Hudson's Bay Company reports 1999 year-end results
- HBC DOUBLES PROFIT AND DELIVERS BEST EARNINGS RESULTS IN FIVE YEARS -
TORONTO, March 9 /CNW/ - Hudson's Bay Company announced today that
earnings for the year ending January 31, 2000, increased by 105% to $1.17 per
share (after deducting net dividends for equity subordinated debentures),
compared to $0.57 per share in the prior year. The earnings improvement is a
result of sales growth and improved merchandising margins at both Zellers and
the Bay. Sales for the Company for the year ended January 31, 2000 grew 3.1%
to $7.296 billion from $7.075 billion in the previous year.
The year-end results include an impressive fourth quarter at both the Bay
and Zellers. The Bay increased comparable store sales by 9.7% over the same
period last year and Zellers comparable store sales increase in the quarter
was the best of the year at 4.3%; earnings in the quarter doubled over the
previous year to $90.6 million.
"We are very pleased with our financial results for fiscal 1999,
particularly with the progress made in both companies," stated George Heller,
President and Chief Executive Officer. "The results reflect our balanced
approach to increasing shareholder value. Through 1999 we produced consistent
and sustained growth in both sales and operating profits. The major
improvement in sales margins and asset management underlies the success of the
broad based and strategic initiatives we undertook. We fully intend on
building on, and adding to the successes achieved in 1999."
For the year ended January 31, 2000, earnings before interest, taxes,
depreciation and amortization (EBITDA) rose to $453.6 million or $6.08 per
share compared to $356.0 million or $4.93 per share last year. Cash flow from
operating activities grew to $449.6 million from $157.5 million the prior
year. Improved inventory management and the continued Company wide commitment
to and investment in improved systems, logistics, and asset management
contributed to enhanced cash flow.
The Company significantly reduced its debt during the year to $793.8
million as at January 31, 2000 from $1,522.9 million at the same time last
year. The decrease is the result of positive cash flow of $253.6 million, the
sales of credit card receivables of $300.0 million and proceeds of $194.0
million from the sale of Equity Subordinated Debentures. Lower debt levels
resulted in a reduction in interest expense to $79.1 million from $97.2
million last year, more than offsetting increases in interest rates
encountered during the year.
Fourth Quarter
Earnings in the fourth quarter amounted to $90.6 million, double last
year's earnings of $45.2 million. After providing for dividends on the equity
subordinated debentures, the fourth quarter earnings available to common
shareholders amounted to $87.9 million or $1.18 per share compared to $45.2
million or $0.63 per share in the same period last year. Earnings before
interest and taxes (EBIT) amounted to $177.9 million for the quarter, an
increase of 69.9% over the $104.7 million earned in the same period last year.
Sales in the fourth quarter grew 4.1% to $2,401.3 million. During the quarter
the Company repurchased 552,600 shares under its normal course issuer bid.
"We enter the new fiscal year with strong momentum, a healthy financial
position, and a revitalized management team with clearly defined strategies to
grow the business," continued Mr. Heller. "Both the Bay and Zellers
demonstrated strong performance in fiscal 1999, and we are confident the
initiatives begun during the year will result in continued increases in sales
and profits going forward."
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The Bay
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Year Ended January 31, 2000 1999
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(millions of dollars)
Sales and Revenue $2,594 2,485
Earnings before Interest & Taxes 128.2 52.1
Net Assets 1,155 1,287
Number of Stores 99 100
Square Footage (thousands) 16,882 17,028
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>>
Sales for the year ended January 31, 2000 increased by 4.4% to $2.594
billion. Comparable store sales rose by 4.7%. Earnings before interest and
taxes (EBIT) for the year increased by 146.3% to $128.2 million from $52.1
million last year. For the fourth quarter, sales increased 8.7% while
comparable store sales increased by 9.7%. EBIT increased significantly to
$88.2 million from $12.9 million the prior year.
Throughout 1999 the Bay remained focused on operational improvements
while achieving significant growth in both sales and earnings. Sales grew
consistently through fiscal 1999, while gross profit margins improved and the
expense rate declined. The Bay was successful in taking advantage of the
unique opportunity in the department store channel in the fourth quarter, and
the Company sees the withdrawal of a key competitor as a significant advantage
for the Bay going forward.
