BELK INC EXPLORING POSSIBLE SALE OR MERGER

Belk Inc., founded in 1888 by William Henry Belk and in the third generation of Belk family leadership, has hired Goldman Sachs to help it evaluate strategic alternatives, including a potential sale. Belk is the largest family owned department store chain in the US, valued at as much as $4 billion.

In fiscal year 2014, ending January 31, 2015, Belk posted net sales of $4.1 billion, up 1.8% compared to the previous year. After Reuters reported on the potential sale, Belk issued a statement that it had hired Goldman Sachs to help them explore all options and expect to conclude its analysis in the next several months.

US consumer spending has been slow moving this year despite lower gas prices, due to weather conditions and consumers’ desire to save. This has affected department store sales, prompting chains to resort to smaller store models and aggressive discounting.

The last major acquisition in the department store sector was Canadian chain Hudson’s Bay Co, owner of the Lord & Taylor chain, which acquired Saks in 2013 for $2.9 billion. Major department stores like Macy’s and Nordstrom are expected to be contacted by Belk to solicit their interest in a deal. Neither Goldman Sachs, Macy’s nor Nordstrom responded to requests for comment.

Belk operates 297 stores in the southern US and is based in Charlotte, North Carolina.

Source: Reuters.com

Hudson's Bay Company Expands Real Estate Ventures

Hudson’s Bay Company, which has 90 locations, two outlet stores, thebay.com and is the parent company of Saks 5^th Avenue and Lord & Taylor, is forming two joint ventures valued at $4 billion to bring more value to its property portfolio.

The company has entered into agreements with Simon Property Group Inc. and RioCan Real Estate Investment Trust. These joint ventures will enable them to build on the strength of its existing real estate assets and identify new real estate growth opportunities.

The transactions position HBC’s retail business for continued growth, the company said, while providing increased financial flexibility. The approximately $1.1 billion in expected cash proceeds from the joint venture transactions, net of expenses, will be used to reduce debt on HBC’s balance sheet, the company said.

“I am truly excited by these partnerships and what they mean for the future of HBC,” said Jerry Storch, CEO, Hudson’s Bay Company. “A stronger balance sheet and enhanced financial position will enable us to invest in growth initiatives across our retail business, including strengthening the connection between our store and digital businesses, expanding our off-price channel and investing in our world-class store base.”

Source: Retailing Today

Saks Boosts Profits At Hudson's Bay Co. In Q3

December 9, 2014

Higher same store sales and its purchase of Saks Inc. last year helped Hudson's Bay Co. post a smaller quarterly loss in the third quarter.

The company had a $13 million net loss and profits of $116 million, both improvements from the same time last year.  Same-store sales rose 1.7% in the third quarter.

"We are pleased with our third quarter financial performance," stated Richard Baker, HBC's governor and CEO.  "We remain on track with our integration of Saks and continue to gain traction on our strategic growth initiatives, especially at HBC Digital where we experienced substantial sales growth.  We are well-positioned for the holiday shopping season with a value proposition underpinned by differentiated merchandising and superior customer service initiatives across all our banners.  We remain confident in achieving our financial performance targets for fiscal 2014."

Total sales at HBC nearly doubled to $1.913 billion, from $984 million a year earlier.  The increased sales was mostly a result of the Saks Fifth Avenue acquisition, although e-commerce sales also grew.  Hudson's Bay said it is on track to meet its 2014 guidance, which calls for sales of between $7.8 billion and $8.1 billion and normalized earnings of between $580 million and $620 million.

The company also announced it has appointed Ian Putnam to the position of EVP-chief corporate development officer.  Putnam has advised HBC since 2008 and has acted on the company's behalf in all of its major  corporate transactions since that time.  Last month the company outlined a $1.25 billion refinancing plan to reduce interest payments on debt it took on after buying Saks.  Hudson's Bay bought Saks for $2.4 billion and assumed $500 million of the U.S. company's debt.

"We continue to progress on the five core strategies of our long-term plan to grow our sales.  We remain committed to driving digital sales across all our banners, growing OFF 5th, bringing Saks Fifth Avenue and OFF 5th to Canada, driving outsized growth at our top doors and driving synergies and efficiencies across our business.  In addition, our recently completed US $1.25 billion, 20-year mortgage on the ground portion of our Saks Fifth Avenue flagship in New York City has strengthened our financial position by providing long-term, fixed-rate capital on highly attractive terms," Baker said.

