Hudson's Bay Company Reports Second Quarter 2015 Financial Results

Transcription

1 September 10, 2015 Hudson's Bay Company Reports Second Quarter 2015 Financial Results Continues Trend of Strong Sales Growth Generates Net Earnings of $67 Million compared to a Net Loss of $36 Million Declares Quarterly Dividend TORONTO & NEW YORK--(BUSINESS WIRE)-- Hudson's Bay Company ("HBC" or the "Company") (TSX: HBC) today announced its second quarter financial results for the 13-week period ended August 1, Unless otherwise indicated, all amounts are expressed in Canadian dollars. Second Quarter Year-Over-Year Highlights Consolidated sales growth of 15.2% to over $2.0 billion Same store sales growth of 14.3% On a constant currency basis, consolidated same store sales increase of 4.2% Department Store Group ("DSG") same store sales increase of 4.9% Saks Fifth Avenue same store sales increase of 0.1% Saks Fifth Avenue OFF 5TH ("OFF 5TH") same store sales increase of 12.7% Digital sales increase of 30.0% on a constant currency basis Gross Profit rate of 40.1% compared to 39.6% Adjusted EBITDAR of $139 million compared to $142 million Adjusted EBITDA of $66 million compared to $81 million Net Earnings of $67 million compared to a Net Loss of $36 Million "This was a transformative quarter for us, with multiple major initiatives that will shape HBC for years to come," stated Richard Baker, HBC's Governor and Executive Chairman. "During the quarter we closed our joint venture with Simon Property Group as well as the first tranche of our joint venture with RioCan REIT, as we continue to execute on our strategies to highlight the value of our real estate assets. As part of these transactions, we paid down more than $1 billion in debt, providing us with additional flexibility to invest in our retail businesses. We also entered into a definitive agreement to acquire Galeria Kaufhof, Germany's leading department store chain, which we expect to be significantly accretive to our shareholders. All of our businesses are in excellent shape for the fall and holiday quarters, putting HBC in a great position to deliver on our 2015 strategic priorities and initiatives." Added Jerry Storch, HBC's Chief Executive Officer, "Our second quarter was characterized by very strong sales growth, led by the increasing traction of our digital platforms. We continue to drive growth today while executing on our strategies to build our businesses and invest in the long term vision of HBC. These strategies include strengthening our digital capabilities, expanding OFF 5TH, bringing Saks Fifth Avenue and OFF 5TH to Canada and leveraging our scale to capture synergies and promote efficiencies across our businesses. These initiatives are a key part of HBC's future growth, and we look forward to realizing the benefits of these investments in the coming quarters." Financial Results Throughout this press release, the terms "Normalized SG&A", "Adjusted EBITDAR", "Adjusted EBITDA", and "Normalized Net Loss" refer to financial results that have been adjusted to, among other things, exclude certain non-recurring items and charges and, in the case of Adjusted EBITDA and Adjusted EBITDAR, certain adjustments related to our Joint Venture entities. In addition, certain references are made to financial results on a constant currency basis. For a full explanation of the Company's use of non-ifrs measures, including the relevant definitions and reconciliations to reported measures, please refer to the "Supplemental Information" section of this press release. For further discussion of the Company's financial and operating

