(Bloomberg) -- Saks Fifth Avenue owner Hudson’s Bay Co. reported another weak sales quarter, giving Chairman Richard Baker ammunition for his contested bid to take the retailer private as shareholders prepare to vote next week.
Comparable third-quarter sales, a closely watched metric for the industry, fell 1.7%. At Saks, which had been the group’s bright star in recent quarters, sales fell 2.3%, the first decline in at least eight quarters. Gross margins dropped 120 basis points.
Key Takeaways
Hudson’s Bay’s lingering malaise despite multiple asset sales, store closures and turnaround efforts plays into Baker’s argument that management will be better off outside the glare of markets as the industry struggles to lure online savvy consumers to brick-and-mortar stores.Hudson’s Bay, which supports the deal led by Baker and his allies, is trying to convince shareholders to vote in favor on Dec. 17. Private-equity firm Catalyst Capital Group Inc., which owns a 17.5% stake and put forth a higher proposal that was rejected, wants to block the sale.A sweeping merchandise dust-off at Hudson’s Bay, the eponymous chain in Canada that’s the oldest company in North America, has yet to bear fruit. Comparable sales dropped 3.9%.Saks OFF 5th, which Hudson’s Bay has tried to turn into a stronger competitor to the likes of Nordstrom Inc.’s Rack, was the lone bright spot, with sales up 4.9%.Saks Fifth, the luxury chain, is showing signs of improvement this quarter, with business “quite strong” in the last eight weeks, Chief Executive Officer Helena Foulkes told analysts Tuesday.
Market Reaction
Catalyst’s proposal of C$11 a share represents a 6.8% premium to the C$10.30 a share that Baker and his partners agreed to pay in October. Hudson’s Bay’s special committee rejected the Catalyst bid in part because Baker and his allies, who own about 57% of shares, have indicated they won’t sell. HBC dropped for a sixth day in Toronto, down 0.9% to C$8.96. That’s well below both offer prices, suggesting investors are concerned the bids may fail.
To contact the reporter on this story: Sandrine Rastello in Montreal at srastello@bloomberg.net
To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Lisa Wolfson
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