TORONTO, April 11, 2013 (GLOBE NEWSWIRE) -- Hudson's Bay Company ("HBC" or the "Company") (TSX:HBC) reported today its results for the 14-week and 53-week periods ended February 2, 2013. The 14-week period was characterized by strong same-store sales growth at Hudson's Bay in Canada and early progress on cost reduction initiatives, offset in part by the previously announced impact of Hurricane Sandy on Lord & Taylor in the United States.
Highlights (14-week and 53-week periods ended February 2, 2013)
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Consolidated sales increased 6.7% for the 14-week period and 5.9% for the 53-week period.
- Same store sales:
- Consolidated same store sales increased 2.1% for the comparable 13-week period and increased 4.0% for the comparable 52-week period.
- Hudson's Bay stores grew 6.1% for the comparable 13-week period and grew 5.4% for the comparable 52-week period.
- Lord & Taylor stores declined 2.9% on a U.S. dollar basis for the comparable 13-week period due primarily to the impact of Hurricane Sandy and grew 2.2% on a U.S. dollar basis for the comparable 52-week period.
-
Online sales grew 57.0% for the comparable 13-week period and 63.0% for the comparable 52-week period.
-
$8 million in annual cost savings initiatives were delivered in the fourth quarter.
-
Normalized EBITDA was $177.1 million or 12.8% of sales for the fourth quarter and $310.0 million or 7.6% of sales for the full year.
-
Normalized net earnings were $0.86 per share for the 14-week period compared to $0.91 per share for the 13-week period the previous year. Normalized net earnings for the 53-week period were $0.71 per share compared to $0.65 per share for the 52-week period ended January 28, 2012.
- A dividend of $0.09375 per common share was declared, payable on April 15, 2013 to shareholders of record on March 28, 2013.
"2012 was an encouraging year for Hudson's Bay Company," stated Richard Baker, HBC's Governor and Chief Executive Officer. "Same store sales increased at both Hudson's Bay, which is rapidly rebuilding its reputation as a Canadian retail icon, and Lord & Taylor, despite the significant disruption created by Hurricane Sandy. These annual increases can be attributed to the successful execution of our store productivity strategies. These strategies include the formation of new partnerships with exciting brands like Topshop, which has enjoyed tremendous success at each of its five locations, and the continued growth of our e-commerce platform, which saw sales grow 63.0% for the comparable 52-week period. We've also continued to reinvest in our locations, both rejuvenating stores and bringing in more brands. We believe we've established a pattern of disciplined capital allocation that will generate meaningful returns well into the future."
"While we are pleased with how our initiatives are progressing, there have been challenges. During the fourth quarter, Hurricane Sandy not only forced us to temporarily close the majority of our Lord & Taylor locations, but also inflicted significant damage upon our surrounding communities. As a result, its impact remained a factor for much of the quarter. More recently, during the first quarter of this fiscal year, unusual weather patterns have led to weaker than anticipated results, particularly at Lord & Taylor."
"Despite these headwinds, we have complete confidence in the foundation we are building for our Company's future," concluded Mr. Baker. "During the year ahead, we will implement a variety of initiatives as we continue to execute upon our multi-pronged strategies for growth. These initiatives include re-launching the websites for both our banners and opening five new Canadian Topshop locations. We will also continue the enhancement of our property portfolio, including opening a new Lord & Taylor store in Boca Raton, Florida and performing significant renovations of four Lord & Taylor and four Hudson's Bay locations, including the creation of a 20,000-square foot Kleinfeld flagship in Toronto which is set to open in early 2014. These initiatives, in concert with our continued focus on creating memorable and unique experiences for our customers, should allow us to achieve our annual same store sales targets of 3.0% to 5.0%. Reaching these targets will enable us to deliver value to our shareholders."
Financial Results
With the exception of same store sales comparisons or unless otherwise noted, all comparative figures below and in the "Highlights" section and throughout this news release are for the 14-week (or "fourth quarter") and 53-week periods (or "Fiscal 2012") ended February 2, 2013 compared to the 13- and 52-week periods ended January 28, 2012. Throughout this news release, the terms "Normalized EBITDA" and "Normalized Net Earnings - Continuing Operations" have been used to refer to financial results that have been adjusted to exclude certain non-recurring items and charges. For a full explanation of the Company's use of non-IFRS measures, please refer to Note 1 of the Selected Consolidated Financial Information section of this news release. For further discussion of the Company's financial and operating results, please refer to our Management's Discussion and Analysis of Financial Condition and Results of Operations, dated April 11, 2013.
