Digital a Bright Spot in Hudson’s Bay’s Disappointing Quarter

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Digital a Bright Spot in Hudson’s Bay’s Disappointing Quarter

By Jamie Grill-Goodman - 09/16/2019

Hudson's Bay Co.'s Q2 2019

  • Revenues totaled $1.9 billion, with comparable sales down 0.4% including a 19% year-over-year increase in digital sales
  • Saks Fifth Avenue’s comp sales were up 7.3% on a two-year stacked basis, which includes 0.6% comp in the second quarter
  • Saks OFF 5TH’s comp sales were up 3.4%, driven by new customer growth

 

Digital sales shone a bright spot in Hudson's Bay Co.’s (HBC) recent quarter and CEO Helena Foulkes provided some light on changes the retailer has made to overcome its e-commerce hurdles. 

While interim CFO Rebecca Roof noted HBC is “disappointed” in its second quarter 2019 performance, in which the retailer reported a $984-million loss, digital sales were up 19% year-over-year, improving upon a 10% growth rate a year ago and 14% in HBC’s first quarter.

For the first time in HBC history, the company’s combined mobile and app revenue surpassed its desktop revenue.

“Our digital performance was a standout with a sharp increase in growth as our changes in strategy, people and infrastructure are paying off,” said Foulkes. “With the Lord & Taylor sale agreement, our focus is now squarely on Saks Fifth Avenue and Hudson’s Bay - businesses that have the greatest potential for HBC amid the consolidating industry.”

As expected, Hudson's Bay comparable sales dipped 3.4% in Q2, which still was a sequential improvement from Q1, driven by sharp improvements in the company’s digital channel, supported by more effective marketing and a recently launched app, Foulkes explained.  

On a two year stack basis, Hudson's Bay comp declined 4%, “a clear signal that we have more work to do,” said Foulkes. “We are adjusting our merchandising strategy to deliver a sharper and more exciting assortment that appeals to both existing and prospective customers, in-store and online. Our first step was correcting previous merchandise missteps.”

The retailer has nixed more than 300 unproductive brands, while adding 100 new and emerging brands to help its fall assortment.

“We continue to concentrate on controlling the ‘controllables’ - serving our customers and lowering expenses and inventory while making strategic investments for our future. While we’ve progressed in simplifying the business and strengthening operations, the second quarter demonstrates that we are still in the early stages of what HBC can become,” said Foulkes.

How Hudson’s Bay is Overcoming its E-commerce hurdles

HBC has tightened integration with marketing, making its new data-driven strategies more effective. The retailer also recently launched an app for Hudson's Bay, and continues to drive customer adoption of the Saks app and testing personalization tactics, such as using geo-locating technology to connect Saks’ in-store associates with customers shopping through the app. In addition, HBC has invested in fixing fundamentals.

“The team has been working on ensuring that we're holding inventory in the most advantageous locations for our customers, resulting in fewer out-of-stocks and improvement in canceled orders through online channels, providing another boost to our digital performance,” noted Foulkes.

The tech leadership team also has a daily call to fix issues in real-time, looking at Net Promoter Score, customer feedback, and where the retailer is “falling down,” such issues with site speed and checkout experience.

The company has also turned its focus to improving delivery times and finding new customers, which has helped with both traffic and conversion, according to Foulkes.

“As you know, as the world moves to mobile, conversion is lower on mobile,” she noted. “But overall, across all of our channels within digital, conversion is going up, and so our Net Promoter Score is going up.”

“The other thing I would highlight that I'm really pleased with is the integration of digital with our stores,” she continued. “And I think that's really where the magic can happen for an omnichannel retailer.”

At Saks, for example, HBC is rolling out digital tools every week to stylists who are using them to serve their customers in stores.

“I'm very impressed with how that team has embraced the digital tools and is really using it to understand what their customers are looking for and to bring new to their customers,” she said.