Reitmans (Canada) Limited announces its results for the three and six months ended August 1, 2015

MONTREAL, Sept. 10, 2015 /CNW Telbec/ -

Three months ended August 1, 2015
Sales for the three months ended August 1, 2015 were $253.0 million as compared with $258.3 million for the three months ended August 2, 2014, a decrease of 2.1%, with 51 fewer stores in operation. Same store sales1 increased by 1.7% with stores decreasing 0.6% and e-commerce increasing 70.1%.

Gross profit for the three months ended August 1, 2015 decreased $13.3 million or 8.7% to $139.2 million as compared with $152.5 million for the three months ended August 2, 2014. Gross margin for the three months ended August 1, 2015 decreased to 55.0% from 59.0% for the three months ended August 2, 2014, with the fluctuation of the US dollar negatively impacting gross margin by approximately $8.2 million.

Net loss for the three months ended August 1, 2015 was $0.2 million ($0.00 basic and diluted loss per share) as compared with net earnings of $9.6 million ($0.15 basic and diluted earnings per share) for the three months ended August 2, 2014. The net loss was primarily attributable to reduced margins and a $5.2 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities mitigated by reduced operating costs both at the store level and head office.

Adjusted EBITDA1 for the three months ended August 1, 2015 was $17.4 million as compared with $23.6 million for the three months ended August 2, 2014, a decrease of $6.2 million.

Six months ended August 1, 2015
Sales for the six months ended August 1, 2015 were $454.7 million as compared with $464.8 million for the six months ended August 2, 2014, a decrease of 2.2%, impacted by a net reduction of 51 stores. Same store sales1 increased 2.1% with stores decreasing 0.3% and e-commerce increasing 81.3%.

Gross profit for the six months ended August 1, 2015 decreased $13.0 million or 4.8% to $259.3 million as compared with $272.3 million for the six months ended August 2, 2014.  The Company's gross margin for the six months ended August 1, 2015 decreased to 57.0% from 58.6% for the six months ended August 2, 2014, with the fluctuation of the US dollar negatively impacting gross margin by approximately $10.3 million

Net loss for the six months ended August 1, 2015 was $7.9 million ($0.12 basic and diluted loss per share) as compared with $3.9 million ($0.06 basic and diluted loss per share) for the six months ended August 2, 2014.  The increased loss was primarily attributable to reduced gross margins and a $6.4 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities mitigated by reduced operating costs both at the store level and head office.

Adjusted EBITDA1 for the six months ended August 1, 2015 was $19.7 million as compared with $19.5 million for the six months ended August 2, 2014, an increase of $0.2 million

Dividend
At the Board of Directors meeting held on September 10, 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 October 29, 2015 to shareholders of record on October 15, 2015.

Sales for the four weeks ended August 29, 2015
Sales for the month of August (the four weeks ended August 29, 2015) increased 0.9% with same store sales1 increasing 6.8%, stores increasing 4.5% and e-commerce increasing 81.8%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada. The Company operates 794 stores consisting of 333 Reitmans, 135 Penningtons, 107 Addition Elle, 80 RW & CO., 69 Thyme Maternity and 70 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 six months ended August 1, 2015 and August 2, 2014:




(in millions of Canadian dollars)

(unaudited)

For the three months ended

For the six months ended


August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014

Net (loss) earnings

$

(0.2)

$

9.6

$

(7.9)

$

(3.9)

Depreciation, amortization and net impairment losses


12.2


12.4


24.1


25.8

Dividend income


(0.6)


(0.6)


(1.3)


(1.3)

Interest income


(0.1)


(0.2)


(0.3)


(0.3)

Realized loss on disposal of marketable securities


-


-


-


0.1

Net change in fair value of marketable securities


5.2


-


6.4


-

Interest expense


0.1


0.1


0.2


0.2

Income tax expense (recovery)


0.8


2.3


(1.5)


(1.1)

ADJUSTED EBITDA

$

17.4

$

23.6

$

19.7

$

19.5

ADJUSTED EBITDA as % of Sales


6.9%


9.1%


4.3%


4.2%










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 second quarter ended August 1, 2015 are available on the SEDAR website at www.sedar.com.