2 results, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations for the Thirteen and Twenty-Six Weeks Ended August 1, 2015 (the "MD&A"). DSG refers to the Company as structured prior to the acquisition of Saks (i.e., excluding Saks). Second Quarter Summary All comparative figures below are for the 13-week period ended August 1, 2015 compared to the 13-week period ended August 2, Retail sales, which include digital sales from all banners, were $2,038 million, an increase of $269 million or 15.2% from $1,769 million in the prior year. Same store sales growth was 14.3%. On a constant currency basis, consolidated same store sales increased by 4.2%. Same store sales on a constant currency basis increased by 4.9% at DSG, by 0.1% at Saks Fifth Avenue and by 12.7% at OFF 5TH. Digital sales increased by 30.0% on a constant currency basis when compared to the prior year, reflecting the Company's continued strategic focus on growing this channel. In terms of merchandise category performance, sales growth at DSG was driven by menswear, ladies apparel, home products and cosmetics. Sales growth at Saks Fifth Avenue was driven by menswear and cosmetics, while at OFF 5TH, sales growth was driven by women's shoes, women's accessories and menswear. Gross profit as reported was $818 million compared to $700 million for the prior year, a year-over-year improvement of $118 million. Improved performance at DSG and Saks, combined with a favourable currency conversion benefit on U.S. dollar denominated sales, drove the increase in gross profit dollars. Gross profit rate was 40.1% of retail sales, a 50 basis point improvement over the comparable gross profit rate of 39.6% during the second quarter of the prior year. SG&A expenses were $775 million compared to $652 million for the prior year. Excluding normalization items of $23 million ($31 million in the prior year), Normalized SG&A expenses were $752 million compared to $621 million, an increase of $131 million. In addition to these normalization adjustments, SG&A expenses were negatively impacted in the quarter from the conversion of U.S. dollar denominated expenses into Canadian dollars. Second quarter SG&A expenses include the impact of incremental strategic investments in our digital business, pre-opening costs associated with the introduction of Saks to Canada and accelerated OFF 5TH openings in the U.S., and the negative impact associated with the conforming change in the classification of advertising credits between SG&A and gross profit as they relate to the Saks business adopted in Q These increases are partially offset by operating synergies of $14 million realized in the second quarter. In addition to being on track to achieve $100 million in synergies as part of the Saks acquisition, the Company believes that there are opportunities for additional synergies and cost savings from further operational efficiencies due to our increased scale. As such, the Company has embarked on a program to further identify and implement these savings within and across its businesses. The benefits of this program are expected to be realized beginning in the third quarter of Fiscal 2015 and will continue into Fiscal Adjusted EBITDAR for the second quarter was $139 million compared to $142 million in the prior year, while Adjusted EBITDA was $66 million compared to $81 million for the same periods. As previously disclosed, the Company is investing a total of approximately $50 million in strategic initiatives during Fiscal 2015, with the impact of these investments being more pronounced during the first half of the year, given the sales and earnings profile of the Company. Finance costs were $52 million in the quarter, compared to $29 million for the second quarter of Fiscal The increase is primarily related to an $18 million write-off of deferred financing costs in connection with the full repayment of the Senior Term Loan B with proceeds received from the joint ventures with Simon Property Group and RioCan REIT, respectively. Net Earnings were $67 million in the quarter, compared to a Net Loss of $36 million in the second quarter of Fiscal Normalized Net Loss was $53 million in the quarter, compared to $28 million in the second quarter of Fiscal Normalized items include the net-of-tax gain recognized on the contribution of properties to the joint ventures of $107 million in the second quarter of Fiscal Year-to-Date Summary All comparative figures below are for the 26-week period ended August 1, 2015 compared to the 26-week period ended August 2, Retail sales, which include digital sales from all banners, were $4,110 million, an increase of $486 million or 13.4% from $3,624 million in the prior year. Same store sales growth was 12.9%. On a constant currency basis, consolidated same store sales increased by 3.5%. Same store sales on a constant currency basis increased by 4.9% at DSG, by 0.4% at Saks Fifth Avenue

