TORONTO & NEW YORK--(BUSINESS WIRE)--Hudson's Bay Company (“HBC” or the “Company”) (TSX:HBC) reported today its results for the 13-week and 52-week periods ended February 1, 2014 (the “fourth quarter” and “Fiscal 2013”, respectively). The fourth quarter and Fiscal 2013 were characterized by strong sales growth at Hudson’s Bay and Saks. Lord & Taylor same store sales slightly declined.
Fourth Quarter Highlights (13-week period ended February 1, 2014)
HBC's financial results for the fourth quarter of 2013 include Saks Incorporated (“Saks”).
Consolidated same store sales grew 6.6%, or 2.1% excluding the impact
of foreign exchange, from the comparable 13-week period of Fiscal 2012.
- Hudson's Bay grew 5.2%.
- Lord & Taylor declined 1.3% on a U.S. dollar basis.
- Saks grew 3.1% on a U.S. dollar basis.
- Digital sales were $252.3 million, reflecting both the acquisition of Saks and strong organic growth of 59% from the comparable 13-week period at the Lord & Taylor and Hudson’s Bay banners.
- Normalized EBITDA was $253.5 million, or 10.5% of sales, compared to $177.1 million, or 12.8% of sales, in the 14-week fourth quarter of 2012. Normalized EBITDA for Legacy HBC was $163.6 million compared to the most recent guidance range of $160 million to $180 million.
- HBC completed its acquisition of Saks in an all-cash transaction valued at approximately U.S.$2.9 billion, including debt, on November 4, 2013.
- The Company implemented several organizational changes to both advance HBC’s growth initiatives and accelerate the integration of Saks, including the appointments of Donald Watros to President, HBC; Marigay McKee to President, Saks Fifth Avenue; Elizabeth Rodbell to President, Department Store Group; Jonathan Greller to President, Outlets; and Michael Burgess to President, HBC Digital.
“Following our acquisition of Saks in November, we have developed a strategic roadmap with four core growth strategies,” stated Richard Baker, HBC’s Governor and Chief Executive Officer. “First is the expansion of HBC Digital to drive sales across all of our banners. Second, we will prioritize the expansion of OFF 5TH, Saks’ value-oriented format. We intend to significantly increase OFF 5TH’s presence through new stores and digitally. Expansion of Saks into Canada is our third major strategy. We believe the Canadian market represents an opportunity for up to seven full-line Saks Fifth Avenue locations and up to 25 OFF 5TH stores, as well as digital commerce initiatives.
"Finally, we will drive sales at the top ten stores at each of our banners. These key locations offer considerable potential for outsized sales growth and set the tone that flows to our other stores, our digital businesses and our overall reputation. In addition to top-line growth, we expect to capture $100 million in annualized synergies related to the integration of Saks by the end of Fiscal 2016.
"Results for the fourth quarter came in at the low end of the guidance ranges issued in December for Legacy HBC. This was primarily attributable to difficult weather in many of our geographies in December and January, which affected consumer shopping behavior and traffic. Although Hudson’s Bay and Saks Fifth Avenue achieved mid-single digit same store sales growth, Lord & Taylor did not rebound as we had anticipated. Notwithstanding this quarter’s performance, we remain excited for HBC’s future given the four core initiatives that I described, which will drive significant growth.
"Initially, investments in our growth initiatives – HBC Digital in particular, where a significant portion of our investments are expensed rather than capitalized – are expected to moderate EBITDA growth and margin expansion in the short-term. However, we believe that these measures will improve significantly over time as our revenue grows over a fixed cost base, which will provide operating leverage. For example, as our fulfillment capabilities continue to improve across channels from technology enhancements, we will utilize our inventory more efficiently by substantially increasing the amount of inventory available on our digital commerce sites. In addition, we will continue to aggressively manage our operating expenses. I look forward to sharing our progress as we move forward.”
