TORONTO, June 9 (Reuters) - Canadian department store operator Hudson's Bay Co on Friday said it would streamline its structure across its various store chains to compete in what it called a "brutal" retail environment, while its shares plunged to record lows.
The company, also known as HBC, is the latest North American department store to announce major plans to address industry-wide turmoil. Intense competition in a saturated market and shifting shopping trends to online are punishing sales across the sector.
"We know we can do better and we are taking bold decisive action," said Chief Executive Gerald Storch in a conference call, adding that the streamlined structure would also help make any future acquisitions easier to integrate.
"Rather than chase the rapid industry trends, our transformation plan will reposition HBC to get ahead and stay ahead."
8 retailers that are actually opening stores
8 retailers that are actually opening stores
Discount stores have generally bucked the current retail trend, and Dollar General (NYSE: DG) has been one of the leaders in that space. The company plans to open 1,000 new stores in 2017 -- that will come on top of the 900 locations the company added last year.
Costco (NASDAQ: COST) exemplifies the idea that slow and steady wins the race. The chain has plodded along in its usual fashion year after year seemingly unfazed by industry headwinds and competitive jostling.
In 2016, the wholesale retailer opened 29 new warehouses with 21 of them in the U.S. That followed 23 new stores globally in 2015, and this year, the company will continue with plans to add 31 new stores (17 of them in the U.S).
Last year, Wal-Mart (NYSE: WMT) closed 269 locations, but it still saw net additions to its network. Over 100 of those closures stemmed from the shuttering of its small-format Express locations, which management originally hoped would be a source of future growth.
Going forward, Wal-Mart plans to open 59 new locations in the U.S. in 2017. That is in line with its normal expansion pace, and that growth will include new SuperCenters and more Sam's Club locations. To service those stores and a growing digital business, Wal-Mart will open new distribution centers as well.
While Wal-Mart has abandoned its Express concept, Target (NYSE: TGT) is embracing the idea that going small can allow it to access markets and areas it otherwise would not be able to. The chain expects to operate over 100 small-format stores within the next few years, including one in New York City's Herald Square.
Furthermore, Target also plans to redesign 600 of its locations by 2018. Like the smaller stores, they will feature a modernized design highlighted by "glazed, large glass windows at the front of store, stenciled concrete floors and unique lighting throughout," the company said in a press release. "Additionally, the new design offers two entrances, each with a specific guest need in mind."
One entrance will be for customers looking to shop the store. It will feature market-appropriate seasonal displays. The second location will serve grab-and-go customers looking for a quick snack or other fast-serve items as well as those picking up digital orders.
REUTERS/Mike Blake/File Photo
While many of its department store rivals have struggled mightily, Nordstrom (NYSE: JWN) has done surprisingly well. The chain exceeded its earnings forecast in 2016 despite full-year comparable-store growth falling 0.9%.
The company has been slowly growing its store footprint, adding five locations in Canada in the fourth quarter alone, along with 21 of its lower-priced (albeit still higher-end) Nordstrom Rack stores. In 2017, the company has planned one new full-line store as well as 15 new Rack locations.
T.J. Maxx and Marshalls
Like many of the other persevering companies on this list, TJXCompanies (NYSE: TJX), which owns Marshalls and T.J. Maxx, has succeeded by discounting. Both chains, as well as sister brand HomeGoods, offer a wide, changing selection of lower-priced merchandise. This model helps drive customer traffic as shoppers visit the stores more often, not knowing what deals they might find each trip. It has clearly worked well with the company delivering 21 straight years of comparable-store sales increases.
In its past fiscal year, TJX Companies added nearly 200 stores globally. It plans to continue that growth in 2017 with the company having a long-term plan to add 1,800 more locations for a total of 5,600. And that only includes growth of existing chains in established markets. The company is launching a fourth concept in 2017, which the company will test in two locations.
(Photo by Joe Raedle/Getty Images)
Hobby Lobby opened 56 new stores in 2016 with more coming this year. The chain, which bills itself as "the world's largest privately owned arts and crafts retailer," expects to open 60 new locations in 2017, all in the U.S. That would bring its total number of stores to over 750. Between 1,700 and 2,500 employees will be hired to staff the additional locations.
Dick's Sporting Goods
Dick's Sporting Goods (NYSE: DKS) has been a rare success story in a market that has seen major competitors like Sports Authority go bankrupt, while remaining players struggle to stay afloat. Dick's has encountered its own challenges, but overall, it has managed to deliver growth in the face of increased online competition.
In 2017, the company, which operates the Golf Galaxy chain as well, expects to open 43 new Dick's and nine Golf Galaxy stores. In some cases, the new stores will be converted Sports Authority or Golfsmith locations that Dick's acquired.
Photographer: Sean Proctor/Bloomberg via Getty Images
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HBC, which operates Hudson's Bay, Lord & Taylor, Saks Fifth Avenue and other chains, plans to decrease its number of vendors, centralize store operations and move toward a "shared services" structure to standardize processes across department stores.
The shares tumbled C$1.08, or 11.2 percent, to C$8.55, and earlier touched a record low of C$8.44.
The company on Thursday had announced a major restructuring plan that included cutting 2,000 positions in North America, or about 3 percent of its more than 66,000 global employees, and reported a wider-than-expected quarterly loss.
On Thursday, U.S. department store operator Nordstrom Inc said that members of the Nordstrom family were exploring the possibility of taking the company private, which could enable the retailer to restructure its business more easily.
HBC said its restructuring was centered on North America, but that its team in Europe was also focused on managing costs.
Storch said employees in Europe were unionized and the agreement when it purchased the Kaufhof department store chain in 2015 included limits to job cuts in the first several years of operation.
Unlike some of its competitors, HBC has no plans to shutter stores as part of its overhaul and is planning to move ahead with growth plans, with Storch highlighting the company's Canadian operations as a "national jewel."
"There are not stores we can close to make our business better," said executive chairman Richard Baker, adding that the company was looking carefully at opening any stores it did not presently have commitments for.
Investors have also been waiting for the company to monetize its real estate portfolio. Baker reiterated the possibility it could sell additional equity in its joint venture assets, or potentially launch an initial public offering of one or both joint ventures. (Reporting by Solarina Ho; Editing by Chizu Nomiyama and Meredith Mazzilli)