Hudson’s Bay offshoot Saks Off 5th is closing its doors in Amsterdam and Rotterdam at the end of June, the company has confirmed.
The news follows mounting speculation that the company’s European expansion is in trouble.
“After saying goodbye to Germany we are sad to announce that Saks OFF 5TH will be leaving the Netherlands as well towards the end of June! But there will be a big final sale,” the company said in a short statement.
Last week, German paper WirtschaftsWoche reported the parent company of Hudson’s Bay’s European operations was considering closing shops in the Netherlands this year, or letting the company go bankrupt. And at the end of last year, the Telegraaf reported that the new owner – German retail group Karstadt – is ‘extremely concerned’ about the major investments the company is making in the Netherlands and the disappointing earnings.
The paper based its claims on internal documents which show the company has lost more than €80m in the Netherlands this year. At the end of 2017, the company changed its strategy in the Netherlands to bring in cheaper product lines and last February plans to open a total of 20 department stores were scrapped.
Hudson’s Bay currently operates 13 stores in the Netherlands. Many of these are located in premises which were used by the V&D department store chain before it went bust. The first store opened in September 2017.
RPA Perspective Saks Fifth Avenue remains the golden child of Hudson’s Bay Co.’s portfolio, as the retail group recently reported falling revenues but improved profits for the fourth quarter.
HBC said overall comparable-store sales for the three months ended Feb. 2 were down 1.4% from the prior year but up 3.9% at Saks, resulting in a two-year stacked growth of 7% at the luxury retailer.
The department store’s sunny results were offset, however, by declines in HBC’s other ventures, including its Hudson’s Bay, Lord & Taylor and Home Outfitters stores, which fell by 5.2%. Comparable sales at Saks Off Fifth, its off-price business, also sank by 2.1%.
Fourth-quarter revenues were C$2.9 billion ($2.2 billion), a drop of C$167 million from the same period in 2017, which included an extra week. Excluding the extra week, revenues were down 1.6%, or C$47 million. While it posted a net loss of C$226 million, or 95 cents per share, from its continuing operations, its discontinued operations boosted overall net profits for the quarter to C$286 million, or C$1.20 per share for the quarter, up from C$84 million, or 39 cents per share last year.
HBC CEO Helena Foulkes, who joined the company in February 2018, has been hard at work shedding unprofitable parts of the business, including the flash sale site Gilt Groupe, its New York City Lord & Taylor flagship and a large part of its European retail and real estate holdings. In December, it announced that it would close Saks Fifth Avenue’s downtown Manhattan location at Brookfield Place a little over two years after it opened, and in February, it said it would close up to 20 Saks Off Fifth stores as well as its Home Outfitters chain in Canada, amid competition.
“Financial discipline is not a one-year event,” said Foulkes, explaining the end goals of focusing the company’s energies on its most promising ventures. “We will continue to improve our cost structure while making strategic investments in technology, marketing, digital and our stores. We’ve streamlined the organization, which has allowed us to focus on our North American operations.”
