Reitmans (Canada) Limited announces its results for the three and nine months ended October 29, 2016

MONTREAL, Dec. 1, 2016 /CNW Telbec/ -

Three months ended October 29, 2016

Sales for the three months ended October 29, 2016 were $245.6 million as compared with $240.3 million for the three months ended October 31, 2015, an increase of 2.2%, despite a net reduction of 81 stores as the Company reduced the number of stores to optimize performance in select markets.  Same store sales1 increased 7.1% with stores increasing 4.7% and e-commerce increasing 40.1% as the Company continues to experience strong growth in its e-commerce channel.

The Company's gross margin for the three months ended October 29, 2016 was 57.0% as compared to 57.4% for the three months ended October 31, 2015. Gross profit for the three months ended October 29, 2016 increased $1.9 million or 1.4% to $139.9 million as compared with $138.0 million for three months ended October 31, 2015 despite a negative foreign exchange impact of approximately $4.6 million.

Results from operating activities for the three months ended October 29, 2016 were $6.5 million as compared with $3.0 million for the three months ended October 31, 2015, an increase of $3.5 million.

Net earnings increased $7.9 million for the three months ended October 29, 2016 to $7.6 million ($0.12 basic and diluted earnings per share) as compared with a net loss of $0.3 million ($0.00 basic and diluted loss per share) for the three months ended October 31, 2015.

Adjusted EBITDA1 for the three months ended October 29, 2016 was $18.4 million as compared with $15.3 million for the three months ended October 31, 2015, an increase of $3.1 million. The increase in adjusted EBITDA was primarily attributable to improvements in gross profit and reduced store operating costs.

Nine months ended October 29, 2016

Sales for the nine months ended October 29, 2016 were $703.5 million as compared with $695.0 million for the nine months ended October 31, 2015, an increase of 1.2%, despite a net reduction of 81 stores as the Company reduced the number of stores to optimize performance in select markets.  Same store sales1 increased 7.5% with stores increasing 5.0% and e-commerce increasing 48.3% as the Company continues to experience strong growth in its e-commerce channel.

The Company's gross margin for the nine months ended October 29, 2016 decreased to 56.4% from 57.2% for the nine months ended October 31, 2015.  Gross profit for the nine months ended October 29, 2016 decreased $0.7 million or 0.2% to $396.6 million as compared with $397.3 million for the nine months ended October 31, 2015 including a negative foreign exchange impact of approximately $10.1 million.

Net earnings increased $18.8 million for the nine months ended October 29, 2016 to $10.6 million ($0.17 basic and diluted earnings per share) as compared with an $8.2 million loss ($0.13 basic and diluted loss per share) for the nine months ended October 31, 2015.

Adjusted EBITDA1 for the nine months ended October 29, 2016 was $37.2 million as compared with $34.9 million for the nine months ended October 31, 2015, an increase of $2.3 million. The increase in adjusted EBITDA was primarily attributable to reduced store operating costs.

Dividends

At the Board of Directors meeting held on December 1, 2016, a quarterly cash dividend (constituting eligible dividends) of $0.05 per share on all outstanding Class A non-voting and Common shares of the Company was declared, payable January 26, 2017 to shareholders of record on January 16, 2017.

Sales for the four weeks ended November 26, 2016

Sales for the month of November (the four weeks ended November 26, 2016) increased 0.4% with same store sales1 increasing 5.1%, stores increasing 1.4% and e-commerce increasing 47.0%. At November 26, 2016, the Company operated 694 stores as compared to 773 stores at November 28, 2015, a net reduction of 79 stores.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 694 stores consisting of 302 Reitmans, 127 Penningtons, 98 Addition Elle, 84 RW & CO., 64 Thyme Maternity and 19 Hyba.

1Non-GAAP Financial Measures

The Company has identified several key operating performance measures and non-GAAP financial measures which management believes are useful in assessing the performance of the Company; however, readers are cautioned that some of these measures may not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other companies.

