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Olympics a hit for HBC

Offered heavy discounts during Games; overshoots sales targets

From Tuesday's Globe and Mail

Hudson's Bay Co. scored big by being the official outfitter for the Canadian team at the Winter Olympics and selling the clothing at HBC stores, it said, despite discounting by up to 40 per cent in the past two weeks.

HBC, which owns the Bay and Zellers stores, overshot its sales targets for Olympic-related fashions to such an extent that by December it ordered almost one million additional pieces of merchandise, Debbie Edwards, a senior vice-president at HBC, said in an interview yesterday.

Even so, during the two weeks of the Games, HBC marked down prices by between 20 and 40 per cent to ensure the stores weren't stuck with winter-related products after the Olympics ended on Sunday, she said.

And over the weekend, the retailer held a 20-per-cent-off sale of Olympic goods, handing out flyers at the door, she said.

"We felt this was a way of celebrating with the close of the Games," Ms. Edwards said.

The discounting surprised some industry insiders, who are accustomed to markdowns when a retailer is struggling with soft sales and has to clear out excess goods.

Michael Budman, founder of Roots Canada -- the previous official outfitter of the Canadian team -- said Roots never discounted Olympic clothing during the period that the Games were being held, or soon afterward. "We never had to."

Still, the Olympics provided a boost for HBC at a time when its financial results have been weak, over all, industry observers said. The company is in the midst of change as U.S. industrialist Jerry Zucker takes it over, vowing to turn around the retailer's fortunes.

(Yesterday, Mr. Zucker said about 63 per cent of HBC shareholders accepted his $1.1-billion offer, adding to the South Carolina businessman's 19-per-cent stake.

Mr. Zucker extended his offer until March 9 to try to get at least a 90-per-cent majority approval, allowing him to ultimately take it private.)

Kaileen Millard, director of fashion at market researcher NPD Canada, said it is unusual to mark down prices of Olympic merchandise during the event itself.

She added that she had found much of the apparel to be pricey, although she said the designs were attractive.

Despite the discounting, the Olympic apparel was a huge success for HBC, Ms. Edwards said.

"In December, we realized that we had severely underestimated the power of this as a brand," Ms. Edwards said. "We went out and sunk a small fortune in repeats . . . The results have come in extraordinarily good. We couldn't be more pleased."

HBC decided to mark down prices because it did not want to head into the spring season with parkas and tuques and heavy gloves, she added. "We need to make room for the spring goods."

Among the runaway Olympic hits were the trapper hat, which athletes wore at the opening ceremony, and the "bugsby" hat, which they wore when they accepted medals, she said.

The scarf and t-shirts with Canada emblazoned on them were also hot sellers, she said, and the popular items have virtually sold out.

HBC enjoyed a sevenfold spike in sales of the trapper hat after the opening parade, and a tenfold jump in sales of the bugsby hat during the second week when athletes were winning medals, she said.

© The Globe and Mail

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