Hudson's Bay Co. operates 170 Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5th stores in the United States.

Source: Retailing Today

Thanks To Saks, HBC's Sales & Profit Soar In Q2

September 12, 2014

Hudson's Bay Company is reaping the rewards of its acquisition last year of Saks.  The company's retail sales soared 86.6% to $1.8 billion, from $948 million in the prior year.

Consolidated same-store sales increased by 1.9% on a local currency basis, with increases of 1.1% at HBC's department store group (DSG), 2.2% at Saks Fifth Avenue and 14.9% at Off 5th.  Digital commerce sales totaled $162 million, including $116 million from Saks and growth of 82.2% at DSG.

In terms of merchandise category performance, sales growth at DSG was driven by men's apparel, home and cosmetics.  Sales growth at Saks Fifth Avenue was led by menswear, gifts and accessories.  Sales growth at Off 5th was strong across the majority of categories.

Gross profit jumped to $700 million, from $368 million in the prior year, again primarily attributable to the inclusion of Saks.

"HBC's quarter was characterized by strong performance from the higher end of our businesses, demonstrating the sustained strength of affluent consumers, and softer performance from our more moderate businesses.  Off 5th, buoyed by its new digital business, experienced outsized same store sales growth for the quarter," said Richard Baker, HBC's governor and CEO.  "We continued to invest in HBC Digital, where we witnessed tremendous sales growth.  Based upon our results for the first half of the year and our positioning for the back-to-school and holiday quarters, we are affirming our outlook for full-year fiscal 2014."

During the second quarter, HBC began the integration of the Home Outfitters business with the Home business of the Hudson's Bay banner.

"Joining our two Home businesses not only allows us to create a more powerful Home destination, but also drives efficiency by combining our merchandising and marketing efforts and organizations," said Donald Watros, HBC's president.

HBC is currently in the process of assessing its Home Outfitters locations and previously announced the closing of locations in Mississauga, Ontario, and Abbotsford, British Columbia, in December 2014 and January 2015, respectively.  Beginning with this year's third quarter results, Home Outfitters will be included in HBC's department store segment.

During the quarter, the company opened four new Off 5th stores located in Boston, Massachusetts; San Diego, California; Charlotte, North Carolina and Lousiville, Kentucky.  During the third quarter, HBC expects to open a Lord & Taylor store in Albany, New York, Off 5th stores in Eagan, Minnesota; Costa Mesa, California; and Columbus, Ohio and a Hudson's Bay Outlet in Mirabel, Quebec.

HBC also recently announced the planned opening of a Saks Fifth Avenue store in the fall of 2016 at Brickell City Centre in downtown Miami, Florida.  Previously, the company has announced plans for Saks Fifth Avenue stores in San Jual, Puerto Rico, in the spring of next year and in Honolulu, Hawaii, in the spring of 2016.

Looking ahead to the full fiscal year, the company anticipates total sales ranging from $7.8 billion to $8.1 billion.  This implies low-to-mid single-digit consolidated same store sales growth calculated on a local currency basis, driven in part by strong digital sales growth.

As previously announced, Paul Beesley joined the company during the second quarter as CFO.  Subsequent to the second quarter, John Caplice joined HBC as SVP, treasury and investor relations, a week ago.  Caplice most recently served as SVP, treasurer and investor relations, at Shoppers Drug Mart Corporation, Canada's largest retail drug store chain with annual sales in excess of $11 billion, from 2000 to 2014.

Source: Retailing Today 

Hudson's Bay Company's Saks Acquisition Pays Off In First Quarter

June 3, 2014

Hudson's Bay Company more than doubled sales in the first quarter driven primarily by its acquisition of Saks last year.

Retail sales were $1.9 billion, an increase of $971 million from $884 million for the prior year.  Consolidated same-store sales increased by 2.8%, with increases of 2.5% at DSG, 2.6% at Saks Fifth Avenue and 15.1% at Off 5th.  Digital commerce sales totaled $207 million, reflecting both the inclusion of Hudson's Bay and Lord & Taylor (which together are referred to as "Department Store Group" or DSG) and Saks.