Throughout this press release, the terms "Normalized EBITDA" and "Normalized Net Earnings - Continuing Operations" have been used to refer to financial results that have been adjusted to exclude certain non-recurring items and charges. For a full explanation of the Company's use of non-IFRS measures, please refer to the “Supplemental Information” section of this press release. For further discussion of the Company's financial and operating results, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for the Thirteen and Fifty-Two Weeks Ended February 1, 2014 (the “MD&A”).
Unless otherwise specified, the Company’s financial information outlined herein includes Saks’ operating results from November 4, 2013.
13 week period ended February 1, 2014
All comparative figures below and in the "Highlights" section for the fourth quarter are for the 13-week period ended February 1, 2014 compared to the 14-week period ended February 2, 2013.
Retail sales were $2,407.6 million for the fourth quarter, an increase of $1,021.1 million, or 73.6%, from $1,386.5 million for the prior year. This increase was primarily attributable to the inclusion of Saks. Consolidated same store sales increased by 6.6% (2.1% excluding the impact of foreign exchange), with an increase of 5.2% at Hudson’s Bay, a decrease of 1.3% at Lord & Taylor and an increase of 3.1 % at Saks.
Digital commerce sales totaled $252.3 million. Digital commerce sales related to the Hudson’s Bay and Lord & Taylor banners increased by approximately 59% on a comparable 13 week basis.
Sales performance at Hudson’s Bay was driven by men’s apparel, ladies’ shoes, outerwear, handbags and accessories, new Topshop/Topman stores and Olympic merchandise. Sales performance at Lord & Taylor was driven by men’s apparel and outerwear, offset by cosmetics, handbags and accessories, jewelry, and ladies’ shoes. Sales performance at Saks Fifth Avenue was driven by women’s ready-to-wear, menswear and accessories.
Gross profit was $886.4 million, or 36.8% of sales, for the fourth quarter, compared to $521.6 million, or 37.6% of sales, for the prior year. The decrease in gross profit margin was attributed to purchase price accounting charges related to the acquisition of Saks. Excluding the accounting charges, gross profit rate would have increased 80 basis points from the prior year.
SG&A was $794.7 million for the fourth quarter, a $433.9 million increase from the prior year. In addition to the inclusion of Saks and costs related specifically to the acquisition of Saks, the increase in SG&A was driven by the following factors: an increase in non-cash share based compensation; a decrease in non-cash pension income and an increase in costs associated with the Company’s strategic initiatives. These net increases were partially offset by expense reductions related to optimizing our corporate infrastructure to reflect the wind-down of discontinued operations.
Normalized EBITDA was $253.5 million, or 10.5% of sales, for the fourth quarter, compared to $177.1 million, or 12.8% of sales, for the prior year, an increase of $76.4 million, or a 230 basis point decrease as a percentage of sales. Legacy HBC Normalized EBITDA for the fourth quarter was $163.6 million, or 11.6% of Legacy HBC sales, a decrease of $13.5 million, or 120 basis points as a percentage of sales, from the prior year.
Finance costs were $38.1 million in the fourth quarter, compared to $13.3 million for the prior year. This increase of $24.8 million was primarily driven by $35.5 million of interest expense from debt financing for the acquisition of Saks and $6.9 million for the write-off of deferred financing costs, offset by $18.3 million of non-cash income from the mark-to-market of outstanding warrants.
Normalized net earnings were $81.5 million for the fourth quarter, compared to $97.6 million for the prior year, a decrease of $16.1 million.
52 week period ended February 1, 2014
All comparative figures below are for the 52-week period ended February 1, 2014 compared to the 53-week period ended February 2, 2013 (“Fiscal 2012”).
Retail sales were $5,223.4 million for Fiscal 2013, an increase of $1,146.4 million, or 28.1%, from $4,077.0 million for Fiscal 2012. This increase was primarily due to the inclusion of Saks in the fourth quarter. Consolidated same store sales increased by 5.4% (2.8% excluding impact of foreign exchange, with an increase of 6.2% at Hudson’s Bay and a decrease of 0.7% at Lord & Taylor.
Digital commerce sales totaled $369.6 million for Fiscal 2013. Digital commerce sales related to the Lord & Taylor and Hudson’s Bay banners increased by approximately 54% on a comparable 52 week basis.