During the week commencing October 28, 2012 Hurricane Sandy caused significant damage and disruption to many communities in the U.S. northeast, where the majority of Lord & Taylor stores are located. As further described below, Hurricane Sandy had a significant negative impact on fourth quarter results.
Retail sales were $1,386.5 million for the 14-week period ended February 2, 2013, an increase of $86.9 million or 6.7% from $1,299.6 million for the 13-week period ended January 28, 2012. The 14th week contributed $50.0 million in retail sales. Retail sales growth for the 14-week period ended February 2, 2013 was driven by men's apparel, handbags and accessories, Topshop/Topman branded apparel and cosmetics and fragrances. Growth in these categories was partially offset by a decline in major home fashion due to the reallocation of selling space from this department to apparel and shoes. Online sales for the Company grew 62.8% (57.0% on a 13-week basis) from $35.6 million for the 13-week period ended January 28, 2012 to $58.0 million for the 14-week period ended February 2, 2013.
For the same periods, 13-week consolidated same store sales increased by 2.1%, with an increase of 6.1% at Hudson's Bay and a decrease of 2.9% (U.S. dollars) at Lord & Taylor. Negative foreign exchange rate movements reduced consolidated same store sales by 0.6%. The improvement in same store sales at Hudson's Bay was driven primarily by stronger promotional events including "One Day Sales" and the Boxing Day Event. Hudson's Bay's same store sales growth follows increases of 8.7% and 8.6% in the fourth quarters of Fiscal 2011 and Fiscal 2010 (excluding Vancouver Olympic Sales), respectively. The decrease in same store sales at Lord & Taylor was due to the direct and indirect impact of Hurricane Sandy at the beginning of the quarter, weaker than expected sales in the weeks leading up to Christmas and subsequent clearance activity to reduce excess inventory.
For Fiscal 2012, retail sales were $4,077.0 million an increase of $277.4 million or 5.9% compared to $3,849.6 million in Fiscal 2011. For the same periods, consolidated same store sales grew 4.0%, with Hudson's Bay stores growing 5.4% and Lord & Taylor growing 2.9% on a constant currency basis.
Gross profit was $521.6 million or 37.6% of retail sales for the 14-week period ended February 2, 2013, compared to $503.8 million or 38.8% of retail sales for the 13-week period ended January 28, 2012. Gross Profit increased $17.8 million due to sales growth. The decrease in gross profit rate was primarily attributable to increased year-over-year inventory clearance activity at Lord & Taylor due to the significant effect of Hurricane Sandy on customers and sales. Additional margin rate decline also resulted from the higher mix of merchandise sold during planned promotional events, including "One Day Sales" and our Boxing Day Event at Hudson's Bay.
For Fiscal 2012, gross profit was $1,590.0 million or 39.0% of retail sales compared to $1,543.6 million or 40.1% of retail sales for Fiscal 2011. The gross margin rate was impacted by increased clearance activity at Lord & Taylor following Hurricane Sandy, the unfavourable inventory shortage previously disclosed in the third quarter of Fiscal 2012, planned increases in promotional activities and additional clearance activity at Hudson's Bay.
SG&A was $387.5 million or 27.9% of retail sales in the 14-week period ended February 2, 2013 compared to $362.8 million or 27.9% of retail sales in the 13-week period ended January 28, 2012, an increase of $24.7 million. The increase in SG&A was due to store payroll and benefits to support the increased sales, decreased return from credit operations due to new program terms, incremental costs associated with the investment in our online/omni-channel platform, increased depreciation and amortization costs related to capital expenditures over the preceding 12 months, corporate reorganization charges, two Lord & Taylor Home store closings, and an impairment related primarily to distribution centers. The cost increases were partially offset by lower bonus-related compensation, lower pension expense and approximately $8 million of expense reductions related to the rightsizing of the corporate infrastructure due to the Zellers store closures. For the 14-week period, SG&A as a percentage of retail sales was 26.5% or 1.6% better than the fourth quarter of Fiscal 2011 after adjusting for the $20.7 million in non-recurring expenses associated with impairment and other non-cash restructuring, foreign exchange and other real estate gains.
