Reitmans (Canada) Limited announces its results for the three and nine months ended October 31, 2015

MONTREAL, Dec. 3, 2015 /CNW Telbec/ -

Three months ended October 31, 2015
Sales for the three months ended October 31, 2015 were $240.3 million as compared with $238.3 million for the three months ended November 1, 2014, an increase of 0.8%, with 68 fewer stores in operation.  Same store sales1 increased by 7.6% with stores increasing 4.8% and e-commerce increasing 72.2%. 

Gross profit for the three months ended October 31, 2015 decreased $12.9 million or 8.6% to $138.0 million as compared with $151.0 million for the three months ended November 1, 2014 with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross margin by approximately $7.4 million.  Gross margin for the three months ended October 31, 2015 decreased to 57.4% from 63.4% for the three months ended November 1, 2014.

Net loss for the three months ended October 31, 2015 was $0.3 million ($0.00 basic and diluted loss per share) as compared with net earnings of $12.9 million ($0.20 basic and diluted earnings per share) for the three months ended November 1, 2014.  The net loss was primarily attributable to reduced margins and a $4.3 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities.

Adjusted EBITDA1 for the three months ended October 31, 2015 was $15.3 million as compared with $31.1 million for the three months ended November 1, 2014, a decrease of $15.8 million.

Nine months ended October 31, 2015
Sales for the nine months ended October 31, 2015 were $695.0 million as compared with $703.1 million for the nine months ended November 1, 2014, a decrease of 1.2%, impacted by a net reduction of 68 stores. Same store sales1 increased 3.9% with stores increasing 1.3% and e-commerce increasing 77.7%.

Gross profit for the nine months ended October 31, 2015 decreased $25.9 million or 6.1% to $397.3 million as compared with $423.2 million for the nine months ended November 1, 2014, with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross margin by approximately $17.6 million.  The Company's gross margin for the nine months ended October 31, 2015 decreased to 57.2% from 60.2% for the nine months ended November 1, 2014.

Net loss for the nine months ended October 31, 2015 was $8.2 million ($0.13 basic and diluted loss per share) as compared with net earnings of $9.0 million ($0.14 basic and diluted earnings per share) for the nine months ended November 1, 2014.  The net loss was primarily attributable to reduced gross margins and a $10.7 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities.

Adjusted EBITDA1 for the nine months ended October 31, 2015 was $34.9 million as compared with $50.7 million for the nine months ended November 1, 2014, a decrease of $15.8 million.

Dividend
At the Board of Directors meeting held on December 3, 2015, 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 28, 2016 to shareholders of record on January 18, 2016.

Sales for the four weeks ended November 28, 2015
Sales for the month of November (the four weeks ended November 28, 2015) increased 1.0% with same store sales1 increasing 9.1%, stores increasing 5.5% and e-commerce increasing 78.0%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 775 stores consisting of 332 Reitmans, 136 Penningtons, 107 Addition Elle, 83 RW & CO., 68 Thyme Maternity, 17 Hyba and 32 Smart Set. The Company also operates 21 Thyme Maternity shop-in-shop boutiques in select Babies"R"Us locations in Canada.

1Non-GAAP Financial Measures
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, realized gains or losses on disposal of marketable securities, interest expense, 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, net change in fair value of marketable securities and realized gains or losses on disposal 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.  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 (loss) earnings to adjusted EBITDA for the three and nine months ended October 31, 2015 and November 1, 2014:

 




(in millions of Canadian dollars)

(unaudited)

For the three months ended

For the nine months ended


October 31, 2015

November 1, 2014

October 31, 2015

November 1, 2014

Net (loss) earnings

$

(0.3)

$

12.9

$

(8.2)

$

9.0

Depreciation, amortization and net impairment losses

11.6

15.9

35.7

41.8

Dividend income

(0.6)

(0.6)

(1.9)

(1.9)

Interest income

(0.1)

(0.3)

(0.4)

(0.6)

Realized gain on disposal of marketable securities

-

(0.8)

-

(0.8)

Net change in fair value of marketable securities

4.3

-

10.7

-

Impairment loss on marketable securities

-

0.5

-

0.6

Interest expense

0.1

0.1

0.2

0.3

Income tax expense (recovery)

0.3

3.4

(1.2)

2.3

ADJUSTED EBITDA

$

15.3

$

31.1

$

34.9

$

50.7

ADJUSTED EBITDA as % of Sales

6.4%

13.1%

5.0%

7.2%

 

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. Such risks include but are not limited to: the impact of general economic conditions, general conditions in the retail industry, seasonality, weather and other risks included in public filings of the Company, including those listed in the "Operating Risk Management and Financial Risk Management" sections of the Company's Management Discussion and Analysis for the year ended January 31, 2015.  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.  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.  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 third quarter ended October 31, 2015 are available on the SEDAR website at www.sedar.com.

