TORONTO, June 12, 2013 (GLOBE NEWSWIRE) -- Hudson's Bay Company ("HBC" or the "Company") (TSX:HBC) reported today its results for the 13-week period ended May 4, 2013 (the "first quarter"). The first quarter was characterized by strong same-store sales growth at Hudson's Bay, partially offset by a low single digit same-store sales decline at Lord & Taylor. By managing its gross profit rate and operating expenses, the Company delivered solid Normalized EBITDA growth.
First Quarter Highlights (13-week period ended May 4, 2013)
- Consolidated sales increased 4.2% to $884.0 million compared to the first quarter of 2012.
- Same store sales:
- Consolidated same store sales grew 4.0%, or 3.2% on a constant currency basis.
- Hudson's Bay same store sales grew 7.6%.
- Lord & Taylor same store sales declined 1.4% on a U.S. dollar basis.
- E-commerce sales were $31.1 million, an increase of 32.8% compared to the first quarter of 2012.
- Normalized EBITDA was $31.0 million, an increase of $4.9 million compared to the first quarter of 2012.
- Normalized net loss was $0.12 per share compared to a loss of $0.22 per share in the first quarter of 2012.
- A dividend of $0.09375 per common share was declared, payable on July 15, 2013 to shareholders of record on June 28, 2013.
"We are pleased with our first quarter performance," stated Richard Baker, Hudson's Bay Company's Governor and Chief Executive Officer. "Our strong sales growth can be attributed to several factors, including improvements in store productivity, increased e-commerce sales, and our partnership with Topshop/Topman. These strategic initiatives drove gains at Hudson's Bay, which continues to outperform its competitors. At Lord & Taylor, our sales performance was impacted by unfavourable year over year weather patterns."
Financial Results
All comparative figures below and in the "Highlights" section and throughout this news release are for the 13-week period ended May 4, 2013 compared to the 13-week period ended April 28, 2012. Throughout this news release, the terms "Normalized EBITDA" and "Normalized Net Loss - 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 (the "MD&A").
Retail sales were $884.0 million for the 13-week period ended May 4, 2013, an increase of $35.8 million or 4.2% from $848.2 million for the 13-week period ended April 28, 2012. Consolidated same store sales grew 4.0% in the first quarter, or 3.2% on a constant currency basis. Hudson's Bay same store stores grew 7.6%, and same store sales at Lord & Taylor declined 1.4% on a U.S. dollar basis.
Sales at Hudson's Bay were driven by strong performance of men's apparel, ladies' shoes, cosmetics, handbags, accessories and certain home categories, the continued growth of e-commerce sales and our five Topshop/Topman stores. Sales at Lord & Taylor were impacted by lower customer traffic due to unfavourable weather trends compared to the first quarter of 2012, with strength in men's apparel, handbags, accessories and cosmetics offset by underperformance of ladies' apparel and shoes. Reflecting the Company's strategic focus on growing its e-commerce channel, online sales contributed strongly to sales growth in the quarter, rising 32.8% to $31.1 million.
Gross profit was $356.2 million, or 40.3% of retail sales, for the 13-week period ended May 4, 2013 compared to $341.1 million, or 40.2% of retail sales, for the 13-week period ended April 28, 2012. Gross profit increased due primarily to sales growth at Hudson's Bay.
Selling, General & Administrative Expenses ("SG&A") was $371.7 million, or 42.0% of retail sales, for the 13-week period ended May 4, 2013 compared to $381.3 million, or 44.9% of retail sales, for the 13-week period ended April 28, 2012. Adjusting for non-recurring expenses of $8.0 million for the 13-week period ended May 4, 2013 and $36.4 million for the 13-week period ended April 28, 2012, SG&A as a percentage of retail sales would have been 41.1% and 40.7%, respectively. The increase in SG&A as a percentage of retail sales was primarily driven by four factors: increased depreciation and amortization costs related to capital investments, including investments in our online/omni-channel platform, an increase in non-cash share based compensation, an increase in costs associated with our strategic initiatives, and a decreased return from credit operations due to new program terms; these factors were partially offset by approximately $9.0 million of expense reductions related to rightsizing our corporate infrastructure due to the wind down of discontinued operations.
Normalized EBITDA was $31.0 million in the 13-week period ended May 4, 2013 compared to $26.1 million in the 13-week period ended April 28, 2012, an increase of $4.9 million. The increase in Normalized EBITDA was primarily due to an increase in sales and gross profit, partially offset by higher SG&A.