For Fiscal 2012, SG&A was $1,469.2 million compared to $1,347.2 million in Fiscal 2011, an increase of $122.0 million.
EBITDA was $165.8 million in the 14-week period ended February 2, 2013 compared to $169.5 million in the 13-week period ended January 28, 2012, a decrease of $3.6 million. For Fiscal 2012, EBITDA was $243.2 million compared to $309.3 million in Fiscal 2011, a decrease of $66.1 million or 21.4%.
Normalized EBITDA was $177.1 million or 12.8% of sales in the 14-week period ended February 2, 2013 compared to $166.8 million or 12.8% of sales in the 13-week period ended January 28, 2012, an increase of $10.3 million. The increase in Normalized EBITDA was primarily related to increased sales offset by lower credit revenue due to new terms, higher SG&A expenses to support store sales and a decline in the gross profit rate. For Fiscal 2012, Normalized EBITDA was $310.0 million compared to $312.9 million in Fiscal 2011, a decrease of $2.9 million or 0.9%.
Net earnings from continuing operations were $93.6 million or $0.81 per share in the 14-week period ended February 2, 2013 compared to $99.2 million or $0.95 per share in the 13-week period ended January 28, 2012, a decrease of $5.6 million. For Fiscal 2012, net earnings from continuing operations were $31.5 million or $0.29 per share compared to $57.3 million or $0.55 per share in Fiscal 2011.
Normalized net earnings from continuing operations were $99.3 million or $0.86 per share in the 14-week period in fiscal 2012 compared to $94.8 million or $0.91 per share in the 13-week period ended January 28, 2012. For Fiscal 2012, normalized net earnings from continuing operations were $76.8 million or $0.71 per share compared to $68.1 million or $0.65 per share in Fiscal 2011.
Outlook
In 2013, management expects to build upon the Company's momentum toward revitalizing its banners and product offerings and strengthening the customer experience.
Initiatives that will impact our results in 2013 and beyond include: continuing to build the Company's e-commerce platform including the re-launches of lordandtaylor.com and thebay.com during the spring season; launching omni-channel functionality during the fall season with mobile shopping applications and enhanced social media; opening five new Topshop/Topman locations in Canada; undertaking significant renovations to expand key categories in four Hudson's Bay stores and four Lord & Taylor stores; and opening a full-line Lord & Taylor location in Boca Raton, Florida.
Recent Sales Information
Consolidated sales for the first nine weeks of Fiscal 2013 have not met management's expectations. While Hudson's Bay's sales were in line with expectations, Lord & Taylor's sales, primarily attributable to a late start to Spring, were weaker than anticipated.
Fiscal 2013 – Full Year
Our Fiscal 2013 guidance incorporates sales and margin trends to date, expected investments in the above mentioned initiatives and higher bonus-related and equity-based compensation, offset by $35 million to $40 million in incremental year over year operating cost savings from continued operations. Additionally, non-cash pension expense for continuing operations will increase to approximately $25 million for Fiscal 2013 (from $5 million in Fiscal 2012) partially as a result of the adoption of IAS 19R – Employee Benefits. The resulting guidance, which is fully qualified by the Forward-Looking Statements section included below, is as follows:
- Total sales growth of 1.5% to 3.5% on same store sales growth of 3.0% to 5.0%, both on a constant currency basis
- Normalized EBITDA of $360 million to $390 million
- Expected consolidated effective tax rate of 29.0% to 31.0%
- Capital expenditures of $175 million to $185 million
Management expects sales and earnings to be stronger in the second half of Fiscal 2013 as headwinds experienced in the fourth quarter of Fiscal 2012, including the significant effects of Hurricane Sandy on the Northeastern United States and slowing consumer spending in both Canada and the United States, extend into the Spring season. This guidance is also based on the assumption that foreign exchange rates for Fiscal 2013 will be similar to those in Fiscal 2012. Significant variations in these rates would impact the guidance.
Conference Call to Discuss Results
Richard Baker, Governor and Chief Executive Officer, and Michael Culhane, Chief Financial Officer, will discuss the quarter and fiscal year financial results and other matters during a conference call on Thursday, April 11, 2013 at 8:30 am EST.
The conference call will be accessible by calling the participant operator assisted toll-free dial-in number (877) 852-2926 or international dial-in number (253) 237-1123. A live webcast of the conference call will be accessible on HBC's website at: http://investor.hbc.com/events.cfm. The audio instant replay will be available via this link until May 11, 2013.
