What happened
Shares of Hudson Ltd. (HUD) were moving higher today after the travel retailer posted strong second-quarter results. As of 12:54 p.m. EDT, the stock was up 10.1%.
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So what
Hudson, the owner of Hudson News and the operator of over 1,000 stores in airports, train stations, bus terminals, and other travel-based properties, said revenue increased 7.4% to $499.4 million, on a comparable-sales increase of 4.5%, which essentially matched estimates of $499.8 million. Gross margin expanded 170 basis points to 63.9%, due to initiatives like expanding grab-and-go food offerings. That and a reduction in franchise fees, which lowered general and administrative expenses by 23%, helped drive adjusted earnings per share from $0.13 a year ago to $0.28, which topped expectations of $0.23.
CEO Joe DiDomizio said, "We had a strong second quarter performance in which we continued to drive organic sales growth and margin expansion." Domizio also noted the recent expansion of the company's contract with Boston's Logan Airport, and was optimistic about further growth: "Looking ahead, we have an exciting opportunity to continue to win new contracts and extend existing relationships, capitalizing on the uncaptured whitespace in the top airports."
Now what
Hudson did not offer guidance in its press release, but the strong margin improvement seems likely to continue for the rest of the year, as the company should benefit from lower franchise fees and efficiencies like grab-and-go food. After its initial public offering earlier this year, this was the second straight earnings beat for Hudson by a wide margin. The market could be underestimating the travel retailer's growth, especially at a time when the North American economy is strong.