Sales performance at Hudson’s Bay was driven by ladies’ and men’s apparel, ladies’ shoes, handbags and accessories and new Topshop/Topman stores. Sales at Lord & Taylor were driven by men’s apparel, outerwear and handbags and accessories, offset by ladies’ apparel and shoes.
Gross profit was $2,006.6 million, or 38.4% of sales, for Fiscal 2013, compared to $1,590.0 million, or 39.0% of sales, for Fiscal 2012. The decrease in the gross profit margin was attributed to purchase price accounting charges related to the acquisition of Saks. Excluding the accounting charges, gross profit rate would have increased 20 basis points from the prior year.
SG&A was $1,823.9 million for Fiscal 2013, an increase of $453.5 million compared to Fiscal 2012 primarily due to the inclusion of Saks and costs related specifically to the acquisition of Saks. The remaining increase in SG&A can primarily be attributed to the following factors: an increase in non-cash share based compensation; an increase in non-cash pension expense; a decreased return from credit operations; and an increase in costs associated with the Company’s strategic initiatives. These net increases were partially offset by expense reductions related to optimizing our corporate infrastructure to reflect the wind-down of discontinued operations.
Normalized EBITDA was $406.8 million, or 7.8% of sales, in Fiscal 2013, compared to $310.0 million, or 7.6% of sales, in Fiscal 2012, an increase of $96.8 million or 20 basis points as a percentage of sales. Legacy HBC Normalized EBITDA in Fiscal 2013 was $316.9 million, or 7.5% of Legacy HBC sales, an increase of $6.9 million and relatively flat as a percentage of sales from Fiscal 2012.
Finance costs were $261.3 million for Fiscal 2013, compared to $97.1 million for Fiscal 2012. This increase of $164.2 million was primarily driven by $153.2 million in non-cash expense from equity financing for the acquisition of Saks.
Normalized net earnings were $80.0 million for Fiscal 2013, compared to $72.0 million for Fiscal 2012, an increase of $8.0 million.
Acquisition of Saks
On November 4, 2013, HBC completed its acquisition of all of the outstanding shares of Saks for U.S.$16.00 per share in an all-cash transaction valued at approximately U.S.$2.9 billion, including debt, in accordance with the previously announced definitive merger agreement dated as of July 28, 2013. In addition, the Company incurred approximately $220 million in acquisition-related expenses. The acquisition and related expenses were financed through a combination of new debt and approximately U.S.$1.0 billion of new equity.
Queen Street Sale
Subsequent to the conclusion of the quarter, on February 25, 2014, HBC completed the sale of its downtown Toronto flagship store and adjacent Simpson's Tower office complex to The Cadillac Fairview Corporation Limited for a purchase price of $650.0 million at an implied capitalization rate of approximately 4.75%. The Company has leased the entire retail and office complex for a base term of twenty-five years with renewal options of up to approximately twenty-five additional years. The property will serve as the site of Canada's first Saks Fifth Avenue location. The Company also agreed to lease space in Toronto's Sherway Gardens for a second full-line Saks Fifth Avenue store in Canada. A portion of the proceeds was used to retire in entirety the Company’s U.S.$300.0 million Second Lien Term Loan and permanently reduce U.S.$150.0 million of its U.S.$2,000.0 million First Lien Term Loan. The balance of the net proceeds was used to reduce the outstanding balance of the Company’s Canadian revolving credit facility. Over time, a portion of the proceeds will be used to fund the Company’s strategic investments including the expansion of Saks Fifth Avenue into Canada and our HBC Digital and OFF 5TH businesses.
As previously disclosed, the sale and leaseback will result in an initial reduction to annualized finance costs of approximately $42 million, partially offset by an increase to annualized rent expense (SG&A) of approximately $30 million. Additionally, approximately $29 million of non-recurring finance costs primarily due to the early extinguishment of debt will be reflected in the first quarter of 2014.
