by Jharonne Martis.
In the 17th century, adventurers from Europe started North America’s oldest company – the Hudson’s Bay Co. (HBC.TO). Now, Canada’s venerable department store chain is continuing its expansion in the Old World, with the announcement on May 17 that it intends to open 20 stores in the Netherlands.
Seventeen are planned under the Hudson’s Bay banner and three under the Saks OFF 5th brand, also owned by HBC. A flagship Hudson’s Bay store is planned in the Rokin area of Amsterdam. The moves come at a time when traditional department stores are struggling, as we reported previously.
In 2015, HBC acquired Germany’s Galeria Kaufhof department store chain for $3.9 billion, establishing HBC’s European headquarters in Cologne, and gaining a network of stores in Germany and Belgium.
In the Netherlands deal, HBC is taking over the store leases of bankrupt Dutch department store chain V&D from its landlords, which could be a risk. If a V&D store struggled because it’s in a bad location, it’s not going to help Hudson’s Bay Co.
However, the Saks OFF 5th division has been one of Hudson’s Bay’s strongest performing groups in terms of same store sales (SSS). What’s more, it’s an off-price segment, which is very popular right now. In times of uncertainty (such as the U.S. presidential election year) consumers gravitate towards off-price retailers. Overall, consumers worldwide have become more value-conscious since the last recession. They want designer clothing for less.
However, the StarMine model scores for Hudson’s Bay paint a sobering picture:
Brighter revenue outlook
However, revenue growth is expected to stay healthy over the next four quarters.
With three of the 20 former V&D stores planned as Saks OFF 5th and 17 as full Hudson’s Bay department stores, HBC says there is little competition in the Netherlands in that mid-to-upper department-store tier.
“The expansion into the Netherlands will build on HBC Europe`s existing infrastructure and will utilize the same platforms such as information technology, procurement and digital support,” the company said in a statement (Source: StreetEvents).
In Q1, HBC Europe’s (GALERIA Kaufhof, Galeria INNO and Sportarena) comparable sales showed a gain of 0.7% from a 0.4% rise in Q4.