In addition to discussing earnings in accordance with IFRS, this press announcement provides adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") as a non-GAAP financial measure.  Adjusted EBITDA is defined as net earnings before income tax expense, other income, dividend income, interest income, net change in fair value of marketable securities, interest expense, impairment of goodwill, depreciation, amortization and net impairment losses.  The following table reconciles the most comparable GAAP measure, net earnings or loss, to adjusted EBITDA.  Management believes that adjusted EBITDA is an important indicator of the Company's ability to generate liquidity through operating cash flow to fund working capital needs and fund capital expenditures and uses the metric for this purpose.  The exclusion of dividend, interest income and net change in fair value of marketable securities eliminates the impact on earnings derived from non-operational activities.  The exclusion of depreciation, amortization and impairment charges eliminates the non-cash impact.  The intent of adjusted EBITDA is to provide additional useful information to investors and analysts and the measure does not have any standardized meaning under IFRS.  Although depreciation, amortization and impairment charges are non-cash changes, the assets being depreciated and amortized will often have to be replaced in the future, adjusted EBITDA does not reflect any cash requirements for such replacements.  Adjusted EBITDA should not be considered as discretionary cash available to invest in the growth of the business and as a measure of cash that will be available to meet the Company's obligations.  Adjusted EBITDA should therefore not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.  Other companies may calculate adjusted EBITDA differently. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.

The Company uses a key performance indicator ("KPI"), same store sales, to assess store performance (including each banner's e-commerce store) and sales growth.  Same store sales are defined as sales generated by stores that have been continuously open during both of the periods being compared and include e-commerce sales.  The same store sales metric compares the same calendar days for each period.  Although this KPI is expressed as a ratio, it is a non-GAAP financial measure that does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies.  Management uses same store sales in evaluating the performance of stores and considers it useful in helping to determine what portion of new sales has come from sales growth and what portion can be attributed to the opening of new stores.  Same store sales is a measure widely used amongst retailers and is considered useful information for both investors and analysts.  Same store sales should therefore not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

The following table reconciles net earnings (loss) to adjusted EBITDA for the three and nine months ended October 29, 2016 and October 31, 2015:

 

(in millions of Canadian dollars)

(unaudited)

For the three months ended

For the nine months ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015

Net earnings (loss)

$

7.6

$

(0.3)

$

10.6

$

(8.2)

Depreciation, amortization and net impairment losses


11.2


11.6


32.3


35.7

Dividend income


(0.6)


(0.6)


(1.9)


(1.9)

Interest income


(0.2)


(0.1)


(0.5)


(0.4)

Net change in fair value of marketable securities


(0.5)


4.3


(4.1)


10.7

Interest expense


-


0.1


0.1


0.2

Income tax expense (recovery)


0.9


0.3


0.7


(1.2)

ADJUSTED EBITDA

$

18.4

$

15.3

$

37.2

$

34.9

ADJUSTED EBITDA as % of Sales


7.5%


6.4%


5.3%


5.0%

 

Forward-Looking Statements

All of the statements contained herein, other than statements of fact that are independently verifiable at the date hereof, are forward-looking statements. Such statements, based as they are on the current expectations of management, inherently involve numerous risks and uncertainties, known and unknown, many of which are beyond the Company's control.  Consequently, actual future results may differ materially from the anticipated results expressed in forward-looking statements, which reflect the Company's expectations only as of the date of this Press Announcement.  Forward-looking statements are based upon the Company's current estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and currently expected future developments, as well as other factors it believes are appropriate in the circumstances.  This Press Announcement, for the Company contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this Press Announcement include, but are not limited to, statements with respect to the Company's anticipated future results and events, future liquidity, planned capital expenditures, amount of pension plan contributions, status and impact of systems implementation, the ability of the Company to successfully implement its strategic initiatives and cost reduction and productivity improvement initiatives as well as the impact of such initiatives.  These specific forward-looking statements are contained throughout the Company's MD&A including those listed in the "Operating and Financial Risk Management" section of the Company's MD&A. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may" and "should" and similar expressions, as they relate to the Company and its management.

Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements.  Please refer to the "Forward-Looking Statements" section of the Company's Management Discussion & Analysis for the three and nine months ended October 29, 2016.

Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time. The reader should not place undue reliance on any forward-looking statements included herein. These statements speak only as of the date made and the Company is under no obligation and disavows any intention to update or revise such statements as a result of any event, circumstances or otherwise, except to the extent required under applicable securities law.

The Company's complete financial statements including notes and Management's Discussion and Analysis for the three and nine months ended October 29, 2016 are available online at www.sedar.com.

