Hudson's Bay Co Fixing Fundamentals, but Loss Widens
Hudson’s Bay Co. reported a bigger third-quarter loss, despite its ongoing work “fixing the fundamentals.”
With the recent sale of Lord & Taylor to Le Tote, the retailer has turned its focus to its Saks Fifth Avenue and Hudson's Bay businesses, while it also faces competing bids to take the company private.
“In the third quarter, we faced our toughest comp, soft industry-wide luxury sales and the challenge of winning back market share in Canada,” said Helena Foulkes, HBC’s CEO. “Strong digital growth, continued cost containment and inventory control were not enough to deliver the financial performance we wanted."
Revenues fell to $1.8 billion Canadian dollars ($1.39 billion), from CA$1.9 billion in the year-ago quarter and third quarter comparable sales declined 1.7%. Saks Fifth Avenue’s comparable sales decreased 2.3% in the third quarter, as compared to a 7.3% increase a year ago.
Digital sales remained a bright spot, growing 15% year-over-year, while NPS scores have nearly tripled since last year. Growth in digital at Saks OFF 5TH resulted in a 4.9% bump in comparable sales and an increase of 2.6% on a two-year stacked basis.
However, the progress still begs the question, is Hudson’s Bay too far behind in its digital transformation?
“Digital is an area where fixing the fundamentals such as site speed, a streamlined checkout process and a more accurate view of inventory, have made a positive impact on performance,” noted Foulkes during the company’s earnings call. “These improvements have also helped to establish the foundation we need to advance our businesses digital experiences through greater personalization.”
“While online personalization is table stakes, we've learned that connecting online data to our top selling associates can drive upside,” she said later. “As part of our efforts to lean into personalization, we plan to empower more associates with this capability and further tailor the Saks experience to individual shoppers.”
Foulkes points out that “in Canada, digital is a more emerging channel and we've made significant progress in improving the Bay’s e-commerce capabilities, helping to put us in a position to lead.”
The retailer launched its Hudson’s Bay mobile app in the first quarter, leading to a tripling of mobile orders. It also has been working on the store experience.
“Recently I visited one of our most improved stores in the third quarter, Fairview,” said Foulkes. “Like many other stores, when they added a digital return desk, their NPS score jumped and we're driving more efficiency through central cash desks and buy online & pickup in stores. Finally we're fixing the fundamentals of the store environment, providing easier navigation, opening fitting rooms and cleaner facilities.”
“I think what we know is that the customer is looking for an omnichannel experience, and it's the integration of stores in digital that are really becoming the winning value proposition,” she explained later.
She noted that in Canada 97% of all e-commerce returns come to stores. “I think that reflects how omnipresent our stores are, and because the return process is so easy through our stores, it makes the online ordering process more compelling for our customers.”
On the digital marketing side, Foulkes noted Hudson’s Bay Co has gotten a lot more savvy and aggressive around its use of data, which is translating into traffic increases.
As the company forges forward in its digital transformation, Foulkes, who took the reins of the company in 2018, said she joined HBC “not only to be here for the first stage of streamlining the portfolio, but the next stage where we deliver on what HBC can become: a company focused on serving our customers, building our brands, making strategic investments in marketing and digital and connecting it all together for a unified shopping experience.”