3 and by 11.5% at OFF 5TH. Digital sales increased by 26.8% when compared to the prior year, reflecting the Company's continued strategic focus on growing this channel. In terms of merchandise category performance, sales growth at DSG was driven by menswear, ladies apparel, home products and ladies shoes. Sales growth at Saks Fifth Avenue was driven by womenswear while at OFF 5TH, sales growth was driven by women's shoes, women's accessories and menswear. Gross profit as reported was $1,664 million compared to $1,416 million for the prior year. Adjusting for the negative impact associated with the amortization of inventory related purchase accounting adjustments in the first half of Fiscal 2014 of $40 million, the comparable gross profit in the first half of Fiscal 2014 was $1,456 million, resulting in a year-over-year improvement of $208 million. Improved performance at DSG and Saks, combined with a favourable currency conversion benefit on U.S. dollar denominated sales, drove the increase in gross profit dollars. Gross profit rate as reported was 40.5% of retail sales, a 30 basis point improvement over the comparable gross profit rate of 40.2% during the same period of the prior year. SG&A expenses were $1,555 million compared to $1,333 million for the prior year. Excluding normalization items of $53 million ($55 million in the prior year), Normalized SG&A expenses were $1,502 million compared to $1,278 million, an increase of $224 million. In addition to these normalization adjustments, SG&A expenses were negatively impacted in the period from the conversion of U.S. dollar denominated expenses into Canadian dollars. The current year SG&A expenses included the impact of incremental strategic investments in our HBC digital business, preopening costs associated with the introduction of Saks to Canada and accelerated OFF 5TH openings in the US, and the negative impact associated with the conforming change in the classification of advertising credits between SG&A and gross profit as they relate to the Saks business adopted in Q These increases are partially offset by operating synergies of $29 million realized in the first half of the year. In addition to being on track to achieve $100 million in synergies as part of the Saks acquisition, the Company believes that there are opportunities for additional synergies and cost savings from further operational efficiencies due to our increased scale. As such, the Company has embarked on a program to further identify and implement these savings within and across its businesses. The benefits of this program are expected to be realized beginning in the third quarter of Fiscal 2015 and will continue into Fiscal Adjusted EBITDAR was $305 million compared to $303 million for the first half of Fiscal 2014, while Adjusted EBITDA was $162 million compared to $178 million for the same periods. As previously mentioned, the Company is investing a total of approximately $50 million in strategic initiatives during Fiscal 2015, with the impact of these investments being more pronounced during the first half of the year, given the sales and earnings profile of the Company. Finance costs were $99 million, compared to $104 million for the prior year. The decrease is primarily related to penalties of $12 million in connection with early repayment of debt in the prior year and finance cost versus income in the prior year related to common share purchase warrants. Net Earnings were $13 million in the period, compared to $140 million in the prior year. Normalized Net Loss was $86 million, compared to $55 million in the prior year. Normalized items include the net-of-tax gain recognized on the contribution of assets to the joint ventures of $107 million in the second quarter of Fiscal 2015, and the net-of-tax gain of $261 million recognized on the Queen Street Sale in the first quarter of Fiscal Store Network During the second quarter, the Company opened four new OFF 5TH stores located in Los Angeles, California; San Francisco, California; Stamford, Connecticut; and Las Vegas, Nevada. The Company closed one Home Outfitters store located in Burnaby, British Columbia, and one Saks Fifth Avenue store located in Santa Barbara, California. Gross Leasable Area (1) / Square Footage Store Count (1) (000s) STORE INFORMATION AS AT August 1, 2015 Hudson's Bay 90 16,123 Lord & Taylor 50 6,898 Saks Fifth Avenue 38 4,741 OFF 5TH 85 2,423 Home Outfitters 66 2,413 Total ,598

4 HBC operates two Hudson's Bay Outlets, two Zellers stores and four Lord & Taylor Outlets that are excluded from store (1) count and gross leasable area. Dividend The Company also announced today that its Board of Directors approved a quarterly dividend to be paid on October 15, 2015, to shareholders of record at the close of business on September 30, The dividend is in the amount of $0.05 per Common Share and is designated as an "eligible dividend" for Canadian tax purposes. Fiscal 2015 Outlook Based upon HBC's year-to-date results for Fiscal 2015, as well as management's views on, among other things, the current and anticipated operating environment and our ongoing initiatives, management reaffirms the following Fiscal 2015 outlook, which is fully qualified by the "Forward-Looking Statements" section of this press release and does not take into account the closing of the Kaufhof transaction, which is anticipated to close in the third quarter of Fiscal 2015: Total sales of between $9.0 and $9.3 billion. This implies low single digit consolidated same store sales growth, calculated on a constant currency basis. Capital investments, net of landlord incentives, of between $350 million and $400 million. This activity includes the addition of one Saks Fifth Avenue store and 15 OFF 5TH stores. In Fiscal 2015, the Company is investing an incremental $50 million in strategic growth initiatives, including an accelerated pace of new store openings at OFF 5TH, strengthening its digital and all-channel presence and capabilities, and incurring preopening costs associated with the 2016 expansion of Saks and OFF 5TH into Canada. This guidance reflects a U.S. dollar foreign exchange rate assumption of USD:CAD = 1:1.24 for Fiscal Significant variation in this foreign exchange rate assumption would impact the guidance. The actual average foreign exchange rate incorporated in the Company's reported sales results for the second quarter 2015 was USD:CAD = 1:1.25. Conference Call to Discuss Results Richard Baker, HBC's Governor and Executive Chairman, Jerry Storch, HBC's Chief Executive Officer and Paul Beesley, HBC's Chief Financial Officer, will discuss the second quarter financial results and other matters during a conference call on September 10, 2015 at 8:30 am EST. The conference call will be accessible by calling the participant operator assisted toll-free dial-in number (877) or international dial-in number (253) A live webcast of the conference call will be accessible on HBC's website at: The audio replay also will be available via this link. Consolidated Financial Statements and Management's Discussion and Analysis The Company's unaudited interim condensed consolidated financial statements for the thirteen and twenty-six weeks ended August 1, 2015 and Management's Discussion and Analysis thereon are available under the Company's profile on SEDAR at Selected Consolidated Financial Information The following tables set out summary unaudited consolidated financial information and supplemental information for the periods indicated. The summary financial information set out below has been derived from unaudited interim condensed consolidated financial statements, prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, for the thirteen and twenty-six week period ended August 1, The unaudited financial information presented has been prepared on a basis consistent with our audited consolidated financial statements for Fiscal In the opinion of our management, such unaudited financial data reflects all adjustments, consisting of normal and recurring adjustments, necessary for a fair presentation of the results for those periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year or any future period. The information presented herein does not contain disclosures required by IFRS and should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the thirteen and twenty-six weeks ended August 1, 2015.