Montreal, September 10, 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 six months ended


August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014










Sales

$

252,998

$

258,326

$

454,729

$

464,804

Cost of goods sold


113,835


105,833


195,471


192,541

Gross profit


139,163


152,493


259,258


272,263

Selling and distribution expenses


124,779


126,881


243,660


252,142

Administrative expenses


11,701


14,706


23,079


25,844

Results from operating activities


2,683


10,906


(7,481)


(5,723)










Finance income


3,169


1,137


4,646


1,641

Finance costs


5,323


140


6,573


855

Earnings (loss) before income taxes


529


11,903


(9,408)


(4,937)










Income tax (expense) recovery


(751)


(2,346)


1,515


1,079










Net (loss) earnings

$

(222)

$

9,557

$

(7,893)

$

(3,858)










Earnings (loss) per share:










Basic

$

0.00

$

0.15

$

(0.12)

$

(0.06)


Diluted


0.00


0.15


(0.12)


(0.06)












REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended

For the six months ended


August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014










Net (loss) earnings

$

(222)

$

9,557

$

(7,893)

$

(3,858)

Other comprehensive income (loss)










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











Net change in fair value of available-for-sale financial assets (net of tax of $49 for the three months ended August 2, 2014 and $362 for the six months ended August 2, 2014)


-


317


-


2,367



Net gain on derivatives designated as cash flow hedges (net of tax of $2,829 for the three months ended August 1, 2015 and $1,323 for the six months ended August 1, 2015; 2014 -nil)


7,808


-


3,639


-



Foreign currency translation differences


(301)


22


(119)


(151)










Total other comprehensive income


7,507


339


3,520


2,216










Total comprehensive income (loss)

$

7,285

$

9,896

$

(4,373)

$

(1,642)












REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands of Canadian dollars)



August 1, 2015

August 2, 2014

January 31, 2015

ASSETS







CURRENT ASSETS








Cash and cash equivalents

$

114,422

$

113,380

$

139,913


Marketable securities


54,930


52,905


57,364


Trade and other receivables


4,803


5,160


4,599


Derivative financial asset


13,166


3,343


20,635


Income taxes recoverable


2,226


2,123


1,977


Inventories


131,488


112,455


106,440


Prepaid expenses


8,983


27,134


12,148



Total Current Assets


330,018


316,500


343,076








NON-CURRENT ASSETS








Property and equipment


141,957


164,375


152,349


Intangible assets


22,535


18,287


20,077


Goodwill


42,426


42,426


42,426


Deferred income taxes


27,975


30,729


26,463



Total Non-Current Assets


234,893


255,817


241,315








TOTAL ASSETS

$

564,911

$

572,317

$

584,391








LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES








Trade and other payables

$

94,741

$

87,550

$

91,719


Derivative financial liability


1


4,057


96


Deferred revenue


15,956


15,359


21,073


Current portion of long-term debt


1,837


1,725


1,780



Total Current Liabilities


112,535


108,691


114,668








NON-CURRENT LIABILITIES








Other payables


9,060


10,855


9,903


Deferred lease credits


11,914


13,921


13,178


Long-term debt


2,618


4,456


3,551


Pension liability


22,315


18,749


21,968



Total Non-Current Liabilities


45,907


47,981


48,600








SHAREHOLDERS' EQUITY








Share capital


38,814


39,227


39,227


Contributed surplus


8,464


7,503


8,014


Retained earnings


350,370


359,343


368,241


Accumulated other comprehensive income


8,821


9,572


5,641



Total Shareholders' Equity


406,469


415,645


421,123








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

564,911

$

572,317

$

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


-


-


(7,893)


-


(7,893)


Total other comprehensive income


-


-


-


3,520


3,520

Total comprehensive loss for the period


-


-


(7,893)


3,520


(4,373)












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


(415)


-


-


-


(415)


Share-based compensation costs


-


450


-


-


450


Dividends


-


-


(6,427)


-


(6,427)


