Web sales growth outpaced overall sales growth at Hudson’s Bay Co. in the first quarter. The retailer, which apart from its namesake retail banner also owns Saks Fifth Avenue, Off 5th, Lord and Taylor and other retail companies, says digital sales grew 37.2% in the quarter ended May 2. Sales across all channels grew 11.7% to C$2.1 billion (US$1.7 billion at today’s exchange rate). Hudson’s Bay, No. 97 in the Internet Retailer 2015 Top 500 Guide and the largest Canada-based retailer in the Guide as measured by its North American web sales, did not disclose its web sales in dollars. Internet Retailer estimates the retailer’s 2014 web sales at $400.2 million.
Company chairman Richard Baker, on a call with analysts, said the retailer is on track to generate C$9.0 billion to C$9.3 billion ($7.3 billion to $7.6 billion) in total sales this year.
“Our investment in digital continues to pay dividends,” said CEO Jerry Storch, who joined the retailer late last year. “We remain very encouraged by the opportunities in this space and will continue to focus resources on improving our presence online as well as enhancing our in-store experience.” The retailer previously said it will invest C$50 million on company initiatives this year, with part of that amount going toward improving its digital business, along with opening more Off 5th stores and opening full-line Saks stores in Canada.
Storch, who has been critical of the economics behind online retailing, reiterated his position on the call. “When the sales involve the store instead of simply being shipped to the customer, [they] are much more profitable than those sales that are simply Amazonian-type shipments. They key is the omnichannel or all-channel model, not simply online sales alone.”
Baker pointed out that Hudson’s Bay does have an advantage online because it sells higher-priced, higher-margin products that are lightweight to ship. “Our business is best suited for this omnichannel model than other businesses,” Baker said. Storch added: “We tend to have very high average order values, which you know is the key to online profitability, as well as high gross margin rates. …But just having said all that, [it is] still better to run sales through the store if you could.”