Gilt Groupe has some catching up to do with Hudson’s Bay

June 15, 2016 08:13 AM

When Canada-based department store chain Hudson’s Bay Co. acquired Gilt Groupe Inc. earlier this year, the flash-sale fashion retailer was struggling, Hudson’s Bay executives acknowledged in the company’s first quarter earnings call this week.

“Gilt when it came to us was not growing at the same rate we were, and it's going to take us a while to get them where we want them to be,” CEO Gerald Storch told analysts on the call.

Still, Hudson’s Bay is benefiting from Gilt’s e-commerce expertise, and Gilt developers already are tasked with building out a mobile app for Hudson’s Bay. “One of the biggest benefits to the acquisition was their terrific development team, both in the United States and Ireland,” Storch said. “We've begun to utilize them quite heavily for other banners with their skill in personalization and mobile technology, so they're leading the way in improving the personalization, for example, on the Saks Fifth Avenue website.”

Hudson’s Bay, the parent company to the Saks Fifth Avenue and Lord & Taylor department stores, acquired web-only merchant Gilt Groupe in January for $250 million. Since then, the merchant has allowed shoppers to return online orders to stores, and it has opened a Gilt Groupe display in a New York City Saks Off 5th store. Internet Retailer estimates Gilt did $400.2 million in sales last year.

Hudson’s Bay does not break out e-commerce sales publicly on a quarterly basis. However, the merchant says comparable digital sales—or e-commerce revenue excluding Gilt—increased 7.4% year over year. Including the Gilt acquisition, digital sales increased by 86.2% compared with the first quarter of last year.

Also during the quarter, Hudson’s Bay made progress on installing robotics technology in its distribution center in Scarborough, Ontario, to speed fulfillment of online orders. A distribution center to open in Pottsville, Pa., in the second quarter—plus the merchant’s other U.S. distribution centers—will be outfitted with the same technology, the retailer says.

“This improved technology for digital fulfillment will help us increase the speed of orders, improve utilization of the space in the distribution centers, and reduce expenses associated with our online sales,” Storch told analysts.

Hudson’s Bay also is working to unite the Lord & Taylor, Saks and its discount brand Off 5th under one e-commerce platform, which the merchant hopes will improve its ability to implement changes across multiple brands. Hudson’s Bay expects to complete that process by the end of the year.

For fiscal Q1 ended April 30, Hudson’s Bay reported:

  • Sales of C$3.30 billion ($2.57 billion), up 59.4% from C$2.07 billion ($1.61 billion) in the first quarter of last year. Much of that growth comes from the Gilt acquisition, in addition to a 2.6 billion euro ($2.91 billion) purchase last year of Germany-based department store chain Galeria Kaufhof.
  • Comparable-store sales fell 1.0% when factoring out currency fluctuations.
  • Net loss of C$97 million ($75 million), up 98.0% from $49 million ($38 million).

Hudson’s Bay is No. 75 in the Internet Retailer 2016 Top 500 Guide. Gilt is No. 69.




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