Audited Consolidated Financial Statements and Management's Discussion and Analysis
The Company's audited consolidated financial statements for Fiscal 2012 and the Management's Discussion and Analysis thereon will be available under the Company's profile on SEDAR at www.sedar.com.
Selected Consolidated Financial Information
The following tables set out summary consolidated financial information and supplemental information for the periods indicated. The summary annual financial information set out below for each of Fiscal 2012, Fiscal 2011 and Fiscal 2010 has been derived from audited consolidated financial statements, prepared in accordance with IFRS and audited by our auditors, Deloitte LLP. The summary financial information set out below for the quarters ended February 2, 2013 and January 28, 2012 is unaudited. The unaudited financial information presented has been prepared on a basis consistent with our audited consolidated financial statements for Fiscal 2012. In the opinion of our management, such unaudited financial data reflects all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of the results for those periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year or any future period.
Based on the Company's reporting convention, our Fiscal 2011 and Fiscal 2010 were 52 weeks while Fiscal 2012 was 53 weeks. Similarly, the fourth quarter of Fiscal 2012 was 14 weeks, as opposed to 13 weeks for the fourth quarter of each of Fiscal 2011 and Fiscal 2010. Notwithstanding the difference in time periods, the Company presents same store sales based on 52-week or 13-week periods, as applicable.
| Fiscal Year | Fiscal Quarter Ended | |||||||||
| (millions of Canadian dollars except per square foot and per share amounts) |
2012 |
2011 |
2010 |
February 2, 2013 |
January 28, 2012 |
|||||
| $ | % | $ | % | $ | % | $ | % | $ | % | |
| Earnings Results | ||||||||||
| Retail sales | 4,077.0 | 100.0% | 3,849.6 | 100.0% | 3,718.2 | 100.0% | 1,386.5 | 100.0% | 1,299.6 | 100.0% |
| Cost of sales | (2,487.0) | -61.0% | (2,306.0) | −59.9% | (2,209.1) | −59.4% | (864.9) | -62.4% | (795.8) | -61.2% |
| Gross profit | 1,590.0 | 39.0% | 1,543.6 | 40.1% | 1,509.1 | 40.6% | 521.6 | 37.6% | 503.8 | 38.8% |
| Selling, General & Administrative Expenses | (1,469.2) | -36.0% | (1,347.2) | −35.0% | (1,360.8) | −36.6% | (387.5) | -27.9% | (362.8) | -27.9% |
| Operating income | 120.8 | 3.0% | 196.4 | 5.1% | 148.3 | 4.0% | 134.1 | 9.7% | 141.0 | 10.8% |
| Finance costs | (97.3) | -2.4% | (142.9) | −3.7% | (241.3) | −6.5% | (13.2) | -1.0% | (28.5) | -2.2% |
| Earnings before income taxes | 23.5 | 0.6% | 53.5 | 1.4% | (93.0) | −2.5% | 120.9 | 8.7% | 112.5 | 8.7% |
| Income tax benefit (expense) | 8.0 | 0.2% | 3.8 | 0.1% | 181.1 | 4.9% | (27.3) | -2.0% | (13.3) | -1.0% |
| Net earnings — continuing operations(1) | 31.5 | 0.8% | 57.3 | 1.5% | 88.1 | 2.4% | 93.6 | 6.8% | 99.2 | 7.6% |
| Net (loss) earnings — discontinued operations, net of taxes | (76.3) | 1,391.7 | (0.1) | 11.4 | 96.6 | |||||
| Net (loss) earnings | (44.8) | 1,449.0 | 88.0 | 105.0 | 195.8 | |||||
| Net (Loss) Earnings per Common Share — Basic and Diluted(2) | ||||||||||
| Continuing operations | 0.29 | 0.55 | 0.84 | 0.81 | 0.95 | |||||
| Discontinued operations | (0.71) | 13.29 | -- | 0.10 | 0.92 | |||||
| (0.42) | 13.84 | 0.84 | 0.91 | 1.87 | ||||||
| Weighted average shares outstanding — basic and diluted (millions) | 107.5 | 104.7 | 104.7 | 115.5 | 104.7 | |||||
| Supplemental Information – Continuing Operations | ||||||||||
| EBITDA(1) | 243.2 | 6.0% | 309.3 | 8.0% | 245.2 | 6.6% | 165.8 | 12.0% | 169.5 | 13.0% |
| Normalized EBITDA(1) | 310.0 | 7.6% | 312.9 | 8.1% | 265.0 | 7.1% | 177.1 | 12.8% | 166.8 | 12.8% |
| Normalized Net Earnings(1) | 76.8 | 1.9% | 68.1 | 1.8% | 22.4 | 0.6% | 99.3 | 7.2% | 94.8 | 7.3% |
