Hudson Provides Trading Update For the Third Quarter and Nine Months Ended September 30, 2020
East Rutherford, NJ – November 3, 2020 – Hudson (NYSE: HUD), a North American travel experience leader with more than 1,000 stores in airports, commuter hubs, landmarks and tourist destinations, today provided a trading update for the third quarter and nine months ended September 30, 2020.
Hudson reported improved sales trends in the third quarter of 2020 relative to the year-over-year sales performance in the second quarter of 2020. Turnover for the three months ended September 30, 2020 decreased from the prior year period by 74.1% to $135.4 million, while net sales declined by 74.4% to $130.9 million. Duty Paid sales have recovered more rapidly than Duty Free sales, due to the limited number of international flights and the continued closure of the U.S./Canada border.
Turnover for the nine months ended September 30, 2020 decreased by 63.6% from the prior year period to $538.6 million, while net sales declined by 63.9% to $521.5 million.
After having temporarily closed over 700 of its approximately 1,000 stores at the height of the pandemic, Hudson has continued to gradually reopen stores and welcome back a number of furloughed team members in alignment with the resumption of air and other travel. Working in close partnership with airports and other landlords to best serve the needs of both travelers and essential airport/commuter hub workers, Hudson has reopened over 300 stores as of October 31, 2020.
While strategically reopening stores as passengers return and when financially prudent to do so, Hudson has continued to focus on cost savings initiatives and rent waivers and deferrals, resulting in significantly reduced cash usage as the year has progressed, with cash usage decreasing from $92.4 million in the first quarter - to $21.1 million in the second quarter - and $14.3 million in the third quarter of 2020.
COVID-19-related concerns, event cancellations and business and government-imposed restrictions led to a reduction in passenger travel beginning in the first quarter of 2020. However, North American passenger volumes have increased significantly since April and the year-over-year volume trends have improved consecutively each month from May through October. U.S. airport passenger levels were down approximately 65% year-over-year in the month of October, compared to 95% down at the height of the COVID-19 pandemic in April 2020, highlighting the resiliency of the travel industry and the initial restoration of passenger confidence, which is driving the continued rebound of Hudson’s business.
The Company has also had the opportunity to open up new stores across its footprint in the first nine months of 2020, signaling Hudson’s continued execution of its business strategy. This includes four stores at Salt Lake City International Airport; two New York branded travel convenience stores at the new Arrivals and Departures Hall in LaGuardia Airport Terminal B; and a locally-inspired travel convenience concept at Nashville International Airport. Additionally, Hudson has rolled out vending machines that provide 24/7 access to health and safety supplies, introduced Sunglass Hut shop-in-shops in a number of its travel convenience stores, and expanded self-checkout capabilities to minimize contact and speed up checkout.
Roger Fordyce, CEO of Hudson, stated, “While the past seven months have been challenging, we’re continuing to position the Company for a strong recovery both in the immediate and long-term by minimizing our cash spend, optimizing our operational efficiency, advancing our digital initiatives, and above all, prioritizing the health and safety of our teams and customers. The progressive improvement in our business is due in large part to the support of our team members, customers, business partners and landlords, for whom we are extremely grateful. As the recovery continues, we are eager to welcome customers back to our stores as we remain committed to being the Traveler’s Best Friend in the months and years to come.”
On August 19, 2020, Hudson announced that it had entered into a definitive agreement with Dufry AG Group (“Dufry”), its controlling shareholder with 57.4% ownership of the Company, pursuant to which Dufry would acquire all of the equity interests in Hudson that it does not already own for $7.70 in cash for each Hudson Class A share (the “Transaction”). Upon completion of the Transaction, Hudson will become an indirect wholly owned subsidiary of Dufry and will be delisted from the New York Stock Exchange.
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