5 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (millions of Canadian dollars, except per share amounts) (unaudited) Thirteen week period ended Twenty-six week period ended Aug 1, 2015 Aug 2, 2014 Aug 1, 2015 Aug 2, 2014 Retail sales 2,038 1,769 4,110 3,624 Cost of sales (1,220) (1,069) (2,446) (2,208) Selling, general and administrative expenses (775) (652) (1,555) (1,333) Depreciation and amortization (101) (81) (201) (163) Gain on contribution of assets to joint ventures Gain on sale and leaseback transaction 308 Operating income (loss) 75 (33) Finance costs (52) (29) (99) (104) Share of net earnings (loss) in joint ventures, net of income taxes (4) (4) Earnings (loss) before income tax 19 (62) (62) 124 Income tax benefit Net earnings (loss) for the period 67 (36) Net earnings (loss) per common share Basic 0.37 (0.20) Diluted 0.33 (0.23) The following table shows additional summary supplemental information for the periods indicated. (millions of Canadian dollars except per share amounts) Unaudited Thirteen week period ended Twenty-six week period ended Aug 1, 2015 Aug 2, 2014 Aug 1, 2015 Aug 2, 2014 $ $ $ $ EBITDA Adjusted EBITDAR Adjusted EBITDA Normalized Net Loss for the period (1) (53) (28) (86) (55) Normalized Net Loss per Common Share - basic and diluted (1) (0.29) (0.15) (0.47) (0.30) Declared dividend per Common Share (1) See tables in MD&A for a reconciliation of Net Earnings (Loss) to Normalized Net Loss CONDENSED CONSOLIDATED BALANCE SHEETS (millions of Canadian dollars) (unaudited) Aug 1, 2015 Aug 2, 2014 (1) Jan 31, 2015 Assets Cash Trade and other receivables Inventories 2,539 2,050 2,349 Financial assets Income taxes recoverable 37 7 Other current assets

6 Total current assets 2,900 2,328 2,829 Property, plant and equipment 3,672 3,962 4,606 Intangible assets 1, ,076 Goodwill Pensions and employee benefits Deferred tax assets Investment in joint venture 313 Other assets Total assets 8,497 7,758 9,072 Liabilities Loans and borrowings Finance leases Trade payables Other payables and accrued liabilities Other liabilities Deferred revenue Provisions Income taxes payable Financial liabilities Total current liabilities 2,074 1,956 2,144 Loans and borrowings 1,969 2,289 2,723 Finance leases Provisions Financial liabilities Pensions and employee benefits Deferred tax liabilities Investment in joint venture 49 Other liabilities Total liabilities 5,971 5,620 6,580 Shareholders' Equity Share capital 1,420 1,420 1,420 Retained earnings Contributed surplus Accumulated other comprehensive income Total shareholders' equity 2,526 2,138 2,492 Total liabilities and shareholders' equity 8,497 7,758 9,072 (1) During fiscal 2014, the Company identified measurement period adjustments based on new information relating to deferred taxes. The impacts of the adjustments to previously reported amounts are provided in more detail in Note 4 of the Company's unaudited Interim Condensed Consolidated Financial Statements for the Thirteen and Twenty-Six Weeks Ended August 1, CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (millions of Canadian dollars) (unaudited) Aug 1, 2015 Aug 2, 2014 Operating activities Net earnings for the period Deduct: Income tax benefit (75) (16) Add: Share of (earnings) loss in joint ventures 4 Add: Finance costs