| Normalized Net Earnings per Common Share — basic and diluted(2) | 0.71 | 0.65 | 0.21 | 0.86 | 0.91 | |||||
| Declared dividend per common share | 0.95 | 3.07 | -- | 0.09(3) | 1.30 | |||||
|
Same Store Sales Percentage Change(4) |
||||||||||
| Continuing operations | 4.0% | 3.7% | 3.2% | 2.1% | 6.8% | |||||
| Continuing operations (excluding Vancouver Olympic Sales and impact of foreign exchange) | 3.7% | 6.5% | 6.4% | 2.7% | 6.8% | |||||
| Hudson's Bay (excluding Vancouver Olympic Sales) | 5.4% | 6.8% | 2.2% | 6.1% | 8.7% | |||||
| Lord & Taylor(5) | 2.2% | 7.1% | 12.4% | -2.9% | 6.6% | |||||
|
Store Information |
||||||||||
| Sales per square foot(6) | ||||||||||
| Continuing operations | 161 | 152 | 146 | |||||||
| Hudson's Bay | 140 | 133 | 124 | |||||||
| Lord & Taylor | 218 | 210 | 197 | |||||||
| Store count(7) | ||||||||||
| Hudson's Bay | 90 | 91 | 92 | |||||||
| Lord & Taylor | 48 | 46 | 46 | |||||||
| Home Outfitters | 69 | 69 | 69 | |||||||
| Total square footage ('000) | 25,343 | 25,381 | 25,452 | |||||||
|
Balance Sheet and Cash Flow Data |
||||||||||
| Cash | 48.3 | 42.4 | 57.2 | |||||||
| Trade and other receivables | 74.3 | 124.0 | 131.9 | |||||||
| Inventories(8) | 994.3 | 1,814.2 | 1,679.8 | |||||||
| Current assets | 1,424.7 | 2,007.2 | 1,892.8 | |||||||
| Property, plant and equipment | 1,335.0 | 1,401.1 | 1,353.1 | |||||||
| Total assets | 3,252.6 | 3,993.5 | 3,881.8 | |||||||
| Current liabilities(9) | 1,363.5 | 1,916.8 | 1,997.0 | |||||||
| Loans and borrowings (excluding current portion) | 718.5 | 901.7 | 1,430.4 | |||||||
| Shareholders' equity | 998.0 | 955.9 | 227.1 | |||||||
| Total capital expenditures(10) — continuing operations | 202.9 | 166.1 | 111.8 | |||||||
| Notes: | ||||||||||
| (1) See tables below for a reconciliation of Net Earnings - Continuing Operations to EBITDA and Normalized EBITDA and a reconciliation of Net Earnings - Continuing Operations to Normalized Net Earnings – Continuing Operations. | ||||||||||
| (2) All references to shares and per share amounts have been adjusted retroactively for the share split on November 19, 2012. For Fiscal 2010, the net earnings (loss) per common share is unaudited. | ||||||||||
| (3) Represents the Company's initial quarterly dividend, which was declared and paid in the fourth quarter of Fiscal 2012. | ||||||||||
| (4) The Company calculates same store sales on a year-over-year basis from stores operating for at least 13 months, online sales and clearance store sales. | ||||||||||
| (5) Same store sales of Lord & Taylor are calculated in U.S. dollars. Lord & Taylor same store sales percentage change, including the impact of foreign exchange, were 2.9% in Fiscal 2012, 3.4% in Fiscal 2011, 2.3% in Fiscal 2010, (4.6)% in the fourth quarter of Fiscal 2012 and 6.5% in the fourth quarter of Fiscal 2011. | ||||||||||
| (6) Sales per square foot is calculated as the total revenue for the stated period divided by the gross leasable area as of the balance sheet date (which is calculated based on the gross leasable area as of the end of the applicable reporting period). This metric is used by management to measure the productivity of the Company's retail operations. For Lord & Taylor, sales per square foot is calculated in U.S. dollars. Hudson's Bay sales per square foot is calculated excluding Vancouver Olympic Sales, which resulted in significant non-recurring sales in the fourth quarter of Fiscal 2009 (approximately $44.4 million) and the first quarter of Fiscal 2010 (approximately $50.5 million). | ||||||||||
| (7) Lord & Taylor also leases two Lord & Taylor Home stores and operates three Lord & Taylor Outlet stores that are not included in the store count. The two leased Lord & Taylor Home stores were closed in March 2013; one of which is scheduled to open as a Lord & Taylor Outlet store in April 2013. | ||||||||||