Montreal, December 1, 2016

Jeremy H. Reitman
Chairman and Chief Executive Officer
Telephone: (514) 385-2630
Corporate Website: www.reitmanscanadalimited.com

 




REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS

(Unaudited)

(in thousands of Canadian dollars except per share amounts)





For the three months ended

For the nine months ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015






Sales

$

245,604

$

240,270

$

703,538

$

694,999

Cost of goods sold

105,687

102,236

306,977

297,707

Gross profit

139,917

138,034

396,561

397,292

Selling and distribution expenses

122,730

123,927

357,627

367,985

Administrative expenses

10,663

11,110

32,434

33,791

Results from operating activities

6,524

2,997

6,500

(4,484)






Finance income

2,033

1,426

6,474

6,072

Finance costs

39

4,401

1,679

10,974

Earnings (loss) before income taxes

8,518

22

11,295

(9,386)






Income tax expense (recovery)

903

291

691

(1,224)






Net earnings (loss)

$

7,615

$

(269)

$

10,604

$

(8,162)






Earnings (loss) per share :





Basic

$

0.12

$

0.00

$

0.17

$

(0.13)

Diluted

0.12

0.00

0.17

(0.13)

 

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)









For the three months ended


For the nine months ended


October 29, 2016

October 31, 2015


October 29, 2016

October 31, 2015








Net earnings (loss)

$

7,615

$

(269)


$

10,604

$

(8,162)

Other comprehensive income (loss)










Items that are or may be reclassified subsequently to net earnings (loss):











Cash flow hedges (net of tax of $2,599 for the three months and $2,340 for the nine months ended October 29, 2016; $2,228 for the three months and $905 for the nine
months ended October 31, 2015)


7,103


(6,125)



(6,397)


(2,486)


Foreign currency translation differences


(146)


-



113


(119)











Total other comprehensive income (loss)


6,957


(6,125)



(6,284)


(2,605)











Total comprehensive income (loss)

$

14,572

$

(6,394)


$

4,320

$

(10,767)

 




REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(Unaudited)

(in thousands of Canadian dollars)






October 29, 2016

October 31, 2015

January 30, 2016

ASSETS




CURRENT ASSETS





Cash and cash equivalents

$

101,794

$

97,192

$

118,595


Marketable securities

49,270

50,597

45,189


Trade and other receivables

6,048

5,107

4,103


Derivative financial asset

3,267

6,439

14,405


Income taxes recoverable

868

1,134

3,301


Inventories

167,672

142,617

124,848


Prepaid expenses

7,433

9,956

8,921



Total Current Assets

336,352

313,042

319,362





NON-CURRENT ASSETS





Property and equipment

126,602

138,128

134,363


 Intangible assets

23,363

23,575

24,347


Goodwill

38,183

42,426

38,183


Deferred income taxes

27,859

29,508

25,828



Total Non-Current Assets

216,007

233,637

222,721





TOTAL ASSETS

$

552,359

$

546,679

$

542,083





LIABILITIES AND SHAREHOLDERS' EQUITY




CURRENT LIABILITIES





Trade and other payables

$

120,847

$

92,167

$

98,135


Derivative financial liability

3,678

616

1,816


Deferred revenue

12,705

11,277

19,325


Current portion of long-term debt

1,988

1,867

1,896



Total Current Liabilities

139,218

105,927

121,172





NON-CURRENT LIABILITIES





Other payables

7,380

8,468

8,112


Deferred lease credits

9,053

11,407

10,640


Long-term debt

153

2,141

1,655


Pension liability

20,005

22,355

19,336



Total Non-Current Liabilities

36,591

44,371

39,743





SHAREHOLDERS' EQUITY





Share capital

38,397

38,687

38,397


Contributed surplus

9,570

8,809

9,007


Retained earnings

328,473

346,189

327,370


Accumulated other comprehensive income

110

2,696

6,394



Total Shareholders' Equity

376,550

396,381

381,168





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

552,359

$

546,679

$

542,083

 



REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands of Canadian dollars)


Share Capital

Contributed Surplus

Retained Earnings

Accumulated Other
Comprehensive
Income

Total
Shareholders' Equity













Balance as at January 31, 2016

$

38,397

$

9,007

$

327,370

$

6,394

$

381,168







Net earnings

-

-

10,604

-

10,604

Total other comprehensive loss

-

-

-

(6,284)

(6,284)

Total comprehensive loss for the period

-

-

10,604

(6,284)

$

4,320







Share-based compensation costs

-

563

-

-

563

Dividends

-

-

(9,501)