7 Operating income Net cash income taxes received 2 5 Interest paid in cash (71) (71) Distributions of earnings from joint ventures 7 Items not affecting cash flows: Depreciation and amortization Net defined benefit pension and employee benefits expense Other operating activities (19) (3) Share of rent expense to joint venture (9) Gain on contribution of assets to joint ventures (133) Gain on sale and leaseback transaction (308) Share based compensation 14 6 Settlement of share based compensation grants (2) Changes in operating working capital: Increase in trade and other receivables (22) (3) Increase in inventories (141) (34) Increase in other assets (44) (15) Decrease in trade and other payables, accrued liabilities and provisions (163) (2) Decrease in other liabilities (2) (16) Net cash outflow for operating activities (328) (36) Investing activities Capital investments (210) (177) Proceeds from landlord incentives (119) (117) Proceeds from lease terminations and other non-capital landlord incentives Proceeds from sale of assets 35 Proceeds from sale and leaseback transaction 650 Proceeds from contribution of assets to joint ventures 1,134 Net cash inflow from investing activities 1, Financing activities Long-term loans and borrowings: Repayments (841) (510) Short-term loans and borrowings: Net borrowings from (repayments to) asset-based credit facilities 56 (23) Payment on finance leases (15) (10) Dividends paid (18) (18) Net cash outflow for financing activities (818) (561) Foreign exchange loss on cash (1) (1) (Decrease) increase in cash (110) 17 Cash at beginning of period Cash at end of period Supplemental Information The following table shows the reconciliation of Net Earnings (Loss) to EBITDA, Adjusted EBITDAR as well as Adjusted EBITDA. Unaudited Thirteen week period Twenty-six week period ended ended (millions of Canadian dollars) August 1, 2015 August 2, 2014 August 1, 2015 August 2, 2014 $ $ $ $ Net Earnings (Loss) 67 (36) Finance costs Income tax benefit (48) (26) (75) (16) Share of net (earnings) loss in joint ventures, net of income taxes 4 4

8 Gain on contribution of assets to joint ventures (133) (133) Gain on Queen Street Sale (308) Non-cash pension expense (1) Depreciation and amortization Share based compensation (1) EBITDA Normalization and rent adjustments Saks acquisition and integration related expenses (1) Kaufhof transaction costs (1) 9 9 Joint ventures transaction costs (1) Amortization of Saks inventory purchase price accounting adjustment 2 40 Foreign exchange adjustment (1), (2) (31) (26 ) Restructuring and other (1) (5) (1) Joint ventures rent expense 1 1 Third party rent expense Total normalizing and rent adjustments Adjusted EBITDAR Third party rent expense (72) (61) (142) (125) Cash rent to joint ventures (8) (8) Cash distributions from joint ventures 7 7 Adjusted EBITDA (1) Item included in the determination of Normalized SG&A. Total for the thirteen and twenty-six week period ended August 1, 2015 was $23 million and $53 million respectively (August 2, 2014: $31 million and $55 million respectively). (2) Represents the impact of unrealized gains related to the translation of U.S. dollar denominated asset and liability balances. EBITDA is a non-ifrs measure that we use to assess our operating performance. EBITDA is defined as net earnings (loss) before finance costs, income tax, share of net earnings (loss) in joint ventures, the gain on contribution of assets to joint ventures, the gain on Queen Street Sale, non-cash share based compensation expense, depreciation and amortization expense, impairment and other non-cash expenses and non-cash pension expense. The Company's Canadian defined benefit pension plan is currently in a surplus position and as a result, pension expense is adjusted as management does not expect to make any payments in the foreseeable future. EBITDAR is defined as EBITDA before rent expenses to third-parties and the real estate joint ventures. Adjusted EBITDAR is defined as EBITDAR adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; and (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. Adjusted EBITDA is defined as Adjusted EBITDAR less rent to third-parties, less cash rent to the real estate joint ventures plus cash distributions from the real estate joint ventures. Normalized Net Loss is defined as net earnings (loss) adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; (iii) normalizing adjustments, including those related to purchase accounting, if any, related to transactions that are not associated with day-to-day operations. Normalized SG&A is defined as SG&A adjusted to exclude: (i) business and organization restructuring/realignment charges; (ii) merger/acquisition costs and expenses; (iii) normalizing adjustments, if any, related to transactions that are not associated with day-to-day operations. We have included EBITDA, EBITDAR, Adjusted EBITDAR, Adjusted EBITDA, Normalized Net Loss and Normalized SG&A to provide investors and others with supplemental measures of our operating performance. We believe EBITDA, EBITDAR, Adjusted EBITDAR, Adjusted EBITDA, Normalized Net Loss and Normalized SG&A are important supplemental measures of operating performance because they eliminate items that have less bearing on our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors, rating agencies and other interested parties frequently use EBITDA, EBITDAR, Adjusted EBITDAR, Adjusted EBITDA, Normalized Net Loss and Normalized SG&A in the evaluation of issuers, many of which present similar metrics when reporting their results. Our management also uses Adjusted EBITDA in order to facilitate operating performance comparisons from period to period, prepare annual operating budgets and assess our ability to meet our future debt service, capital expenditure and working capital requirements and our ability to pay dividends on our shares. As other companies may calculate EBITDA, EBITDAR, Adjusted EBITDAR, Adjusted EBITDA, Normalized Net Loss or Normalized SG&A differently than we do, these metrics are not comparable to similarly titled measures reported by other companies. This press release makes reference to certain

