Hudson鈥檚 Bay Company is cutting 2,000 positions in North America as quarterly losses mount and brick-and-mortar stores come under increasing threat from online competitors.
The job losses announced Thursday by the Toronto-based retailer, which also owns the luxury department store chain Saks Fifth Avenue, amounts to about three per cent of its global workforce.
鈥淭his is a fairly big move in terms of the number,鈥� Retail Advisors Network co-founder Bruce Winder told 麻豆传媒 Channel. 鈥淚t鈥檚 definitely sending a signal that they mean business in terms of trying to cut costs.鈥�
Founded in 1670, HBC employs over 66,000 people and operates more than 480 stores in North America and Europe. The company鈥檚 stable of retail banners also includes Lord & Taylor, Gilt, Saks OFF 5TH, Galeria Kaufhof, the largest department store group in Germany, and Belgium's only department store group Galeria INNO.
North America鈥檚 oldest company says it will save $350 million annually once its so-called transformation plan to cope with a changing retail climate is fully implemented by end of fiscal 2018. The cost-savings initiative was previously announced in February, according to the company.
鈥淩ather than chase the rapid industry changes, our transformation plan will reposition HBC to get ahead and stay ahead,鈥� chief executive officer Jerry Storch said in a statement Thursday.
The job cuts come on the heels of HBC鈥檚 first-quarter earnings, which showed a net loss of $221 million, more than twice the $97 million loss it had in the same period last year.
鈥淚t鈥檚 not a big surprise, unfortunately, because HBC has had a few rough quarters recently,鈥� Winder said.
He says that like many legacy department store brands, HBC is suffering from decreased mall traffic and weaker sales to tourists in the U.S. market due to the strong U.S. dollar.
鈥淧eople just aren鈥檛 going to malls anymore and a lot of these stores are anchored in malls, so there is an issue with traffic,鈥� he said. 鈥淢all traffic in the U.S. is down about 10 per cent.鈥�
Winder points to still-vacant retail space left in the wake of Target鈥檚 abrupt 2015 departure from the Canadian markets as further evidence of brick-and-mortar weakness on this side of the border.
鈥淵ou look at the footprint that Target left when it vacated Canada, there are still 30 or 40 stores that haven鈥檛 been filled yet. Retail is changing. Online retailers such as Amazon are getting stronger,鈥� he said. 鈥淵ou are going to have to retool your business fairly quickly, or you might find yourself in trouble.鈥�
Cutting through the bloat
The emphasis on shaving costs within the expansive retail empire is a familiar refrain for Storch, who led the company through the elimination of 265 corporate jobs in Toronto and New York in September 2015; following years marked by a string of major acquisitions.
鈥淗BC has taken on a lot of other companies. Things like Lord & Taylor, Gilt, and Saks Fifth Avenue,鈥� said retail and marketing expert Brynn Winegard. 鈥淲hat they have experienced of course is bloating.鈥�
Winder expects this latest round of cuts will impact more back office jobs than positions on sales floors and in distribution warehouses.
鈥淭here is only so much you can cut on the retail floor and the distribution floor without it significantly affecting sales. Not to say that white collar jobs aren鈥檛 important, but that is a trend that we have seen in the last five to 10 years,鈥� he told the Business News Network
Winegard expects HBC will remain committed ensuring customers get the shopping experience they have come to expect in pursuit of sales growth, but she notes clerk and warehouse jobs are not immune to future cuts.
Last year, the company introduced a robotic packing system at its Toronto warehouse for filling online orders, a direct play to compete with Amazon.
鈥淲e were expecting to see HBC go the direction of not just online and digital, but more automated and less in the way of human workers,鈥� she said.
Before the job cuts were announced, shares in HBC closed down 11 cents, or 1.13 per cent, to $9.62 on 318,378 shares. The stock is down nearly 40 per cent year-over-year.
