Investing

Hudson's Bay Company (HBC-T)

  • Last Updated:
  • Aug 17th, 2017 1:52 am
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Newbie
Jul 7, 2013
9 posts
1 upvote
Toronto
Hang tight. Their earnings are still pretty good.

I got in at 14.35 in Nov so I'm down 37% now which is quite a lot but I'm just going to wait it out at this point. No idea why its dropping so much, its not like they have negative earnings.
Sr. Member
Dec 3, 2014
956 posts
166 upvotes
Ontario
Here's an interesting exercise. Pull up a two year chart of Amazon. Now turn it upside down... boom, you now have the 2 year chart for HBC. You also have the only explanation you need for HBC's price action.
Newbie
Jul 7, 2013
9 posts
1 upvote
Toronto
llpresident wrote:
Jan 12th, 2017 9:47 pm
You also have the only explanation you need for HBC's price action.
Amazon isn't exactly known for selling premium clothing and accessories. When was the last time you bought a suit or a dress shirt that fit properly from Amazon?

I'm thinking its just a knee jerk reaction by the market. There aren't many big retailers left in Canada other than Walmart. Target is gone, Zellers gone, Sears gone, Reitmans is barely holding on after closing so many LOBs. Do people not buy clothing anymore?
Newbie
User avatar
Jan 7, 2017
12 posts
3 upvotes
Kensington, South Lo…
It certainly looked more attractive when you originally posted this. Lately it seems like its been all bad news for HBC. All I read is "downgraded," "tumbling," "all-time low." I am hoping for the best, but expecting the worst.
Known to many as the Welsh Investor, I am semi-retired living off my investment income and working casually as a financial analyst/consultant. I enjoy meeting new people and sharing investing insight, information, and advice.
Sr. Member
Dec 3, 2014
956 posts
166 upvotes
Ontario
awesomepawsome wrote:
Jan 13th, 2017 11:03 am
Amazon isn't exactly known for selling premium clothing and accessories. When was the last time you bought a suit or a dress shirt that fit properly from Amazon?

I'm thinking its just a knee jerk reaction by the market. There aren't many big retailers left in Canada other than Walmart. Target is gone, Zellers gone, Sears gone, Reitmans is barely holding on after closing so many LOBs. Do people not buy clothing anymore?
Valid. But people dress more causally and there are plenty of smaller stores to go to with similar price to HBC and better service.

HBC revenue is derived from a lot more then luxury fashion. They will need to reduce their store footprint by 80% to eliminate all of the stuff that people do buy on Amazon.

The department store as a business model generally is in decline.
Newbie
Jul 7, 2013
9 posts
1 upvote
Toronto
llpresident wrote:
Jan 13th, 2017 12:46 pm
The department store as a business model generally is in decline.
Yeah I'm guilty of contributing to this myself. I bought an item that was for $23 on amazon vs going to my local walmart that had it for $24. Even though the walmart price was still fairly discounted, $1 off with free shipping was a no brainer.

Just hope the stock rebounds enough by summer for me to get a profit and exit. I bought Reitmans when it was at $15 and its been sitting at $4-5 for years now... Target coming to Canada caused their stock to plummet but post-Target-exit the stock didnt gain any momentum.
Sr. Member
Dec 3, 2014
956 posts
166 upvotes
Ontario
awesomepawsome wrote:
Jan 13th, 2017 1:38 pm
Yeah I'm guilty of contributing to this myself. I bought an item that was for $23 on amazon vs going to my local walmart that had it for $24. Even though the walmart price was still fairly discounted, $1 off with free shipping was a no brainer.

Just hope the stock rebounds enough by summer for me to get a profit and exit. I bought Reitmans when it was at $15 and its been sitting at $4-5 for years now... Target coming to Canada caused their stock to plummet but post-Target-exit the stock didnt gain any momentum.
Well lesson learned I hope - stay away from retailers unless their online game is strong.
Deal Addict
User avatar
Oct 9, 2008
3959 posts
841 upvotes
Thornhill
awesomepawsome wrote:
Jan 13th, 2017 1:38 pm

Yeah I'm guilty of contributing to this myself. I bought an item that was for $23 on amazon vs going to my local walmart that had it for $24. Even though the walmart price was still fairly discounted, $1 off with free shipping was a no brainer.

Just hope the stock rebounds enough by summer for me to get a profit and exit. I bought Reitmans when it was at $15 and its been sitting at $4-5 for years now... Target coming to Canada caused their stock to plummet but post-Target-exit the stock didnt gain any momentum.
llpresident wrote:
Jan 13th, 2017 4:57 pm
Well lesson learned I hope - stay away from retailers unless their online game is strong.
As you've seen first hand and are in process of seeing; investing/trading the retail sector is one of the most precarious positions one could take if you're not extremely careful. Yet you still think you have a chance in hell on making money on HBC? You better stock up on plenty of 'hopium' by summer. With enough summer heat, foot traffic may go up due to people taking refuge in HBC stores for the free A/C and relax on the furniture. Smiling Face With Open Mouth And Smiling Eyes

On the professional side of the equation - HBC screams to get ploughed under when it's window dressing time.
Newbie
Jul 7, 2013
9 posts
1 upvote
Toronto
Jeenyus1 wrote:
Jan 13th, 2017 5:56 pm
Yet you still think you have a chance in hell on making money on HBC? You better stock up on plenty of 'hopium' by summer. With enough summer heat, foot traffic may go up due to people taking refuge in HBC stores for the free A/C and relax on the furniture. Smiling Face With Open Mouth And Smiling Eyes

On the professional side of the equation - HBC screams to get ploughed under when it's window dressing time.
I've made $ on HBC a few times, it just hasn't gone down this much so quickly. If you think HBC is risky, you've clearly never bought a gold etf. That's like being in Vegas, 6% up one day, 15% down next week, a month later you're pocketing a 15% gain :)

I got HBC for a short term gain, was expecting a rebound in the new year. Nothing ventured, nothing gained.
Newbie
Nov 30, 2016
5 posts
So far, it's my worst investment as well. Thankfully, I only bought a small position but I did get in at $18.

I see that HBCs Canadian numbers weren't so bad. They were bad in the US and Germany, though. Hopefully, they can turn around those stores the way they have with the Bay in Canada. The continuing tumble comes from the bad numbers coming from other department stores...and for the market share that Amazon is gaining.

Personally, I'm in for the longterm. I see HBCs longterm value being in real estate, not retail. The retail is a bonus to me, and I think that these guys can figure it out. Hopefully, the company decides to unlock that real estate value for us.
Newbie
Jan 15, 2016
24 posts
7 upvotes
A lot of us are in HBC because of Richard Baker and the underlying RE value.

If the Sacs 5th Ave lease is truly worth $10-12 a share on its own and the combined RE and value of leases total $20-25, then there is some support.

The question becomes whether Baker does in the interim:

1) Is he patient and work this out operationally across the various banners?

2) does he unlock the value of the RE through a partial spin off into REIT ?

3) if share prices continue to trade significantly below NAV, does he pursue privatization options? I would imagine the opportunity to unlock this much value would be attractive to P/E or institutional investors.
Member
May 31, 2008
452 posts
226 upvotes
Toronto
Retail has a very long lead time..it will be sometime before they can turn things around. Wait till they process all their holiday returns, and then have a hit to their profit margins due to clearance...With all their purchases for GILT and then their spending for the ecommerce (back operations - though not the customer facing website) the ROI on all that money spent will take some time.

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