Sales growth at DSG was driven by menswear and beauty.  Sales growth at Saks Fifth Avenue was driven by menswear and accessories.  Sales growth at Off 5th was strong across all categories.

Two Off 5th stores opened in Palm Beach, Florida, and Milwaukee, Wisconsin, and two Saks Fifth Avenue locations closed in Orlando, Florida, and Stamford, Connecticut.

HBC also completed the sale and leaseback of its Queen Street flagship store and Simpson Tower office complex in Toronto for a purchase price of $650 million.

"Overall first quarter performance was in the range of our expectations," said governor and CEO Richard Baker.  "We are encouraged by the business trends witnessed through the quarter, which bode well for the balance of this year.  Furthermore, we are pleased by the progress of our integration of Saks, which is on-track to achieve approximately $50 million in HBC synergies targeted for this year.  As a result, we ar reaffirming our outlook for fiscal 2014 as provided in April."

Baker said that his confidence in HBC's future is based upon its core sales growth strategies: driving digital sales across all its banners, growing Off 5th through a modified and more productive format as well as new stores in the U.S. and Canada, bringing Saks Fifth Avenue to Canada and driving outsized growth at the top doors of each of its banners.

Hudson's Bay will also have a new financial chief step into that role June 9.  Paul Beesley most recently served in a number of executive roles with Empire Company Limited, a corporation with annual sales in excess of $19 billion and operations in retailing and related real estate, from 2000 to 2014, including as chief corporate development officer of it Sobeys unit and as CFO of Empire.  While at Empire, Beesley developed strategies resulting in the acquisitions of Canada Safeway and the remaining stake in Sobeys, led the creation of an Empire-related REIT and facilitated numerous financing transactions.

Source: Retailing Today

Hudson's Bay Invests In M-Commerce

January 23, 2014

Hudson's Bay Company plans to launch a new mobile shopping application for both Hudson's Bay and Lord & Taylor.  HBC is partnering with Pounce, a consumer-facing mobile app, to integrate traditional media with m-commerce, providing customers the opportunity to purchase merchandise displayed in print media using tablets and smartphones.  According to Pounce, it is the only Hudson's Bay and Lord & Taylor approved mobile app that allows customers to instantly buy products seen in print by simply scanning an image.

The app launched in Canada today, just ahead of this year's Olympic Winter Games.  Hudson's Bay is the official apparel sponsor of the Canadian Olympic and Paralympic Teams for the Sochi 2014 Olympic and Paralympic Winter Games, and the upcoming ads for HBC Olympic apparel will be the first to display the Pounce mobile app opportunity for customers.  The app also launched in the United States for Lord & Taylor.

"Our goal with this initiative is to complement traditional media with popular mobile technology, and Pounce creates the opportunity to combine offline and online channels in a seamless way," said Michael Crotty, chief marketing officer for HBC. "Pounce's unique capability is a natural fit as we roll-out and grow our omnichannel strategy for HBC."

"Traditional media is a successful marketing channel, but consumers also want the power of instant purchasing," said Avital Yachin, CEO of Pounce.  Our technology turns static print into digital storefronts, satisfying the instant purchasing needs of consumers."

Hudson's Bay customers can download Pounce free on iOS devices via the Apple App Store.

Source: Retailing Today

Hudson's Bay CFO Takes Leave of Absence

January 22, 2014

Hudson's Bay Company's CFO Michael Culhane is reportedly taking a leave of absence from the company.  Assuming the CFO role will be Donald Watros, who on February 1 will be stepping into his new role as president of the company.

HBC did not provide further details on Culhane or the CFO position.

Culhane has been CFO of Hudson's Bay Comapny since February 2009.  He is responsible for financial planning, profit improvement, accounting, treasury, income taxes, audit, legal and credit/loyalty marketing.  He also served as CFO and EVP of Lord & Taylor from 2004 to 2009 and held other executive financial positions with the May Department Stores Comapny from 1997 to 2004.

The company has been restructuring its leadership so it can focus on managing and growing HBC's presence in North America, as well as its expanding portfolio of brands.

Source: Retailing Today