Hudson's Bay Company reported its results for the 13-week period ended August 3, 2013. Consistent with the first quarter of fiscal 2013, the second quarter was characterized by strong same store sales growth at Hudson's Bay and rising e-commerce sales. These strengths were partially offset by a decline in same store sales at Lord & Taylor.
Second Quarter Highlights (13-week period ended August 3, 2013)
-Consolidated sales of $947.7 million, a 3.9% increase compared to the second quarter of 2012.
Same store sales:
-Consolidated same store sales grew 3.5%, or 3.0% on a constant currency basis.
-Hudson's Bay same store sales grew 6.2%.
--Lord & Taylor same store sales declined 1.2% on a U.S. dollar basis.
-E-commerce sales were $37.3 million, an increase of 56.1% compared to the second quarter of 2012.
-Normalized EBITDA was $58.0 million, a decrease of $0.9 million compared to the second quarter of 2012.
-Normalized net earnings were $0.03 per share, compared to a loss of $0.02 per share in the second quarter of 2012.
On July 29, 2013, the Company and Saks Incorporated ("Saks") announced that they entered into a definitive merger agreement (the "Merger Agreement") whereby the Company agreed to acquire all of the issued and outstanding shares of Saks in an all-cash transaction valued at approximately U.S. $2.9 billion, including debt (the "Acquisition").
Subsequent to the end of the second quarter, on August 20, 2013, the Company announced that it had entered into an underwriting agreement with a syndicate of underwriters to sell 16,050,000 subscription receipts (the "Subscription Receipts") at a price of $17.15 per Subscription Receipt, for aggregate gross proceeds of $275.3 million. The Company will use the proceeds from the Subscription Receipts offering to finance a portion of the Acquisition.
On August 30, 2013 the Company announced that it has been notified of the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR Act") applicable to the Acquisition.
On September 6, 2013, the "go-shop" period outlined in the Merger Agreement expired. Saks is now subject to customary "no-shop" provisions which are outlined in the Merger Agreement.
A dividend of $0.09375 per common share of the Company ("Common Share") was declared, payable on October 15, 2013 to shareholders of record on September 30, 2013. Subsequent to the closing of the Acquisition, the Company expects to reduce its quarterly dividend to $0.05 per share to accelerate deleveraging of debt in the short-term.
"Hudson's Bay continues to demonstrate industry-leading sales growth," stated Richard Baker, HBC's Governor and Chief Executive Officer.
"This performance has been driven by a continued focus on our stated strategic initiatives. We are seeing strong performance from stores and departments that have recently received capital investments. We are also pleased by the continued growth of our e-commerce sales, which accelerated in the second quarter and are up approximately 45% year-to-date following our re-launch of both banner websites.
"Our online business was a key factor in our results, and reflects our increased investment in this component of our business. We are confident that our inventory is well-positioned for the Fall season and expect stronger financial performance from Lord & Taylor and the overall business in the back half of the year."