Normalized net loss from continuing operations for the 13-week period ended May 4, 2013 was $14.3 million, a $9.0 million improvement from a loss of $23.3 million in the 13-week period ended April 28, 2012.
Normalized net loss per share was $0.12 in the first quarter compared to a normalized net loss of $0.22 per share in the 13-week period ended April 28, 2012.
Quarterly Dividend
The Company also announced that its Board of Directors has approved a quarterly dividend for holders of the Company's common shares in the amount of $0.09375 per common share. The dividend will be paid on July 15, 2013 to shareholders of record at the close of business on June 28, 2013 and is designated as an "eligible dividend" for Canadian tax purposes.
Conference Call to Discuss Results
Richard Baker, Governor and Chief Executive Officer, and Michael Culhane, Chief Financial Officer, will discuss the quarter's financial results during a conference call on Wednesday, June 12, 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 July 12, 2013.
Unaudited Interim Condensed Consolidated Financial Statements and Management's Discussion and Analysis
The Company's unaudited interim condensed consolidated financial statements for the 13-weeks ended May 4, 2013 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 unaudited consolidated financial information and supplemental information for the periods indicated. The summary financial information set out below has been derived from unaudited interim condensed consolidated financial statements prepared in accordance with IFRS for the thirteen week period ended May 4, 2013. The financial information presented has been prepared on a basis consistent with our audited consolidated financial statements for Fiscal 2012 except for the new accounting standards described in Note 2 of the unaudited interim condensed consolidated financial statements. 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.
| Fiscal Quarter Ended | ||||
| (millions of Canadian dollars except per share amounts) |
May 4, 2013 |
(restated(7)) April 28, 2012 |
||
| $ | % | $ | % | |
| Earnings Results | ||||
| Retail sales | 884.0 | 100.0% | 848.2 | 100.0% |
| Cost of sales | (527.8) | (59.7%) | (507.1) | (59.8%) |
| Gross profit | 356.2 | 40.3% | 341.1 | 40.2% |
| SG&A | (371.7) | (42.0%) | (381.3) | (44.9%) |
| Operating loss | (15.5) | (1.7%) | (40.2) | (4.7%) |
| Finance costs | (12.1) | (1.4%) | (24.8) | (2.9%) |
| Loss before income tax | (27.6) | (3.1%) | (65.0) | (7.6%) |
| Income tax benefit | 6.4 | 0.7% | 18.0 | 2.1% |
| Net loss for the period — continuing operations(1) | (21.2) | (2.4%) | (47.0) | (5.5%) |
| Net loss for the period — discontinued operations, net of tax | (59.5) | (82.7) | ||
| Net loss for the period | (80.7) | (129.7) | ||
| Net Loss per Common Share — Basic and Diluted(2) | ||||
| Continuing operations | (0.18) | (0.45) | ||
| Discontinued operations | (0.49) | (0.79) | ||
| (0.67) | (1.24) | |||
| Weighted average Common Shares outstanding — basic and diluted (millions) | 120.0 | 104.7 | ||
|
Supplemental Information – Continuing Operations |
||||
| EBITDA(1) | 23.0 | 2.6% | (7.2) | (0.9%) |
| Normalized EBITDA(1) | 31.0 | 3.5% | 26.1 | 3.1% |
| Normalized net loss for the period(1) | (14.3) | (1.6%) | (23.3) | (2.7%) |
| Normalized net loss per Common Share — basic and diluted(2) | (0.12) | (0.22) | ||
| Declared dividend per Common Share(3) | 0.09375 | |||
|
Same Store Sales Percentage Change(4) |
||||
| Continuing operations | 4.0% | 7.8% | ||
| Continuing operations (excluding impact of foreign exchange) | 3.2% | 6.9% | ||
| Hudson's Bay | 7.6% | 7.4% | ||
| Lord & Taylor(5) | (1.4%) | 7.5% | ||
|
Store Information |
||||
| Store count(6) | ||||
| Hudson's Bay | 90 | 91 | ||
| Lord & Taylor | 48 | 48 | ||
| Home Outfitters | 69 | 69 | ||
| Total square footage ('000) | ||||
| Hudson's Bay | 16,118 | 16,358 | ||
| Lord & Taylor | 6,710 | 6,710 | ||
| Home Outfitters | 2,515 | 2,515 | ||
| (restated(7)) | |||
| Balance Sheet | May 4, 2013 | April 28, 2012 | February 2, 2013 |
| Cash | 27.4 | 49.6 | 48.3 |
| Trade and other receivables | 66.2 | 67.8 | 74.3 |
| Inventories | 1,093.7 | 1,072.9 | 994.3 |
