Saks Off 5th Wants in on the Discount Retail Boom 

(Bloomberg) -- Everybody likes a bargain, but the discount division of Hudson’s Bay Co. has been unable to tap the appetite for good deals that’s lifted sales at rival retailers.

The Canadian owner of Saks Fifth Avenue is trying to turn around its Saks Off 5th chain, which reported falling same-store sales for the seventh time in the past eight quarters. In contrast, revenue at Nordstrom Inc.’s Rack grew 4 percent on that basis last quarter, while TJ Maxx operator TJX Cos., on the lower end of the off-price spectrum, is thriving, too.

Saks Off 5th Wants in on the Discount Retail Boom 

The company appointed a new head of Saks Off Fifth in January and agreed to sell its struggling flash-sale website Gilt in June. It is looking in the short term at improving the “fundamental basics of running an off-price retailer,” Chief Executive Officer Helena Foulkes said in an phone interview Wednesday after reporting a smaller-than-expected second-quarter loss.

“That’s a category that is performing quite well and Saks Off 5th is an outlier,” said Foulkes, who started as CEO in February. “The two years we spent integrating Gilt really took our eye off the ball.”

While the chain’s profitability has improved, progress on revenue won’t happen till 2019, according to Foulkes. She said the company also needs more time to consider longer-term options for the chain, which operates 132 stores in North America. Same-store sales at Off 5th slumped 7.6 percent last quarter.

“The issue at Off 5th is merchandise, they need to fix the product in there -- get more compelling assortments and also fix pricing,” Bloomberg Intelligence senior analyst Poonam Goyal said. “Nordstrom had the same issue and they have now moved past it.”

Hudson’s Bay shares rose as much as 7.2 percent on Wednesday after quarterly results were announced. The company classified its European business as discontinued operations following a deal Tuesday to merge its chains there with Signa Holding GmbH’s Karstadt.

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