Lord & Taylor Is Closing 10 Stores Including Its Fifth Avenue Flagship

Hudson's Bay Sells Gilt to Rue La La

Hudson's Bay sells Gilt to Rue La La. , Bloomberg News

HBC's total sales increased 1 percent in the first quarter, to $3.1 billion, largely on the strength of its Saks Fifth Avenue chain, whose comparable sales rose 6 percent. Its department-store group, which includes the Hudson's Bay and Home Outfitters chains in Canada and Lord & Taylor in the United States, saw those sales dip 0.6 per cent.

The cleanup continues at Hudson's Bay Co., the owner of Saks Fifth Avenue. Foulkes said she will work with HBC's slate of newly minted executives in technology, marketing and at Lord & Taylor and act quickly to improve results.

Under Foulkes' predecessor, Gerald Storch, Gilt had become a central part of its Saks Off Fifth discount chain, a business that has languished in recent quarters: HBC reported on Tuesday that in the quarter ended May 5, comparable sales at Saks Off Fifth were down 3.5%, a poor performance compared to those of rivals such as TJX's (tjx) T.J. Maxx, Marshalls and of Nordstrom (jwn) Rack.

"The actions we have taken show that we are serious about improving results and better positioning HBC to deliver profitable growth", Foulkes said on the call, adding several times that "everything is on the table" to help turn the company around.

Perhaps most indicative of Lord & Taylor's waning fortunes is HBC's decision to close its iconic flagship on Manhattan's upscale Fifth Avenue strip altogether. The stock was down 3.6 percent at 10:58 a.m. Its adjusted net loss excluding one-time items was $286-million, compared with analyst expectations of $200.5-million, according to Thomson Reuters I/B/E/S. She said she reorganized management there to have experienced executives run different regions and report directly to her.

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She did not go as far as saying she was ready to close some of the European stores but didn't rule it out either.

"Across all of our businesses, I have found that we tend to make decisions without involving one of our key stakeholders: the customer", Foulkes told industry analysts on a conference call Tuesday after HBC posted disappointing first-quarter results, including a wider than expected loss and declining sales performance in its European and off-price divisions.

She said HBC's discount business, including Saks OFF 5, is under-performing the market and "we have not been pleased with our performance".

The company's shares, down 12 per cent this year, were down 1.6 per cent in afternoon trading Tuesday.

The companies didn't disclose the price, but the Wall Street Journal reported Rue La La paid less than $100 million, citing people familiar with the deal. Results in the Netherlands, where HBC began opening stores in September and has opened 13 Hudson's Bay locations to date, have not met initial expectations, Foulkes admitted Tuesday.

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