Kevin O鈥橪eary says that, while Hudson鈥檚 Bay Co.鈥檚 latest are impressive, he鈥檚 not sure the profitability will last.
O鈥橪eary told 麻豆传媒 Channel that the company鈥檚 recent profits are driven by the trend of older retailers unlocking the value of their prime real estate.
鈥淚f you鈥檝e owned a store for 50 years, the value of that real estate has gone up dramatically, maybe even more so than the value of your business,鈥� said the CTV business commentator.
鈥淥ne of the strategies has either been to sell off the real estate or turn it into a separate REIT (Real Estate Investment Trust), which investors can invest in, and then you lease back your own property,鈥� he explained.
鈥淭his is the same thing Hudson鈥檚 Bay is doing,鈥� he added. 鈥淢y question as an investor 鈥� is this sustainable?鈥�
O鈥橪eary added that he is 鈥渁lways suspect of retail,鈥� because of the tendency for brands to 鈥渓ose their mojo,鈥� in part by failing out of touch with what鈥檚 fashionable.
O鈥橪eary said that, 鈥淪ears is a worthless brand now鈥� and that Gap Inc. 鈥渉as lost so much of its mojo over the last 15 years 鈥� because they haven鈥檛 been able to buy the right products.鈥�
Hudson鈥檚 Bay Co. said Wednesday that it had returned to profit in the second quarter, in large part due to a $107-million gain from real estate joint ventures.
HBC's net income for second quarter ended Aug. 1 was $67 million, which compared with a loss of $36 million in the second quarter of 2014, and $33 million in the first quarter of 2015.
HBC operates under the brands Lord & Taylor and Saks Fifth Avenue in the U.S., and Hudson's Bay and Home Outfitters in Canada.
HBC's sales totalled $2.04 billion in the second quarter, which was up $269 million or 15.2 per cent from a year earlier.
With files from The Canadian Press