Premium on repurchase of Class A non-voting shares


-


-


(3,891)


-


(3,891)

Total (distributions to) contributions by owners of the Company


(413)


450


(10,318)


-


(10,281)












Balance as at August 1, 2015

$

38,814

$

8,464

$

350,370

$

8,821

$

406,469












Balance as at February 2, 2014

$

39,227

$

7,188

$

369,660

$

7,356

$

423,431












Total comprehensive loss for the period












Net loss


-


-


(3,858)


-


(3,858)


Total other comprehensive income


-


-


-


2,216


2,216

Total comprehensive loss for the period


-


-


(3,858)


2,216


(1,642)












Contributions by (distributions to) owners of the Company












Share-based compensation costs


-


315


-


-


315


Dividends


-


-


(6,459)


-


(6,459)

Total contributions by (distributions to) owners of the Company


-


315


(6,459)


-


(6,144)












Balance as at August 2, 2014

$

39,227

$

7,503

$

359,343

$

9,572

$

415,645














REITMANS (CANADA) LIMITED

CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended

For the six months ended


August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014

CASH FLOWS FROM OPERATING ACTIVITIES









Net (loss) earnings

$

(222)

$

9,557

$

(7,893)

$

(3,858)

Adjustments for:










Depreciation, amortization and net impairment losses


12,226


12,364


24,106


25,831


Share-based compensation costs


312


242


450


315


Amortization of deferred lease credits


(991)


(926)


(2,434)


(1,955)


Deferred lease credits


785


73


1,170


269


Pension contribution


(428)


(207)


(703)


(494)


Pension expense


525


492


1,050


984


Realized loss on sale of marketable securities


15


37


15


61


Impairment loss on available-for-sale financial assets


-


-


-


10


Net change in fair value of marketable securities


5,233


-


6,401


-


Net change in fair value of derivatives


2,799


2,395


12,335


9,424


Foreign exchange gain on cash and cash equivalents


(4,521)


(406)


(5,467)


(1,086)


Interest and dividend income, net


(643)


(671)


(1,428)


(1,369)


Interest paid


(75)


(103)


(157)


(211)


Interest received


127


183


379


381


Dividends received


635


629


1,248


1,439


Income tax expense (recovery)


751


2,346


(1,515)


(1,079)



16,528


26,005


27,557


28,662

Changes in:










Trade and other receivables


1,248


1,944


(246)


1,028


Inventories


3,489


8,287


(25,048)


(2,854)


Prepaid expenses


15,413


(1,372)


3,165


(14,622)


Trade and other payables


24,702


13,795


5,233


(4,333)


Deferred revenue


(159)


(168)


(5,117)


(4,639)

Cash from operating activities


61,221


48,491


5,544


3,242

Income taxes received


-


5,133


2


5,133

Income taxes paid


(392)


(838)


(1,570)


(3,033)

Net cash flows from operating activities


60,829


52,786


3,976


5,342










CASH FLOWS USED IN INVESTING ACTIVITIES









Purchases of marketable securities


(2,924)


(80)


(5,660)


(185)

Proceeds on sale of marketable securities


1,678


2,500


1,678


5,000

Proceeds on sales of trademarks


-


26


-


55

Additions to property and equipment and intangible assets


(9,094)


(6,444)


(19,226)


(12,779)

Cash flows used in investing activities


(10,340)


(3,998)


(23,208)


(7,909)










CASH FLOWS USED IN FINANCING ACTIVITIES









Dividends paid


(3,198)


(3,230)


(6,427)


(6,459)

Purchase of Class A non-voting shares for cancellation


(4,306)


-


(4,306)


-

Repayment of long-term debt


(441)


(415)


(876)


(822)

Proceeds from issuance of share capital


-


-


2


-

Cash flows used in financing activities


(7,945)


(3,645)


(11,607)


(7,281)










FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY


4,220


389


5,348


873

NET INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS


46,764


45,532


(25,491)


(8,975)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


67,658


67,848


139,913


122,355

CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

114,422

$

113,380

$

114,422

$

113,380










 

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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