-

(9,501)

Total contributions by (distributions to) owners of the Company

-

563

(9,501)

-

(8,938)







Balance as at October 29, 2016

$

38,397

$

9,570

$

328,473

$

110

$

376,550



















Balance as at February 1, 2015

$

39,227

$

8,014

$

368,581

$

5,301

$

421,123







Net loss

-

-

(8,162)

-

(8,162)

Total other comprehensive loss

-

-

-

(2,605)

(2,605)

Total comprehensive loss for the period

-

-

(8,162)

(2,605)

(10,767)







Cash consideration on exercise of share options

2

-

-

-

2

Cancellation of shares pursuant to share repurchase program

(542)

-

-

-

(542)

Share-based compensation costs

-

795

-

-

795

Dividends

-

-

(9,616)

-

(9,616)

Premium on repurchase of Class A non-voting shares

-

-

(4,614)

-

(4,614)

Total (distributions to) contributions by owners of the Company

(540)

795

(14,230)

-

(13,975)







Balance as at October 31, 2015

$

38,687

$

8,809

$

346,189

$

2,696

$

396,381

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)





For the three months ended

For the nine months ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015

CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES









Net earnings (loss)

$

7,615

$

(269)

$

10,604

$

(8,162)

Adjustments for:










Depreciation, amortization and net impairment losses


11,235


11,593


32,302


35,699


Share-based compensation costs


430


345


908


795


Amortization of deferred lease credits


(805)


(1,189)


(2,373)


(3,623)


Deferred lease credits


622


682


786


1,852


Pension contribution


(501)


(485)


(1,160)


(1,188)


Pension expense


609


525


1,829


1,575


Realized loss on sale of marketable securities


-


-


-


15


Net change in fair value of marketable securities


(498)


4,333


(4,081)


10,734


Net change in fair value of derivatives


-


-


-


12,335


Foreign exchange loss (gain)


1,510


(2,342)


4,184


(7,809)


Interest and dividend income, net


(774)


(667)


(2,254)


(2,095)


Interest paid


(39)


(68)


(139)


(225)


Interest received


215


113


532


492


Dividends received


633


636


1,825


1,884


Income tax expense (recovery)


903


291


691


(1,224)



21,155


13,498


43,654


41,055

Changes in:










Trade and other receivables


(722)


(318)


(1,909)


(564)


Inventories


(20,513)


(11,129)


(42,824)


(36,177)


Prepaid expenses


1,214


(973)


1,488


2,192


Trade and other payables


944


(3,677)


22,904


1,556


Deferred revenue


(4,523)


(4,679)


(6,620)


(9,796)

Cash (used in) from operating activities


(2,445)


(7,278)


16,693


(1,734)

Income taxes received


2,119


1,859


2,489


1,861

Income taxes paid


(7)


(365)


(438)


(1,935)

Net cash flows (used in) from operating activities


(333)


(5,784)


18,744


(1,808)










CASH FLOWS USED IN INVESTING ACTIVITIES









Purchases of marketable securities


-


-


-


(5,660)

Proceeds on sale of marketable securities


-


-


-


1,678

Additions to property and equipment and intangible assets


(8,885)


(8,293)


(25,244)


(27,519)

Proceeds on disposal of property and equipment and intangibles


-


-


416


-

Cash flows used in investing activities


(8,885)


(8,293)


(24,828)


(31,501)










CASH FLOWS USED IN FINANCING ACTIVITIES









Dividends paid


(3,167)


(3,189)


(9,501)


(9,616)

Purchase of Class A non-voting shares for cancellation


-


(850)


-


(5,156)

Repayment of long-term debt


(477)


(447)


(1,410)


(1,323)

Proceeds from issuance of share capital


-


-


-


2

Cash flows used in financing activities


(3,644)


(4,486)


(10,911)


(16,093)










FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY


118


1,333


194


6,681

NET DECREASE IN CASH AND CASH EQUIVALENTS


(12,744)


(17,230)


(16,801)


(42,721)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


114,538


114,422


118,595


139,913










CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

101,794

$

97,192

$

101,794

$

97,192

 

SOURCE Reitmans (Canada) Limited

For further information: Jeremy H. Reitman, Chairman and Chief Executive Officer, Telephone: (514) 385-2630, Corporate Website: www.reitmanscanadalimited.com

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