Fiscal 2014 will be HBC’s first full year operating Saks, while Fiscal 2013 financial results only included Saks results for the fourth quarter. Our Fiscal 2014 guidance incorporates management’s views on the current and expected operating environment and expected investments in sales growth and margin enhancement initiatives – especially HBC Digital, which increases SG&A expenses – as well as approximately $50 million of synergies savings from the integration of Saks. The following guidance is fully qualified by the Forward-Looking Statements section below:
- Total sales of $7.8 billion to $8.1 billion. This implies low-to-mid single-digit consolidated same store sales growth calculated on a constant-currency basis, driven in part by strong digital sales growth.
- Normalized EBITDA of $580 million to $620 million.
- Capital investments of $380 million to $420 million, net of landlord incentives.
This guidance reflects a U.S. dollar exchange rate assumption of USD:CAD = 1:1.09 for Fiscal 2014. Significant variation in this exchange rate assumption would impact the guidance.
Conference Call to Discuss Results
Richard Baker, Governor and Chief Executive Officer, and Donald Watros, HBC’s President and acting Chief Financial Officer, will discuss the quarter’s financial results and 2014 outlook during a conference call on April 3, 2014 at 8:30 am EST.
The conference call will be accessible by calling the participant operator assisted toll-free dial-in number (877) 852-2926 or international dial-in number (253) 237-1123. A live webcast of the conference call will be accessible on HBC's website at: http://investor.hbc.com/events.cfm. The audio replay also will be available via this link.
Consolidated Financial Statements and Management's Discussion and Analysis
The Company's consolidated financial statements for the thirteen and fifty-two weeks ended February 1, 2014 and Management's Discussion and Analysis thereon will be available under the Company's profile on SEDAR at www.sedar.com.
Selected Consolidated Financial Information
The following sets out consolidated financial information for each of Fiscal 2013 and Fiscal 2012. The summary financial information set out for the quarters ended February 1, 2014 and February 2, 2013 has been prepared on a basis consistent with our audited consolidated financial statements for Fiscal 2013. In the opinion of our management, such unaudited financial data reflects all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of the results for those periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year or any future period. The information presented herein does not contain disclosures required by IFRS and should be read in conjunction with the Company’s consolidated financial statements for Fiscal 2013.
Based on the Company’s reporting convention, our Fiscal 2013 was 52 weeks while Fiscal 2012 was 53 weeks. Similarly, the fourth quarter of Fiscal 2012 was 14 weeks, while the fourth quarter of Fiscal 2013 was 13 weeks.
The financial information outlined herein includes Saks’ operating results from November 4, 2013.
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
|Fiscal Quarter Ended||Fiscal Year|
February 1, 2014
|February 2, 2013(1)||2013||2012(1)|
|Cost of sales||(1,521.2)||(864.9)||(3,216.8)||(2,487.0)|
|Selling, general and administrative expenses||(794.7)||(360.8)||(1,823.9)||(1,370.4)|
|Depreciation and amortization||(84.3)||(31.0)||(175.6)||(104.1)|
|Total interest expense, net||(55.3)||(13.3)||(95.2)||(97.1)|
Acquisition-related finance income (costs)
(Loss) earnings before income tax — continuing operations
|Income tax benefit (expense)||68.1||(26.1)||78.5||9.4|
|Net earnings (loss) for the period — continuing operations||37.4||90.4||(175.7)||27.8|
|Net loss for the period — discontinued operations, net of taxes||(8.3)||(3.6)||(82.4)||(62.9)|
|Net earnings (loss)||29.1||86.8||(258.1)||(35.1)|
|Basic net earnings (loss) per common share|
|Diluted net earnings (loss) per common share|
|(1)||Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to see note 2(z) of the Company’s consolidated financial statements for Fiscal 2013.|
CONSOLIDATED BALANCE SHEETS
|Trade and other receivables||137.2||74.3|
|Other current assets||71.4||31.1|
|Income taxes recoverable||22.9||—|
