in metropolitan cities, the company said.
Foulkes said the company’s 15% growth in digital sales, tight lid on cost and increased inventory management were not enough to deliver the financial performance it wanted in the quarter.
Hudson’s Bay has been shutting stores and divesting assets to shore up finances and focus on Saks and on Hudson’s Bay in Canada.
Earlier this year, the retailer announced the sale of its Lord + Taylor business to fashion rental company Le Tote Inc for about $100 million.
Hudson’s Bay Executive Chairman Richard Baker has won the support of the company’s special committee to take the retailer private for C$1.9 billion ($1.4 billion) but faces a vote from minority shareholders to approve the deal on Dec. 17.
Canadian private equity firm Catalyst Capital Group Inc, which owns roughly 17.5% of Hudson’s Bay, has urged other shareholders to shoot down the deal, as has proxy advisory firm Institutional Shareholder Services Inc.
Catalyst made a rival C$2.03 billion bid for the Saks owner, but the special committee that backed the deal with Baker rejected it.
“Whether we are public or private company, our strategy remains the same,” Foulkes said on Tuesday.
Comparable sales at Saks fell 2.3% in the quarter, while those at its namesake stores decreased 3.9%.
A bright spot for the company was its off-price business, Saks OFF Fifth, which saw a 4.9% jump in same-store sales, with gains in accessories, women’s apparel, kids and shoes.
“We continue to think the future of department stores is off-price,” said CFRA analyst Camilla Yanushevsky.
Hudson’s Bay’s net loss widened to C$226 million ($170 million), or C$1.23 per share, in the quarter ended Nov. 2, from C$161 million, or 88 Canadian cents per share, a year earlier.
Total revenue fell to C$1.84 billion from C$1.89 billion.
Reporting by Soundarya J in Bengaluru and Melissa Fares in New York; Additional reporting by Jessica DiNapoli in New York; Editing by Mark Potter and Steve Orlofsky