Montreal, December 3, 2015

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

 

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in thousands of Canadian dollars except per share amounts)




For the three months ended

For the nine months ended


October 31, 2015

November 1, 2014

October 31, 2015

November 1, 2014






Sales

$

240,270

$

238,295

$

694,999

$

703,099

Cost of goods sold

102,236

87,319

297,707

279,860

Gross profit

138,034

150,976

397,292

423,239

Selling and distribution expenses

123,728

126,711

367,388

378,853

Administrative expenses

11,309

10,189

34,388

36,033

Results from operating activities

2,997

14,076

(4,484)

8,353






Finance income

1,426

2,811

6,072

3,818

Finance costs

4,401

659

10,974

880

Earnings (loss) before income taxes

22

16,228

(9,386)

11,291






Income tax (expense) recovery

(291)

(3,362)

1,224

(2,283)






Net (loss) earnings

$

(269)

$

12,866

$

(8,162)

$

9,008






(Loss) earnings per share:






Basic

$

0.00

$

0.20

$

(0.13)

$

0.14


Diluted

0.00

0.20

(0.13)

0.14

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended

For the nine months ended


October 31, 2015

November 1, 2014

October 31, 2015

November 1, 2014






Net (loss) earnings

$

(269)

$

12,866

$

(8,162)

$

9,008

Other comprehensive (loss) income





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







Available-for-sale financial assets (2015 – nil;
net of tax of $263 for the three months and
$99 for the nine months ended November
1, 2014)

-

(1,718)

-

649



Cash flow hedges (net of tax of $2,228 for the
three months and $905 for the nine months
ended October 31, 2015; 2014 - nil)

(6,125)

-

(2,486)

-



Foreign currency translation differences

-

(112)

(119)

(263)


Total other comprehensive (loss) income

(6,125)

(1,830)

(2,605)

386






Total comprehensive (loss) income

$

(6,394)

$

11,036

$

(10,767)

$

9,394

 


REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of Canadian dollars)




October 31, 2015

November 1, 2014

January 31, 2015

ASSETS




CURRENT ASSETS





Cash and cash equivalents

$

97,192

$

121,014

$

139,913


Marketable securities

50,597

48,373

57,364


Trade and other receivables

5,107

6,536

4,599


Derivative financial asset

6,439

4,154

20,635


Income taxes recoverable

1,134

-

1,977


Inventories

142,617

124,324

106,440


Prepaid expenses

9,956

12,820

12,148



Total Current Assets

313,042

317,221

343,076





NON-CURRENT ASSETS





Property and equipment

138,128

157,211

152,349


Intangible assets

23,575

18,532

20,077


Goodwill

42,426

42,426

42,426


Deferred income taxes

29,508

32,254

26,463



Total Non-Current Assets

233,637

250,423

241,315





TOTAL ASSETS

$

546,679

$

567,644

$

584,391





LIABILITIES AND SHAREHOLDERS' EQUITY




CURRENT LIABILITIES





Trade and other payables

$

92,167

$

79,763

$

91,719


Derivative financial liability

616

469

96


Deferred revenue

11,277

12,422

21,073


Income taxes payable

-

1,663

-


Current portion of long-term debt

1,867

1,753

1,780



Total Current Liabilities

105,927

96,070

114,668





NON-CURRENT LIABILITIES





Other payables

8,468

10,451

9,903


Deferred lease credits

11,407

14,294

13,178


Long-term debt

2,141

4,007

3,551


Pension liability

22,355

19,026

21,968



Total Non-Current Liabilities

44,371

47,778

48,600





SHAREHOLDERS' EQUITY





Share capital

38,687

39,227

39,227


Contributed surplus

8,809

7,847

8,014


Retained earnings

346,189

368,980

368,241


Accumulated other comprehensive income

2,696

7,742

5,641



Total Shareholders' Equity

396,381

423,796

421,123





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

546,679

$

567,644

$

584,391

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED 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 February 1, 2015