Among the numerous changes introduced at the Bay in 1999 - the Company
underwent an intensive review of the Bay's store portfolio and made
significant changes in its operations of stores in urban and suburban
communities. These changes are designed to improve customer service and
merchandise assortment throughout the chain. Two prototype stores were opened
and tested in Toronto to positive consumer response. With nine new stores,
including four re-locations, one expansion and one renovation in 2000, the Bay
will make significant improvement in the quality and profitability of the
store portfolio. The new and renovated stores will be built to the new Bay
prototype format.
<<
Zellers
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Year Ended January 31, 2000 1999
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(millions of dollars)
Sales and Revenue $4,598 4,498
Earnings before Interest & Taxes 149.6 133.8
Net Assets 1,740 1,958
Number of Stores 328 342
Square Footage (thousands) 28,287 28,284
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>>
Sales for the year ended January 31, 2000 increased by 2.2% to $4.598
billion. Comparable store sales rose by 2.3%. Earnings before interest and
taxes (EBIT) for the year increased by 11.8% to $149.6 million from $133.8
million last year, as a result of continuing efforts to reposition and convert
stores, and improve cost structures and operating efficiencies. Included in
these amounts are store closure costs amounting to $25.6 million in fiscal
1999 versus $9.5 million in fiscal 1998 resulting from Zellers' ongoing
program to upgrade its store portfolio. For the fourth quarter, sales
increased by 1.3% while comparable store sales increased by 4.3% - the best
comparable store sales increase of the year. EBIT increased by 7.6% to $86.9
million from $80.7 million. Included in the fourth quarter results are store
closing costs of $13.6 million compared to $6.2 million last year.
During 1999, Zellers accelerated its program to cull under-performing
stores and retrofit current units to its successful new prototype format. The
Company continued to refine its store portfolio by market with 5 new stores,
10 store expansions, 15 renovations and 19 closures. Zellers' prototype format
is outperforming the chain average and by August 2000, almost 50% of total
store space will have been converted to Zellers' prototype.
Declaration of Dividend
The Board of Directors has declared a dividend of $0.09 per share payable
on April 30, 2000 to shareholders of record on April 7, 2000.
<<
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Financial Highlights
Three Months Ended Year Ended
January 31, January 31,
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2000 1999 2000 1999
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$000's $000's $000's $000's
(Restated) (Restated)
Sales and Revenue
The Bay 888,697 817,907 2,594,264 2,485,200
Zellers 1,480,770 1,461,207 4,597,622 4,498,113
Other 31,834 28,568 103,865 91,665
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2,401,301 2,307,682 7,295,751 7,074,978
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Earnings before Interest Expense and
Income Taxes
The Bay 88,209 12,910 128,226 52,062
Zellers 86,903 80,738 149,649 133,839
Other 2,745 11,075 (6,331) 1,308
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177,857 104,723 271,544 187,209
Interest Expense (15,940) (25,309) (79,140) (97,171)
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Earnings before Income Taxes 161,917 79,414 192,404 90,038
Income Taxes (71,360) (34,245) (96,369) (48,563)
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Net Earnings 90,557 45,169 96,035 41,475
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Earnings per Share (Note) $1.18 $0.63 $1.17 $0.57
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>>
Note:
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Earnings per share are determined after deducting dividends paid and
accrued net of income taxes and accretion of the conversion option on equity
subordinated debentures, amounting to $2,681,000 for the three months ended
January 31, 2000 and $8,679,000 for the year ended January 31, 2000.
Hudson's Bay Company, established in 1670, is Canada's largest department
store retailer and oldest corporation. The Company operates 99 Bay stores, 300
Zellers stores, 28 Best Value stores across the nation and 105 Fields stores
in Western Canada, in addition to other related retail enterprises.
This news release includes forward-looking statements, which are based on
the Corporation's current expectations and assumptions, and are subject to a
number of risks and uncertainties that could cause actual results to
materially differ from those anticipated. Such risks and uncertainties
include, among others, general business and economic conditions and
competitive actions.
%SEDAR: 00002055EB |
