[caption id="attachment_96237" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   2Q19 Results HBC reported 2Q19 revenues of C$1.85 billion, down 0.5% year over year and below the consensus estimate of C$2.13 billion. The company reported adjusted 2Q19 EBITDA of C$52 million, lower than the consenus estimate of $55.7 million and down 50.9% from the year-ago period. Management said its second quarter North America retail financial performance was a setback, with an adjusted EBITDA loss of $5 million. For the quarter, comparable sales overall were down 0.4%, better than the consensus estimate of down by 0.7%. By banner:

• Saks Fifth Avenue comps were up 0.6%. Growth categories included men’s, women’s ready-to-wear, handbags and beauty.
• Hudson’s Bay comps decreased 3.4% in the second quarter, showing an improvement from the first quarter decline of 4.3%. Management reported it is working to correct previous merchandise choices and modernizing its marketing mix.
• Comparable sales at Saks OFF 5TH increased 3.4%. The banner is in the early stages of a new strategy which includes shifts in its buying, marketing and service model. The company reported gains in sales of jewelry, women’s modern clothing and men’s classic apparel.

Following the company’s agreement to sell Lord & Taylor to Le Tote in August 2019, HBC classified Lord & Taylor as a discontinued operation. Management outlined the advantages of the Le Tote agreement. First, HBC receives approximately $100 million in cash at closing, a $33 million promissory note and a 25% equity stake in the new venture. Le Tote receives approximately $284 million in inventory and $77 million in net rent per year for three years. Lord & Taylor maintains ownership of its real estate, which provides the company with flexbility for potential further redevelopment beginning late 2021 when HBC and Le Tote have options to reassess the Lord & Taylor store network. Digital sales were a standout during the quarter at 19% growth for the company year over year. This was up from 14% in the first quarter, and 9% in the fourth quarter. The gains are attributed to integration with marketing and investments in digitial. During 2Q19, HBC’s total store count slid 24%, by 83 stores, from 342 to 259, most notably with the transfer of 45 Lord + Taylor stores and 37 Home Outfitters stores. In February, HBC announced it would close its Home Outfitters business. The company had 37 Home Outfitter locations throughout Canada and the closures were expected to be completed by the end of 2Q19. In the first quarter, HBC also announced a review of its Saks OFF 5TH business, and HBC identified 15 stores to close on a rolling basis throughout 2019, closing one store in 2Q19. The company plans to close 13 stores in the third quarter and one store in 4Q19. As of September 12, 2019, HBC’s store count by banner was as follows: [caption id="attachment_96324" align="aligncenter" width="700"] Source: Company reports [/caption]   The company reported going forward it will focus on three distinct areas with nearly half of its sales in luxury, more than one third of its sales in Canada and 15% in off-price. Its top priorities remain investing to drive growth at Saks and Hudson’s Bay while enhancing the customer experience across all channels. Outlook The company did not offer 3Q19 or full-year guidance in its statement or on its analyst call.