Hudson’s Bay Corp. is moving to up its efficiency quotient as sales in its brick-and-mortar stores slip.
The Saks Fifth Avenue operator has been working to streamline operations and said its efforts would reduce expenses this year by 75 million Canadian dollars, or $57.2 million at current exchange.
HBC, said it’s been looking to “rationalize corporate functions and overhead across North America” and now expects to incur a one-time severance charge of $30 million.
It was not immediately clear how many or what type of employees would be affected, but HBC said it expects to “reinvest in customer-facing activities while reducing costs in back office and support areas” and also to begin “optimizing” associate scheduling practices.
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“Our operational review is ongoing, and we will continue to evaluate additional opportunities to improve productivity, enhance our operating model, and optimize in-store operations,” said Jerry Storch, HBC’s chief executive officer. “We believe this cost reduction initiative will help us mitigate the pressures facing our company and the department store industry as a whole.”
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Department stores have been struggling lately, making cost-cutting measures seem par for the course, but HBC is also rumored to be moving toward a potential acquisition of Macy’s, a department store dealing with its own consolidation process.
HBC also revealed its consolidated comparable-store sales for the fourth quarter, which dropped by 1.2 percent,
The drop is mainly due to mainly due to a 5.6 percent drop in sales in HBC’s off-price channels, Gilt and Saks off 5th. The company’s European stores also dropped by 2 percent.
Meanwhile, sales at Saks Fifth Avenue inched up by 0.1 percent and sales at Hudson’s Bay stores, Lord & Taylor and Home Outfitters rose 0.6 percent.
Digital sales however increased 13.3 percent over the prior-year quarter and online sales at departments stores did even better, rising by nearly 21 percent.
Storch added: “We are focused on combining best-in-class retail destinations and an advanced digital platform, which will allow our customers to shop whenever, wherever, and however they choose.”