Department store company Hudson’s Bay Co., Canadian parent of American department stores Lord & Taylor and Saks Fifth Avenue, on Monday lowered its fiscal year revenue expectations for the second time, saying “the retail environment has remained challenging in the U.S. and Europe.”
Hudson’s Bay now expects total capital investments, net of landlord incentives, to range between $660 million and $710 million Canadian, which is approximately 4.5%-4.9% of the midpoint of the sales outlook. Included in these amounts is the capital expenditure associated with the recent acquisitions of flash-sales site Gilt and European retailers the Galeria Kaufhof, Galeria INNO and Sportarena.
Consolidated same-store sales fell 0.7% on a constant-currency basis and 2% accounting for currency fluctuations in the nine-week holiday selling period ended Dec. 31, Hudson's Bay said. Total digital sales including Gilt rose 14.7% on a constant currency comparable basis; excluding Gilt, total digital sales rose 21.7% on a constant currency comparable basis, the company added.
In November, Hudson's Bay CEO Jerry Storch had expressed high hopes for the holiday quarter, but Monday said that strong sales in the period failed to meet expectations.
"Our holiday sales trend improved considerably from what we experienced in the third quarter,” Storch said in a statement. “However, the sales improvement that we experienced was not strong enough to achieve the results we had expected.”
Storch also said the declining euro is giving Hudson's Bay fits, but that the company is dedicated to improving its exclusive product offerings, store improvements and “all-channel shopping experiences.” The retailer also is focusing on high-performing segments like dresses and active wear, and adding new categories, like toys, to its home goods assortment (something Macy’s also did in its holiday Backstage pop-ups in full-line stores). Late last year, Hudson’s Bay instituted a comprehensive review of its business operations to identify efficiencies, streamline processes and improve back of store productivity, while also enhancing customer service, and promised additional details on those efforts as work progresses. The retailer additionally has completed the installment of its robotic fulfillment system in Canada, which was in place to some extent for holiday orders.
But like many department store companies, Hudson’s Bay continues to face challenges in the women’s apparel, department store and luxury segments. Its decision to cut guidance comes on the heels of similarly disappointing results from Macy’s (which announced further store closings and job cuts), Kohl’s (which also cut its guidance for its full year) and J.C. Penney (whose holiday season set back its comeback).