| (8) Includes inventories related to discontinued operations as of January 28, 2012 and January 31, 2011 of $844.2 million and $810.9 million, respectively. | ||||||||||
| (9) Includes trade payables, other payables and accrued liabilities and provisions related to discontinued operations as at January 28, 2012 and January 31, 2011 of $629.1 million and $299.9 million, respectively. | ||||||||||
| (10) Capital expenditures from continuing operations are inclusive of software development costs. Capital expenditures presented exclude those associated with discontinued operations of nil, $4.1 million and $25.6 million in Fiscal 2012, 2011 and 2010, respectively and $nil in the fourth quarter of Fiscal 2012 and $0.1 million in the fourth quarter of Fiscal 2011. | ||||||||||
The following table shows the reconciliation of Net Earnings - Continuing Operations to EBITDA as well as Normalized EBITDA.
| Fiscal Year | Fiscal Quarter Ended | ||||
| (millions of Canadian dollars) |
2012 |
2011 |
2010 |
February 2, 2013 |
January 28, 2012 |
| $ | $ | $ | $ | $ | |
| Net Earnings - Continuing Operations | 31.5 | 57.3 | 88.1 | 93.6 | 99.2 |
| Finance costs | 97.3 | 142.9 | 241.3 | 13.2 | 28.5 |
| Income tax (benefit) expense | (8.0) | (3.8) | (181.1) | 27.3 | 13.3 |
| Pension expense (recovery) (non-cash) | 5.0 | 12.1 | 8.6 | (8.7) | 3.7 |
| Depreciation and amortization | 104.1 | 90.6 | 84.4 | 31.0 | 24.1 |
| Impairment and other non-cash expenses | 13.3 | 10.2 | 3.9 | 9.4 | 0.7 |
| EBITDA | 243.2 | 309.3 | 245.2 | 165.8 | 169.5 |
| Normalization adjustments | |||||
| Restructuring and other | 76.8 | 22.3 | 22.9 | 21.3 | 10.3 |
| Foreign exchange gains on capital transactions | -- | (13.1) | (3.1) | -- | (13.1) |
| Real estate (gains) losses | (10.0) | (5.6) | -- | (10.0) | 0.1 |
| Total normalizing adjustments | 66.8 | 3.6 | 19.8 | 11.3 | (2.7) |
|
Normalized EBITDA |
310.0 | 312.9 |
265.0 |
177.1 | 166.8 |
The following table shows the reconciliation of Net Earnings - Continuing Operations to Normalized Net Earnings - Continuing Operations.
| Fiscal Year | Fiscal Quarter Ended | ||||
| (millions of Canadian dollars) |
2012 |
2011 |
2010 |
February 2, 2013 |
January 28, 2012 |
| $ | $ | $ | $ | $ | |
| Net Earnings – Continuing Operations | 31.5 | 57.3 | 88.1 | 93.6 | 99.2 |
| Normalization Adjustments | |||||
| Restructuring and other | 54.6 | 16.1 | 18.3 | 15.8 | 7.8 |
| Foreign Exchange Gains on Capital Transactions | -- | (9.6) | (2.3) | -- | (9.6) |
| Real estate gains | (5.9) | (5.3) | -- | (5.9) | -- |
| Financing related adjustments(1) | 6.6 | 18.0 | 81.9 | 1.4 | 5.8 |
| Tax related adjustments(2) | (10.0) | (8.4) | (163.6) | (5.6) | (8.4) |
| Total normalizing adjustments | 45.3 | 10.8 | (65.7) | 5.7 | (4.4) |
|
Normalized Net Earnings - Continuing Operations |
76.8 | 68.1 | 22.4 | 99.3 | 94.8 |
| Notes: |
| (1) Includes write-off of deferred financing costs, gain on early extinguishment of debt, fair market value movement in embedded derivatives and amortization of loan renewal options. Please refer to Note 6 of the Company's audited consolidated financial statements for the fiscal year ended February 2, 2013. |
| (2) Includes impact of tax rate change, Lord & Taylor deferred tax assets on change in tax status and reversal of valuation allowances on deferred tax assets. Please refer to Note 7 of the Company's audited consolidated financial statements for the fiscal year ended February 2, 2013. |
EBITDA is a non-IFRS measure that we use to assess our operating performance. EBITDA is defined as net earnings before interest expense, income taxes, depreciation and amortization expense. The Company's defined benefit pension plan is currently over funded, and as a result pension expense is adjusted as management does not expect to make any payments given the surplus position.
