With online sales skyrocketing, Hudson’s Bay Co. is looking into ways to make a greater profit off of those sales.
Hudson’s Bay, No. 75 in the Internet Retailer 2016 Top 500 Guide, reported its online sales grew 81.4% year over year during the fiscal second quarter of 2016 ended July 30, while digital comparable sales, which is e-commerce revenue excluding Gilt, grew just 1.4% year over year. Hudson’s Bay declined to provide a specific dollar figure for its online sales growth. Through the first half of 2016, Hudson’s Bay’s digital sales grew 86.9% year over year, with comparable sales growing 5.5%.
While the retailer’s online sales have skyrocketed, thanks in part to the company’s acquisitions of web-only merchant Gilt Groupe in January and Germany-based department store chain Galeria Kaufhof last year, its profits have declined, with Hudson’s Bay posting losses during both the quarter and the first half of the year compared to gains during the same periods last year.
“The lower the average ticket, the wider the gap tends to be between store profitability and the internet profitability,” said Hudson’s Bay CEO Jerry Storch during a conference call with analysts, according to a transcript from Seeking Alpha. “There are two ways in which we’re addressing that at the highest level. One is by making every step of a traditional ship-from-distribution-center-to-home internet order more efficient; and the second is by continuing to fill out the omnichannel paradigm so that more of the sales take place in an integrated fashion between the internet and the stores.”
Storch told analysts the company is looking into various ways that Hudson’s Bay can take better advantage of its retail locations to fulfill online orders, but he declined to specify further. The company does currently fulfill some Saks.com orders from its Saks retail locations.
For the fiscal second quarter ended July 30, Hudson’s Bay reported:
- Total sales of C$3.252 billion ($2.522 billion), up 59.6% from C$2.038 billion ($1.581 billion) last year. The company attributes this steep uptick in sales to Gilt Groupe and HBC Europe’s inclusion in its sales results.
- A comparable-store sales gain of 1.9%.
- A net loss of C$142.0 million ($110.1 million), compared to a C$59.0 million ($45.8 million) profit.
For the first six months of fiscal 2016, Hudson’s Bay reported:
- Total sales of C$6.555 billion ($5.084 billion), up 59.5% from C$4.110 billion ($3.188 billion) last year. The company attributes this steep uptick to Gilt Groupe and HBC Europe.
- A comparable-store sales gain of 3.2%.
- A net loss of C$239 million ($185.4 million), compared to a C$10 million ($7.8 million) profit.