Stormy Weather

The Hudson's Bay Co. (Toronto), Canada's largest department store chain, announced that earnings fell 65 percent for the second quarter, after it cut prices at its Zellers discount chain.

Sales for the period ending July 31, 2002, fell less than 1 percent. But the company blamed slower-than-expected May sales at Zellers, which cut prices in July to clear out seasonal merchandise like footwear and men's clothing that did not sell because of the cold spring weather.

“May was not kind to us in terms of weather and people's appetite for either seasonal or apparel goods,” said ceo George Heller. “We've moved on from that, and the trend is positive.”

Zellers is Canada's second-largest discount department store chain (behind Wal-Mart), with more than 320 stores, and it accounts for about 60 percent of the Bay's corporate sales. The retailer also operates 100 Bay department stores, about 100 smaller Fields general merchandise stores in Western Canada and more than 20 Home Outfitters. The company is in the midst of a big remodeling program to update its Zellers stores in the image of an upscale discounter like Target.