Expanded loss for Hudson's Bay in the midst of takeover dispute

HBC's Tumultuous Third Quarter: Competing Bids and Cost-Cutting Measures

Two competing bids aim to take the struggling Canadian retail giant Hudson's Bay Company (HBC) private, with HBC Governor Richard Baker leading one group offering approximately CA$40 per share, and Canadian private equity firm Catalyst Capital offering CA$11 per share.

The board and the Baker group are urging shareholders to bless their offer, while Catalyst is saying it should be rejected in favor of its own bid. However, the special committee of HBC's board tasked with evaluating the bids found the Baker offer low.

The company's third quarter was described as "noisy" by interim CFO, Becky Roof. The net loss widened to CA$226 million from CA$161 million a year ago, and the gross profit margin declined 120 basis points to 38.3%. Total comparative sales (comps) fell 1.7%.

Retail sales specifically dropped to CA$1.82 billion from CA$1.86 billion a year ago, and the company's revenues for the quarter fell to $1.8 billion Canadian dollars. The Canadian home retail business of the company has been shuttered, and the company has sold off its European holdings in the Netherlands and Germany.

The company has also downsized its Saks Off 5th footprint. CEO Helena Foulkes mentioned the need for cost-cutting measures, including potential downsizing in the labor force, including in the corporate ranks. Daily operations in retail have changed tremendously over the past few years, as retailers re-examine topics including shrink and pricing.

Whether the company remains public or private, its strategy remains the same. The company's focus remains on its Hudson's Bay and Saks Fifth Avenue department stores, which are considered the company's greatest opportunities. The normalized net loss, excluding one-time items and discontinued operations, widened to CA$128 million.

The Baker group's offer is CA$10.30 per share in cash, while Catalyst's offer is CA$11 per share. The board and the Baker group are pushing for their offer, but it remains to be seen whether shareholders will favour one bid over the other. The saga continues as HBC navigates through these challenging times.