9 financial results expressed on a constant currency basis. In calculating the same store sales change on a constant currency basis, prior year foreign exchange rates are applied to both current year and prior year same store sales. This enhances the ability to compare underlying sales trends by excluding the impact of foreign currency exchange rate fluctuations. Definitions and calculations of same store sales differ among companies in the retail industry. About Hudson's Bay Company Hudson's Bay Company, founded in 1670, is North America's oldest company. Today, HBC offers customers a range of retailing categories and shopping experiences primarily in the United States and Canada. Our leading banners - Hudson's Bay, Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5TH - offer a compelling assortment of apparel, accessories, shoes, beauty and home merchandise. Hudson's Bay is Canada's most prominent department store with 90 full-line locations, two outlet stores and thebay.com. Lord & Taylor operates 50 full-line locations primarily in the northeastern and mid-atlantic U.S., four Lord & Taylor outlet locations and lordandtaylor.com. Saks Fifth Avenue, one of the world's pre-eminent luxury specialty retailers, comprises 38 U.S. stores, five international licensed stores and saks.com. OFF 5TH offers value-oriented merchandise through 85 U.S. stores and saksoff5th.com. The Company also operates Home Outfitters, Canada's largest kitchen, bed and bath specialty superstore with 66 locations. Hudson's Bay Company trades on the Toronto Stock Exchange under the symbol "HBC". Forward-Looking Statements Information in this press release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, including statements regarding the timing and completion of the Kaufhof acquisition, the accretion and benefits anticipated from the Kaufhof acquisition and the financing thereof, as well as future-oriented financial information and financial outlooks, such as those described under "Fiscal 2015 Outlook". This information is based on certain estimates and assumptions regarding expected growth, results of operations, performance, and business prospects and opportunities. While the Company considers these estimates and assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Forward-looking information is subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from what the Company currently expects. These risks, uncertainties and other factors include, but are not limited to: ability to execute retailing growth strategies, ability to continue same store sales growth, ability to make successful acquisitions and investments, risks relating to the Company's size and scale, ability to attract and retain qualified employees, exposure to changes in the real estate market, successful closure of the second tranche of the RioCan-HBC JV, successful operation of the joint ventures to allow the Company to realize the anticipated benefits, loss of flexibility with respect to properties in the joint ventures, successful completion of the Kaufhof acquisition as contemplated and within the anticipated timeline, the ability of HBC-Simon JV to enter into definitive documentation, secure acceptable debt financing or satisfy other conditions in order to complete the acquisition of 40 Kaufhof properties, changes in demand for current real estate assets, fluctuations in the U.S. and Canadian dollars, increase in raw material costs, ability to manage indebtedness and cash flow, risks related with increasing indebtedness, restrictions of existing credit facilities reducing flexibility, ability to maintain adequate financial processes and controls, ability to maintain dividends, and other risks inherent to the Company's business and/or factors beyond the Company's control which could have a material adverse effect on the Company. For more information on these risks, uncertainties and other factors the reader should refer to the Company's filings with the securities regulatory authorities, including the Company's Annual Information Form dated April 30, 2015 and the Company's management discussion & analysis for the second fiscal quarter, which are available on SEDAR at To the extent any forward-looking information in this press release constitutes future-oriented financial information or financial outlooks, within the meaning of securities laws, such information is being provided to demonstrate the potential of the Company and readers are cautioned that this information may not be appropriate for any other purpose. Future-oriented financial information and financial outlooks, as with forward-looking information generally, are based on assumptions and subject to risks, uncertainties and other factors. Actual results may differ materially from what the Company currently expects. Other than as required under applicable securities laws, the Company does not undertake to update any forward-looking information at any particular time. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. All forward-looking information contained in this press release is expressly qualified in its entirety by this cautionary statement. View source version on businesswire.com: Hudson's Bay Company INVESTOR RELATIONS: Phone: (416) investorrelations@hbc.com or MEDIA CONTACT: Tiffany Bourré Director, External Communications

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