$

39,227

$

8,014

$

368,241

$

5,641

$

421,123







IFRS 9 (2014) adoption adjustment

-

-

340

(340)

-

Adjusted balance as at February 1, 2015

39,227

8,014

368,581

5,301

421,123







Total comprehensive loss for the period







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)







Contributions by (distributions to) owners of the Company







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







Balance as at February 2, 2014

$

39,227

$

7,188

$

369,660

$

7,356

$

423,431







Total comprehensive income for the period







Net earnings

-

-

9,008

-

9,008


Total other comprehensive income




386

386

Total comprehensive income for the period

-

-

9,008

386

9,394







Contributions by (distributions to) owners of the Company







Share-based compensation costs

-

659

-

-

659


Dividends

-

-

(9,688)

-

(9,688)

Total contributions by (distributions to) owners of the Company

-

659

(9,688)

-

(9,029)







Balance as at November 1, 2014

$

39,227

$

7,847

$

368,980

$

7,742

$

423,796

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended

For the nine months ended


October 31, 2015

November 1, 2014

October 31, 2015

November 1, 2014

CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES





Net (loss) earnings

$

(269)

$

12,866

$

(8,162)

$

9,008

Adjustments for:






Depreciation, amortization and net impairment losses

11,593

15,942

35,699

41,773


Share-based compensation costs

345

344

795

659


Amortization of deferred lease credits

(1,189)

(986)

(3,623)

(2,941)


Deferred lease credits

682

1,359

1,852

1,628


Pension contribution

(485)

(215)

(1,188)

(709)


Pension expense

525

492

1,575

1,476


Realized (gain) loss on disposal of marketable securities

-

(836)

15

(775)


Impairment loss on marketable securities

-

564

-

574


Net change in fair value of marketable securities

4,333

-

10,734

-


Net change in fair value of derivatives

-

(4,399)

12,335

5,025


Foreign exchange gain on cash and cash equivalents

(2,342)

(502)

(7,809)

(1,588)


Interest and dividend income, net

(667)

(831)

(2,095)

(2,200)


Interest paid

(68)

(95)

(225)

(306)


Interest received

113

182

492

563


Dividends received

636

470

1,884

1,909


Income tax expense (recovery)

291

3,362

(1,224)

2,283


13,498

27,717

41,055

56,379

Changes in:






Trade and other receivables

(318)

(1,192)

(564)

(164)


Inventories

(11,129)

(11,869)

(36,177)

(14,723)


Prepaid expenses

(973)

14,314

2,192

(308)


Trade and other payables

(3,677)

(7,802)

1,556

(12,135)


Deferred revenue

(4,679)

(2,937)

(9,796)

(7,576)

Cash (used in) from operating activities

(7,278)

18,231

(1,734)

21,473

Income taxes received

1,859

-

1,861

5,133

Income taxes paid

(365)

(839)

(1,935)

(3,872)

Net cash flows (used in) from operating activities

(5,784)

17,392

(1,808)

22,734






CASH FLOWS USED IN INVESTING ACTIVITIES





Purchases of marketable securities

-

-

(5,660)

(185)

Proceeds on sale of marketable securities

-

2,822

1,678

7,822

Proceeds on sales of trademarks

-

29

-

84

Additions to property and equipment and intangible assets

(8,293)

(9,412)

(27,519)

(22,191)

Cash flows used in investing activities

(8,293)

(6,561)

(31,501)

(14,470)






CASH FLOWS USED IN FINANCING ACTIVITIES





Dividends paid

(3,189)

(3,229)

(9,616)

(9,688)

Purchase of Class A non-voting shares for cancellation

(850)

-

(5,156)

-

Repayment of long-term debt

(447)

(421)

(1,323)

(1,243)

Proceeds from issuance of share capital

-

-

2

-

Cash flows used in financing activities

(4,486)

(3,650)

(16,093)

(10,931)






FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY

1,333

453

6,681

1,326

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

(17,230)

7,634

(42,721)

(1,341)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD

114,422

113,380

139,913

122,355






CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

97,192

$

121,014

$

97,192

$

121,014

 

 

SOURCE Reitmans (Canada) Limited

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

RELATED LINKS
http://www.reitmans.ca

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890