|Assets of discontinued operations||2.3||268.6|
|Total current assets||2,288.4||1,419.7|
|Property, plant and equipment||4,110.4||1,335.0|
|Pensions and employee benefits||72.2||38.3|
|Deferred tax assets||248.7||209.5|
|Loans and borrowings||531.6||132.1|
|Other payables and accrued liabilities||469.3||269.7|
|Income taxes payable||9.6||3.0|
|Liabilities of discontinued operations||88.9||342.9|
|Total current liabilities||1,986.2||1,343.5|
|Loans and borrowings||2,923.3||718.5|
|Pensions and employee benefits||95.9||70.3|
|Deferred tax liabilities||634.9||—|
|Accumulated other comprehensive income (loss)||91.7||(62.5)|
|Total shareholders’ equity||2,050.7||1,013.0|
|Total liabilities and shareholders’ equity||7,927.0||3,247.6|
(1) Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to see note 2(z) of the Company’s consolidated financial statements for Fiscal 2013.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Fiscal 2013||Fiscal 2012(1)|
|Net (loss) earnings for the year||(175.7)||(82.4)||(258.1)||27.8||(62.9)||(35.1)|
|Add: Income tax benefit||(78.5)||(27.9)||(106.4)||(9.4)||(77.9)||(87.3)|
|Add: Finance costs (income)||261.3||—||261.3||97.1||(0.4)||96.7|
|Earnings (loss) before income tax and finance costs||7.1||(110.3)||(103.2)||115.5||(141.2)||(25.7)|
|Net cash income taxes received (paid)||1.3||93.2||94.5||(10.2)||(2.7)||(12.9)|
|Interest (paid) received in cash||(81.7)||—||(81.7)||(86.9)||0.7||(86.2)|
|Items not affecting cash flows:|
|Recognition of proceeds on sale of leasehold interests||—||(33.4)||(33.4)||—||(271.5)||(271.5)|
|Depreciation and amortization||175.6||—||175.6||104.1||5.0||109.1|
|Impairment of property, plant and equipment||4.1||—||4.1||11.9||31.5||43.4|
|Net defined benefit pension and employee benefits expense||20.8||6.0||26.8||11.8||10.0||21.8|
|Other operating activities||(14.5)||(0.2)||(14.7)||(21.1)||1.5||(19.6)|
|Gain on sale of pharmacy records||—||—||—||—||(41.0)||(41.0)|
|Loss (gain) on sale of assets||—||16.4||16.4||(9.1)||28.2||19.1|
|Share based compensation||10.6||—||10.6||5.2||—||5.2|
|Redemption of share based compensation grants||(3.2)||(5.2)||(8.4)||(18.3)||(9.5)||(27.8)|
|Changes in operating working capital:|
|Decrease in trade and other receivables||36.8||7.8||44.6||0.5||42.2||42.7|
|Decrease (increase) in inventories||179.7||151.3||331.0||(24.1)||692.7||668.6|
|Decrease (increase) in other current assets||4.1||6.4||10.5||(9.8)||(3.9)||(13.7)|
|Decrease in trade and other payables, accrued liabilities and provisions||(161.7)||(210.7)||(372.4)||(13.7)||(67.3)||(81.0)|
|Increase (decrease) in other liabilities||25.2||(7.0)||18.2||25.0||(1.9)||23.1|
|Net cash inflow from (outflow for) operating activities||204.2||(85.7)||118.5||80.8||272.8||353.6|
|Acquisition of Saks, net of cash acquired||(2,765.7)||—||(2,765.7)||—||—||—|
|Software development costs||(53.2)||—||(53.2)||(43.6)||—||(43.6)|
|Proceeds from lease termination||3.6||—||3.6||—||—||—|
|Proceeds from sale of assets||—||2.7||2.7||4.7||81.7||86.4|
|Other investing activities||(0.5)||—||(0.5)||0.9||—||0.9|
|Net cash (outflow for) inflow from investing activities||(3,054.1)||2.7||(3,051.4)||(197.3)||81.7||(115.6)|
|Fiscal 2013||Fiscal 2012(1)|
|Long-term loans and borrowings:|
|Net decrease in other long-term borrowings||(1.6)||—||(1.6)||—||—||—|
|Short-term loans and borrowings:|
|Net borrowings (repayments) of asset-based credit facilities||36.3||—||36.3||(142.2)||—||(142.2)|
|Issuance of common shares||1,039.3||—||1,039.3||230.1||—||230.1|
|Net cash inflow from (outflow for) financing activities||2,906.2||—||2,906.2||(232.1)||—||(232.1)|
|Foreign exchange losses on cash||(0.8)||—||(0.8)||—||—||—|
|Increase (decrease) in cash||55.5||(83.0)||(27.5)||(348.6)||354.5||5.9|
|Transfer (from) to continuing operations||(83.0)||83.0||—||354.5||(354.5)||—|
|(Decrease) increase in cash||(27.5)||—||(27.5)||5.9||—||5.9|
|Cash at beginning of year||48.3||—||48.3||42.4||—||42.4|
|Cash at end of year||20.8||—||20.8||48.3||—||48.3|
|(1)||Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to see note 2(z) of the Company’s consolidated financial statements for Fiscal 2013.|
The following table shows the reconciliation of Net (Loss) Earnings - Continuing Operations to EBITDA as well as Normalized EBITDA.
