Hudson Bay’s Company (HBC) will close its Home Outfitters business in Canada in 2019, and may shutter up to 20 Saks OFF 5TH locations as part of a fleet review. The changes are designed to help HBC reduce costs, simplify its business and improve profitability.
The vast majority of Home Outfitters’ 37 shops are located in markets that also contain a Hudson’s Bay store, which have their own home furnishings departments and accept Home Outfitters gift cards.
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The review and potential closures of Saks OFF 5TH locations will let HBC focus on the chain’s strongest locations. HBC also ceased operations at the Lord & Taylor flagship store on Fifth Avenue in New York City following the 2018 holiday season, and may close up to 10 more Lord & Taylor stores.
HBC has been unafraid of divesting unprofitable units in the past. The retailer sold Gilt Groupe to Rue La La for less than $100 million in June 2018, just two years after purchasing the flash sale business for $250 million. Gilt had recently posted a $63 million loss in Q4 2017.
HBC merged with Signa Retail Holdings, a European retail and real estate operator, in September 2018. The deal created the third-largest department store chain in Europe by revenue, with combined annual sales of approximately $6.3 billion.
The retailer’s overall financial performance has been positive despite the recent closures: companywide sales were up 5.6% to $2.2 billion in the quarter ending Nov. 3, 2018. Comparable sales at the DSG division (consisting of Hudson’s Bay, Lord & Taylor and Home Outfitters) were up 0.9%, but this included a bump from running the “Bay Days” promotional event in Q3 instead of Q4. When adjusted for the promotion’s impact, comparable sales declined 2.4%.
