EDMONTON, March 1 /CNW/ - Planet Organic Health Corp (TSX Venture Exchange - POH), Canada's leading natural products retailer announces their financial results for the second quarter ended December 31, 2009. Sales from continuing operations for the quarter ended December 31, 2009 were $28.1 million compared to $28.7 million for the same period in 2008, a decrease of $0.6 million, or 2.1%. Net losses from continuing operations were $1.0 million compared to losses of $1.2 million last year.
The Planet Organic Market division, operating in nine locations in Canada throughout the quarter, reported sales for the quarter ended December 31, 2009 of $16.0 million, an increase of 4.2% over the same period last year. Same store sales increased by 4.2% over the second quarter last year following three quarters of decline. During the quarter, the Corporation closed the store located in Markham Ontario due to lower than expected results during its first year of operations.
The Mrs. Green's Natural Market division, operating in eleven US locations, reported sales of $12.1 million for the quarter ended December 31, 2009, a decrease of 9.3% over the second quarter last year. However, the decrease was entirely attributable to changes in foreign currency translation. Same store sales, which exclude the impact of foreign exchange translation differences, grew by 4.1% from the same quarter last year, also following three consecutive quarters of decline.
"We are extremely pleased to be back in positive growth territory in Planet Organic Market and Mrs. Green's following three quarters of nominal sales declines. We believe we were both strategic and fortunate that the decreases during the toughest economic conditions in recent memory remained in the very low single digits." reports Darren Krissie, Executive Vice President and co-CEO, adding that "the positive sales growth trends are continuing in many individual locations throughout both divisions."
Summary of key second quarter FY2010 financial results from continuing
operations (in thousands of dollars)
Q2 Fiscal Fiscal 2009 Q2 Fiscal Fiscal 2010
2009 Year to Date 2010 Year to Date
Sales $28,736 $54,666 $28,147 $54,725
Cost of goods sold $17,692 $33,907 $17,066 $33,790
Gross profit $11,044 $20,759 $11,081 $20,934
Operating expenses $13,855 $24,681 $12,269 $13,855
costs $1,128 $2,003 $1,991 $2,644
costs $1,128 $2,003 ($57) $596
Loss before tax ($2,811) ($3,921) ($1,188) ($3,707)
Income taxes ($12) ($280) $970 ($71)
Net loss ($2,798) ($3,641) ($2,158) ($3,635)
Cash flow from
operations ($1,154) $1,052 ($1,019) ($8)
Included in current quarter operating expenses are costs of $2.0 million pertaining to one-time restructuring costs, with $1.5 million attributable to the closure of the Planet Organic Market store located in Markham Ontario. This store was open just over a year but did not yield expected results during this time, primarily due to the economic conditions since it opened. Additionally, the Corporation recorded a foreign exchange gain of $347 thousand this quarter as the Canadian dollar continued to strengthen against the US dollar. This quarter last year, the Corporation recorded a foreign exchange loss of $2.3 million.
EBITDASX from continuing operations before restructuring costs for the quarter was $0.9 million, or 76% higher than the second quarter last year. The increase was driven primarily by stronger gross margins and expenditure control. On a year to date basis, EBITDASX before restructuring charges is 32% higher than last year at $2.6 million.
Negative cash flow from continuing operations for the quarter reflects the cash charges associated with closing the Markham Planet Organic Market store, but despite these charges was not substantially different than the same quarter last year. Pre-tax losses in the quarter were primarily driven by the restructuring charges, partially offset by a foreign exchange gain of $347 thousand on conversion of U.S. denominated debt and accrued interest. The Corporation also incurred additional interest costs of $0.4 million as a result of increased interest rates now applicable due to the covenant breach last year. On a year to date basis, pre-tax losses this year also include $2.1 million in debt restructuring charges while last year a foreign exchange loss of $3.1 million was recorded.
"In the last eight months, we have initiated reductions to our cost structure and optimized efficiencies, particularly in the Planet Organic Market division. We are now seeing some of the benefits of these actions. We continue to focus on our core business, being Planet Organic Market and Mrs. Green's Natural Market. Additionally, we have commenced the divestiture of non-core assets which will help reduce our overall debt levels." stated Krissie, referring to the announced sale of the Sangster's division on February 26th, 2010. He added that "Further divestitures are being pursued with the objective to reduce our debt."
As previously announced, the Corporation has divested the natural health outlets which operate under the Sangster's Health Centre banner. The Corporation will also be seeking to further divest other non-core assets.
Shareholders are reminded that the Corporation is currently operating in default under its credit facilities and accordingly the lenders have the legal right to demand repayment of all indebtedness and enforce their security over all of the Corporation's assets. To date, the Corporation has not been successful in arranging financing from other sources to meet its debt obligations to the lenders. The Corporation is reviewing all financing options in order to eliminate its aggregate debt load.
EBITDASX reported above is a non-GAAP measure and is earnings before interest, taxes, depreciation, amortization, stock-based compensation, foreign currency translation and loss on extinguishment of debt.
For further financial information and a copy of our annual report, please visit our corporate website at www.planetorganichealthcorp.com
About Planet Organic Health Corp.
Planet Organic Health Corp. (TSX-V: POH) is a natural products industry company, comprising manufacturing, distribution and retail. Planet Organic is listed on the TSX Venture Exchange as a Tier One company. Planet Organic operates nine natural food supermarkets throughout Canada under the Planet Organic Market banner and eleven natural food supermarkets in the U.S. under the Mrs Green's Natural Markets banner. Another Planet Organic division, Trophic Canada, is the country's leading manufacturer of natural supplements. The Company has a total of nine stores throughout Canada and eleven in the U.S.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Certain information included herein is forward-looking. Forward-looking statements include, without limitation, statements regarding the future financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Planet. Many of these statements can be identified by looking for words such as "believe", "expects", "expected", "will", "intends", "projects", "anticipates", "estimates", "continues", or similar words and include but are not limited to, statements regarding the accretive effects of the acquisition and the anticipated results and expected benefits of the acquisition upon closing thereof. Planet Organic believes the expectations reflected in such forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon. Forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties some of which are described in Planet Organic's continuous disclosure documents. Such forward-looking statements necessarily involve known and unknown risks and uncertainties and other factors, which may cause Planet Organic's actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward-looking statements. Such factors include, but are not limited to: general economic, market and business conditions; industry capacity; competitive action by other companies; refining and marketing margins; the ability of suppliers to meet commitments; actions by governmental authorities including increases in taxes; changes in environmental and other regulations; and other factors, many of which are beyond the control of Planet Organic. Any forward-looking statements are made as of the date hereof and Planet Organic does not undertake any obligation, except as required under applicable law, to publicly update or revise such statements to reflect new information, subsequent or otherwise.
SOURCE PLANET ORGANIC HEALTH CORP.
For further information: For further information: Planet Organic Health Corp., Darren Krissie, Executive Vice President, (780) 719-4667