| Current assets | 1,352.6 | 2,260.1 | 1,419.7 |
| Property, plant and equipment | 1,350.2 | 1,253.3 | 1,335.0 |
| Total assets | 3,192.8 | 4,030.7 | 3,247.6 |
| Current liabilities | 1,367.5 | 2,185.3 | 1,343.5 |
| Loans and borrowings (including current portion) | 1,090.7 | 1,419.4 | 850.6 |
| Shareholders' equity | 927.9 | 793.4 | 1,013.0 |
| Notes: | |||
| (1) See tables below for a reconciliation of Net Loss – Continuing Operations to EBITDA and Normalized EBITDA and a reconciliation of Net Loss – Continuing Operations to Normalized Net Loss – Continuing Operations. | |||
| (2) All references to Common Shares and per Common Share amounts have been adjusted retroactively for a split on November 19, 2012. | |||
| (3) Effective as of the Company's initial public offering on November 26, 2012, the Company implemented a dividend policy. Distributions prior to the offering are not included in this table. | |||
| (4) The Company calculates same store sales on a year-over-year basis from stores operating for at least 13 months, e-commerce sales and clearance store sales. | |||
| (5) Same store sales of Lord & Taylor are calculated in U.S. dollars. Lord & Taylor same store sales percentage changes, including the impact of foreign exchange, were 0.9% in the first quarter of Fiscal 2013 and 9.8% in the first quarter of Fiscal 2012. | |||
| (6) Lord & Taylor leases four Lord & Taylor Outlet stores that are not included in the store count. | |||
| (7) Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to "New Accounting Policies – Employee Benefits" and "Changes in Accounting Policies Including Initial Adoption" sections of the MD&A. | |||
The following table shows the reconciliation of Net Loss – Continuing Operations to EBITDA as well as Normalized EBITDA.
| Fiscal Quarter Ended | ||
| (millions of Canadian dollars) |
May 4, 2013 |
(restated(1)) April 28, 2012 |
| $ | $ | |
| Net Loss for the Period – Continuing Operations | (21.2) | (47.0) |
| Finance costs | 12.1 | 24.8 |
| Income tax benefit | (6.4) | (18.0) |
| Pension expense (non-cash) | 7.1 | 6.8 |
| Depreciation and amortization | 29.0 | 23.1 |
| Impairment and other non-cash expenses | -- | 3.1 |
| Share based compensation | 2.4 | -- |
| EBITDA | 23.0 | (7.2) |
| Normalizing adjustments – restructuring and other | 8.0 | 33.3 |
| Normalized EBITDA | 31.0 | 26.1 |
| Note: | ||
| (1) Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to "New Accounting Policies – Employee Benefits" and "Changes in Accounting Policies Including Initial Adoption" sections of the MD&A. | ||
The following table shows the reconciliation of Net Loss – Continuing Operations to Normalized Net Loss – Continuing Operations.
| Fiscal Quarter Ended | ||
| (millions of Canadian dollars) |
May 4, 2013 |
(restated(1)) April 28, 2012 |
| $ | $ | |
| Net Loss for the Period – Continuing Operations | (21.2) | (47.0) |
| Normalization adjustments | ||
| Restructuring and other, net of tax | 5.9 | 23.7 |
| Tax related adjustments | 1.0 | -- |
| Total normalizing adjustments | 6.9 | 23.7 |
|
Normalized Net Loss for the Period – Continuing Operations |
(14.3) |
(23.3) |
| Note: | ||
| (1) Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to "New Accounting Policies – Employee Benefits" and "Changes in Accounting Policies Including Initial Adoption" sections of the MD&A. | ||
EBITDA is a non-IFRS measure that we use to assess our operating performance. EBITDA is defined as net earnings before interest expense, income tax, 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 in the foreseeable future.
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 (Loss) – 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 (Loss) – Continuing Operations to provide investors with supplemental measures of our operating performance. We believe Normalized EBITDA and Normalized Net Earnings (Loss) – 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 (Loss) – 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 (Loss) – 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. 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 annual information form dated April 30, 2013, 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.