Hudson’s Bay pins its $10 billion future on digital

September 17, 2014 11:46 AM

Department store giant Hudson’s Bay Co. is projecting $10 billion in total sales in the next four years, and its path is pretty clear: a continued focus on e-commerce.

That makes sense, as the multichannel retailer, which operates the Lord & Taylor and Saks Fifth Avenue brands in the U.S., and Hudson’s Bay in Canada, says its digital properties will grow three times as fast as stores over the next five years. Additionally, more than 70% of its transactions are influenced by a digital experience, and customers who shop online and in stores tend to spend three or four times as much as shoppers who frequent only one channel, Hudson’s Bay executives said yesterday at a consumer conference.

To reach its goal, Hudson’s Bay, ranked No. 130 in the Internet Retailer 2014 Top 500 Guide, says it plans to increase its focus on online marketing and personalization, in addition to working to unite its user experiences for consumers shopping in multiple channels.

Hudson’s Bay has already made major strides in advancing its multichannel and e-commerce efforts. In July, the merchant announced a deal with Swirl to install beacon technology in 130 stores that will send location-aware messages to in-store customers’ smartphones. The move represents one of the largest retail beacon rollouts yet.

In February, the merchant tapped e-commerce veteran Michael Burgess to head up a newly formed HBC Digital division of the company. The new group now oversees digital strategy across all sales channels, including web, store and mobile. Burgess is a former president of Saks Direct, the online and catalog division of designer apparel retail chain Saks Fifth Avenue, which Hudson’s Bay acquired last year.

The merchant also announced plans this week to expand its web and store presence in Canada. Hudson’s Bay will launch Canadian e-commerce properties for its luxury department store Saks Fifth Avenue and its discount brand Saks Off 5th at an undisclosed time in the near future. It will also open seven Saks Fifth Avenue stores in Canada, beginning with Toronto in 2016, and 25 Off 5th stores in various Canadian markets.

Additionally this week, Hudson’s Bay reported strong second quarter results, especially from its online properties. For the period ended August 2, 2014, Hudson’s Bay reported:

  • $162 million in e-commerce sales. That includes $116 million from the Saks Fifth Avenue brand, which it acquired in November 2013, and 80% year-over-year growth at its Lord & Taylor and Hudson’s Bay web properties. The merchant did not disclose a total comparable web sales figure for last year.
  • Total sales were $1.77 billion, an 86.3% increase from $950 million for the prior year.
  • Net loss of $36 million versus a net loss of $81 million in the same period last year.

The dramatic increases in sales and profits are mostly attributed to the acquisition of Saks Fifth Avenue, the merchant says. The web represented 9.2% of total sales during the quarter.

“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,” says CEO Richard Baker. “Off 5TH, buoyed by its new digital business, experienced outsized same-store sales growth for the quarter. We continued to invest in HBC Digital, where we witnessed tremendous sales growth.”

For the first six months of the year, Hudson’s Bay also reported:

  • $3.62 billion in total sales, a 97.8% increase from the first six months of last year, again attributed to the Saks acquisition.
  • Net income of $140 million compared with a net loss of $163 million in the same period last year.



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