- Actions to Generate Additional $75 Million in Expected Annualized Cost Savings and Synergies beyond Previously Announced Synergies from the Integration of Saks Incorporated
- Realignment Supports Growth Areas of the Business, including Digital Offering and Geographic Expansion
TORONTO & NEW YORK, 2015-9-30 — /EPR Retail News/ — Hudson’s Bay Company (TSX:HBC) today announced a series of actions to position the Company to deliver an enhanced all-channel customer experience, accelerate financial performance and drive future success. Reflecting the Company’s substantial growth and strong performance since the 2013 acquisition of Saks Incorporated, the initiatives are designed to enable HBC to invest greater resources in the areas of the business offering the most significant return on investment potential, while leveraging strengths across its retail banners and increasing efficiencies.
The actions being announced for the North American business today include:
- Establishing new Centers of Excellence for the Customer Relationship Management, Creative, and Human Resources functions, complementing existing Centers of Excellence some of which include: Digital, Information Technology, Legal, Logistics, and Real Estate;
- Consolidating key business functions to enable more productive and efficient operations and refocus resources on customer-facing aspects of the business;
- Implementing substantial technology enhancements and accelerating the consolidation to one common platform across Company banners, under the leadership of newly hired executives Janet Schalk, Chief Information Officer, and Dion Rooney, Executive Vice President, HBC Digital; and
- Aligning resources in business functions to match current and future business strategy while investing in areas that will drive growth.
Richard Baker, HBC’s Governor and Executive Chairman, commented, “Through organic growth and acquisitions, HBC has established itself as one of the fastest-growing department store retailers in North America and a truly unique global company. This significant growth has created meaningful opportunities for us to further build our business while operating even more effectively. To that end, we are focused on taking the appropriate next steps to position HBC to deliver continued industry-leading performance and long-term growth, while best delivering for our customers in a constantly evolving industry environment.”
Jerry Storch, CEO of HBC, continued, “By enabling our teams to work smarter, faster and more effectively, we expect to achieve substantial cost savings and continue to invest in our core strategies to build our business, drive further improved financial performance and support the long-term vision of HBC. We have an enormously talented team in place, and will continue to build our world-class capabilities.”
The actions announced today are expected to result an annualized cost savings and synergies during fiscal year 2016 totaling $75 million, in addition to the previously announced synergies the Company is on track to achieve in connection with the integration of Saks Incorporated. The Company anticipates taking a charge of approximately $20 million in the third quarter of fiscal year 2015 in connection with the realignment.
Since the Company’s 2013 acquisition of Saks Incorporated, it has hired more than 2,000 Associates in connection with new store growth and the expansion of the digital offering across its store banners. As that integration has proceeded, the organization has been positioned to operate more efficiently. Consequently, the realignment announced today includes a reduction in positions at headquarters and in corporate functions across HBC’s store banners, impacting approximately 265 Associates in North America. Affected Associates will receive a severance package and outplacement support to help ease their transition and will be considered for open positions with HBC as appropriate.
The benefits from the realignment will support HBC’s overarching growth strategies, including continuing to strengthen its digital capabilities and all-channel offering, while enhancing store environments across the Company’s banners through renovations and strategic merchandising initiatives. In addition, the Company will be investing in store growth in 2016, including the opening of seven Saks Fifth Avenue locations and 25 OFF 5TH locations, in part through the expansion of both banners into Canada.
“Overall, we are excited about the great opportunities that lie ahead and believe that our new North American structure puts us in an even better position for the future. As we move forward, we are ever mindful of HBC’s Core Values and Winning Ways, including being passionate about our future, acting with integrity in all we do, and building world-class teams,” Mr. Storch said.
About Hudson’s Bay Company
Hudson’s Bay Company, founded in 1670, is North America’s longest continually operated company. Today, HBC offers customers a range of retailing categories and shopping experiences primarily in the United States and Canada. Our leading banners – Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5TH – offer a compelling assortment of apparel, accessories, shoes, beauty and home merchandise. Hudson’s Bay is Canada’s most prominent department store with 90 full-line locations, two outlet stores and thebay.com. Lord & Taylor operates 50 full-line locations primarily in the northeastern and mid-Atlantic U.S., four Lord & Taylor outlet locations and lordandtaylor.com.Saks Fifth Avenue, one of the world’s pre-eminent luxury specialty retailers, comprises 38 U.S. stores, five international licensed stores and saks.com. OFF 5TH offers value-oriented merchandise through 86 U.S. stores and saksoff5th.com. Home Outfitters is Canada’s largest kitchen, bed and bath specialty superstore with 66 locations. Hudson’s Bay Company trades on the Toronto Stock Exchange under the symbol “HBC”.
Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, including statements regarding the Company’s North American realignment plan that is expected to result in $75 million of annualized cost savings and synergies in fiscal 2016, the benefits expected to be realized from such realignment plan, and the Company being on track to achieve $100 millionin synergies related to the integration of Saks Incorporated. This information is based on certain current assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While the Company considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Forward-looking information is subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what the Company currently expects. These risks, uncertainties and other factors include, but are not limited to: ability to execute retailing growth strategies, ability to continue same store sales growth, changing consumer preferences, marketing and advertising program success, damage to brands and dependence on vendors, ability to realize synergies and growth from the Saks acquisition, ability to make successful acquisitions and investments, constating documents discouraging favorable takeover attempts, successful inventory management, loss or disruption in centralized distribution centers, ability to upgrade and maintain our information systems to support the organization and protect against cyber-security threats, privacy breach, risks relating to our size and scale, loss of key personnel, ability to attract and retain qualified employees, deterioration in labour relations, ability to maintain pension plan surplus, funding requirement of Saks pension plan, limits on insurance policies, loss of intellectual property rights, insolvency risk of parties which we do business with or their unwillingness to perform their obligations, exposure to changes in the real estate market, successful operation of the joint ventures to allow us to realize the anticipated benefits, loss of flexibility with respect to properties in the joint ventures, the possibility that the anticipated benefits from the Galeria Holding acquisition cannot be realized, exposure to environmental liabilities, liabilities associated with Target Corporation, changes in demand for current real estate assets, increased competition, change in spending of consumers, international operational risks, fluctuations in the U.S. and Canadian dollars, increase in raw material costs, seasonality of business, extreme weather conditions or natural disasters, ability to manage indebtedness and cash flow, risks related with increasing indebtedness, restrictions of existing credit facilities reducing flexibility, ability to maintain adequate financial processes and controls, ability to maintain dividends, ability of a small number of shareholders to influence the business, uncontrollable sale of the Company’s common shares by significant shareholders could affect share price, increase in regulatory liability, increase in product liability or recalls, increase in litigation, developments in the credit card and financial services industries, other risks inherent to our business and/or factors beyond our control which could have a material adverse effect on us.
HBC cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also adversely affect its results. For more information on the risks, uncertainties and assumptions that could cause HBC’s actual results to differ from current expectations, please refer to the “Risk Factors” section of HBC’s Annual Information Form dated April 30, 2015, HBC’s second quarter Management Discussion & Analysis dated September 10, 2015, as well as HBC’s other public filings, available at www.sedar.com and at www.hbc.com.
The forward-looking statements contained in this news release describe HBC’s expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by applicable Canadian securities laws, HBC does not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.
Hudson’s Bay Company
Tiffany Bourré, 905-595-7184
Director, External Communications
Source: Hudson’s Bay Company
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