Normalized EBITDA is defined as EBITDA adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. Normalized Net Earnings - Continuing Operations is defined as net earnings (loss) adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. We have included Normalized EBITDA and Normalized Net Earnings - Continuing Operations to provide investors with supplemental measures of our operating performance. We believe Normalized EBITDA and Normalized Net Earnings - Continuing Operations are important supplemental measures of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDA, Normalized EBITDA, and Normalized Net Earnings – Continuing Operations in the evaluation of issuers, many of which present similar metrics when reporting their results. Our management also uses Normalized EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements and our ability to pay dividends on our shares. Because other companies may calculate EBITDA, Normalized EBITDA, or Normalized Net Earnings - Continuing Operations differently than we do, these metrics are not comparable to similarly titled measures reported by other companies.
About Hudson's Bay Company
HBC, founded in 1670, is North America's longest continually operated company. In Canada, HBC operates Hudson's Bay, Canada's largest department store with 90 locations, unsurpassed in its fashion, beauty, home and accessory designers and brands, as well as thebay.com. HBC also operates Home Outfitters, Canada's largest home specialty superstore with 69 locations across the country. In the United States, HBC operates Lord & Taylor, a department store with 48 full-line store locations throughout the northeastern United States and in two major cities in the Midwest, and lordandtaylor.com. With approximately 29,000 Associates in Canada and the U.S., Hudson's Bay Company banners provide stylish, quality merchandise at great value, with a dedicated focus on service excellence. The Hudson's Bay Company trades on the Toronto Stock Exchange under the symbol "HBC".
Forward-Looking Statements
Information in this press release that is not current or historical factual information may constitute forward-looking information, including future-oriented financial information and financial outlooks, within the meaning of securities laws. This information is based on certain assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Forward-looking information is subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what the Company currently expects. These risks, uncertainties and other factors include, but are not limited to: credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates, the timing and market acceptance of future products, competition in the Company's markets, the growth of certain business categories and market segments and the willingness of customers to shop at the Company's stores, the Company's margins and sales and those of the Company's competitors, the Company's reliance on customers, risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, regulations, competition, seasonality, commodity price and business disruption, the Company's relationships with suppliers and manufacturers, changes to existing accounting pronouncements, the ability of the Company to successfully implement its strategic initiatives, changes in consumer spending, managing our portfolio of brands and our merchandising mix, seasonal weather patterns, economic, social, and political instability in jurisdictions where suppliers are located, increased shipping costs, potential transportation delays and interruptions, the risk of damage to the reputation of brands promoted by the Company and the cost of store network expansion and retrofits, compliance costs associated with environmental laws and regulations, fluctuations in currency and exchange rates, commodity prices, the Company's ability to maintain good relations with its employees, changes in the law or regulations regarding the environment or other environmental liabilities, the Company's capital structure, funding strategy, cost management programs and share price, the Company's ability to integrate acquisitions and the Company's ability to protect its intellectual property.
For more information on these risks, uncertainties and other factors the reader should refer to the Company's filings with the securities regulatory authorities, including the Company's supplemented PREP prospectus dated November 19, 2012, which is available on SEDAR at www.sedar.com. To the extent any forward-looking information in this press release constitutes future-oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are based on assumptions and subject to risks, uncertainties and other factors. Actual results may differ materially from what the Company currently expects. Other than as required under securities laws, the Company does not undertake to update any forward-looking information at any particular time. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement.