Department store operator Hudson’s Bay Co reported a smaller-than-expected quarterly profit as expenses soared and sales at established Saks Fifth Avenue stores dropped.
The company’s cost of sales rose 74 percent in the fourth quarter ended January 30, while its selling, general and administrative expenses almost doubled.
Saks Fifth Avenue, the company’s luxury chain, reported a 1.2 percent drop in sales in stores open at least 13 months on a constant currency basis, due to high competition.
Hudson’s Bay raised its 2016 sales forecast to C$14.9 billion-C$15.9 billion from C$14.2 billion-C$15.2 billion to reflect the revenue from online luxury retailer Gilt Groupe Holdings Inc, which it bought in January.
The company, whose roots in Canada date back to 1670, said online sales in the fourth quarter rose 61.6 percent.
The company’s total retail sales rose to C$4.49 billion in the quarter from C$2.63 billion a year earlier, helped by the 2.8 billion euros acquisition of German department store operator Kaufhof.
Net profit rose to C$370 million ($283 million), or C$1.88 per share, from C$115 million, or 62 Canadian cents per share.
Excluding items, Hudson’s Bay posted a profit of 79 Canadian cents per share, lower than the average analyst estimate of 99 Canadian cents.
Hudson’s Bay is a chain of 90 department stores that operate exclusively in Canada. It is the main brand of Hudson’s Bay Company (HBC), North America’s oldest company.
It has its headquarters in the Simpson Tower in Toronto. In French, the chain is known as la Baie d’Hudson, short for “Compagnie de la Baie”. The chain uses both the English and French versions of the name in some parts of the country.
The stores are full-line department stores, with a focus on high end fashion apparel, accessories, and home goods. Price points at Hudson’s Bay are comparable to US retailers Lord & Taylor, Bloomingdale’s, and Nordstrom. The average store size is 135,000 square feet.