|Fiscal Year||Fiscal Quarter Ended|
|(millions of Canadian dollars)||2013||
|Net (Loss) Earnings - Continuing Operations||(175.7)||27.8||37.4||90.4|
|Income tax (benefit) expense||(78.5)||(9.4)||(68.1)||26.1|
|Pension expense (recovery) (non-cash)||20.8||11.8||(0.6)||(6.4)|
|Depreciation and amortization||175.6||104.1||84.3||31.0|
|Impairment and other non-cash expenses||4.1||13.3||4.1||9.4|
|Share based compensation||8.7||-||2.2||-|
|Acquisition related expenses||70.4||-||65.2||-|
|Saks integration expenses||53.1||-||44.0||-|
|Amortization of Saks inventory purchase accounting adjustments||39.3||-||39.3||-|
|Restructuring and other||27.7||75.3||7.6||23.3|
|Real estate gains||-||(10.0)||-||(10.0)|
|Foreign exchange gains on capital transactions||-||-||-||-|
Less: Saks Normalized EBITDA
Legacy HBC Normalized EBITDA
|(1)||Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to “New Accounting Policies – Employee Benefits” and “Changes in Accounting Policies Including Initial Adoption.”|
The following table shows the reconciliation of Net (Loss) Earnings - Continuing Operations to Normalized Net Earnings - Continuing Operations.
|Fiscal Year||Fiscal Quarter Ended|
|(millions of Canadian dollars)||2013||
|Net (Loss) Earnings – Continuing Operations||(175.7)||27.8||37.4||90.4|
|Acquisition-related finance costs and expenses, net of tax||222.5||-||37.0||-|
|Restructuring and other, net of tax||20.3||53.6||5.4||17.3|
|Financing related adjustments, net of tax(1)||7.6||6.6||4.1||1.4|
|Saks integration expenses, net of tax||33.5||-||26.8||-|
|Real estate gains, net of tax||-||(5.9)||-||(5.9)|
|Foreign Exchange Gains on Capital Transactions, net of tax||-||-||-||-|
|Amortization of Saks inventory purchase accounting adjustments, net of tax||23.6||-||23.6||-|
|Tax related adjustments(2)||(51.8)||(10.0)||(52.8)||(5.6)|
|Total normalizing adjustments||255.7||44.3||44.1||7.2|
Normalized Net Earnings - Continuing Operations
|(1)||Includes write-off of deferred financing costs, gain on early extinguishment of debt, fair market value movement in embedded derivatives and amortization of loan renewal options. Please refer to note 6 of the Company’s audited consolidated financial statements for the fiscal years ended February 1, 2014 and February 2, 2013.|
|(2)||Includes reversal of valuation allowances on deferred tax assets, impact of tax rate change and revaluation of Lord & Taylor deferred tax assets as a result of change in tax status. Please refer to note 7 of the Company’s audited consolidated financial statements for the fiscal year ended February 1, 2014.|
|(3)||Certain previously reported figures have been restated due to the implementation of IAS 19R. For more information, please refer to “New Accounting Policies – Employee Benefits” and “Changes in Accounting Policies Including Initial Adoption.”|
EBITDA is a non-IFRS measure that we use to assess our operating performance. EBITDA is defined as net earnings before interest expense, income tax, non-cash share based compensation expense, depreciation and amortization expense, impairment and other non-cash expenses and pension expense (non-cash). The Company’s Canadian defined benefit pension plan is currently over-funded, and as a result pension expense is adjusted as management does not expect to make any payments in the foreseeable future.
Normalized EBITDA is defined as EBITDA adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. Normalized Net Earnings (Loss) – Continuing Operations is defined as net earnings (losses) adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, including those related to purchase accounting, if any, related to transactions that are not associated with day-to-day operations.
We have included Normalized EBITDA and Normalized Net Earnings (Loss) – Continuing Operations to provide investors with supplemental measures of our operating performance. We believe Normalized EBITDA and Normalized Net Earnings (Loss) – Continuing Operations are important supplemental measures of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use EBITDA, Normalized EBITDA, and Normalized Net Earnings (Loss) – Continuing Operations in the evaluation of issuers, many of which present similar metrics when reporting their results. Our management also uses Normalized EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements and our ability to pay dividends on our shares. As other companies may calculate EBITDA, Normalized EBITDA, or Normalized Net Earnings (Loss) – Continuing Operations differently than we do, these metrics are not comparable to similarly titled measures reported by other companies.
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, Saks Fifth Avenue, Lord & Taylor 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 national branded department store with 90 full-line locations, one outlet store and thebay.com. Saks Fifth Avenue, one of the world's pre-eminent luxury specialty retailers, comprises 39 U.S. stores, five international licensed stores and saks.com. Lord & Taylor operates 49 full-line locations primarily in the northeastern and mid-Atlantic U.S., four Lord & Taylor outlet locations and lordandtaylor.com. OFF 5TH offers value-oriented merchandise through 72 U.S. stores and saksoff5th.com. Home Outfitters is Canada's largest kitchen, bed and bath specialty superstore with 69 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, including future-oriented financial information and financial outlooks, within the meaning of securities laws. This information is based on certain 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: credit, market, currency, operational, liquidity and funding risks, including changes in economic conditions, interest rates or tax rates, the timing and market acceptance of future products, competition in the Company’s markets, the growth of certain business categories and market segments and the willingness of customers to shop at the Company’s stores, the Company’s margins and sales and those of the Company’s competitors, the Company’s reliance on customers, risks and uncertainties relating to information management, technology, supply chain, product safety, changes in law, regulations, competition, seasonality, commodity price and business disruption, the Company’s relationships with suppliers and manufacturers, changes to existing accounting pronouncements, the ability of the Company to successfully implement its strategic initiatives, changes in consumer spending, managing our portfolio of brands and our merchandising mix, seasonal weather patterns, economic, social, and political instability in jurisdictions where suppliers are located, increased shipping costs, potential transportation delays and interruptions, the risk of damage to the reputation of brands promoted by the Company and the cost of store network expansion and retrofits, compliance costs associated with environmental laws and regulations, fluctuations in currency and exchange rates, commodity prices, the Company’s ability to maintain good relations with its employees, changes in the law or regulations regarding the environment or other environmental liabilities, the Company’s capital structure, funding strategy, cost management programs and share price, the Company’s ability to integrate acquisitions and the Company’s ability to protect its intellectual property.
For more information on these risks, uncertainties and other factors the reader should refer to the Company’s filings with the securities regulatory authorities, including the MD&A, which is available on SEDAR at www.sedar.com. To the extent any forward-looking information in this press release constitutes future-oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are based on assumptions and subject to risks, uncertainties and other factors. Actual results may differ materially from what the Company currently expects. Other than as required under securities laws, the Company does not undertake to update any forward-looking information at any particular time. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement.