Reitmans (Canada) Limited announces its results for the three and six months ended July 30, 2016

MONTREAL, Sept. 8, 2016 /CNW Telbec/ -

Three months ended July 30, 2016
Sales for the three months ended July 30, 2016 were $254.4 million as compared with $253.0 million for the three months ended August 1, 2015, an increase of 0.6%, with a net reduction of 75 stores primarily attributable to the closure of Smart Set stores. Same store sales1 increased 6.3%, being the ninth consecutive quarter of increased same store sales1, with stores increasing 4.0% and e-commerce increasing 45.4%. 

The Company's gross margin for the three months ended July 30, 2016 increased to 56.3% from 55.0% for the three months ended August 1, 2015. Gross profit for the three months ended July 30, 2016 increased $4.0 million or 2.9% to $143.2 million as compared with $139.2 million for three months ended August 1, 2015, with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross profit by approximately $1.7 million.

Results from operating activities for the three months ended July 30, 2016 were $12.5 million as compared with $2.7 million for the three months ended August 1, 2015, an increase of $9.8 million.  

Net earnings increased $9.2 million for the three months ended July 30, 2016 to $9.0 million ($0.14 basic and diluted earnings per share) as compared with a net loss of $0.2 million ($0.00 basic and diluted loss per share) for the three months ended August 1, 2015.

Adjusted EBITDA1 for the three months ended July 30, 2016 was $23.1 million as compared with $17.4 million for the three months ended August 1, 2015, an increase of $5.7 million. The increase in adjusted EBITDA was primarily attributable to improvements in gross profit and reduced store operating costs.

Six months ended July 30, 2016
Sales for the six months ended July 30, 2016 were $457.9 million as compared with $454.7 million for the six months ended August 1, 2015, an increase of 0.7%, with a net reduction of 75 stores primarily attributable to the closure of Smart Set stores. Same store sales1 increased 7.5% with stores increasing 5.0% and e-commerce increasing 49.0%.

The Company's gross margin for the six months ended July 30, 2016 decreased to 56.0% from 57.0% for the six months ended August 1, 2015.  Gross profit for the six months ended July 30, 2016 decreased $2.7 million or 1.0 % to $256.6 million as compared with $259.3 million for the six months ended August 1, 2015.  The weakness of the Canadian dollar vis-à-vis the U.S. dollar negatively impacted gross profit by approximately $5.5 million.

Net earnings increased $10.9 million for the six months ended July 30, 2016 to $3.0 million ($0.05 basic and diluted earnings per share) as compared with a $7.9 million loss ($0.12 basic and diluted loss per share) for the six months ended August 1, 2015.

Adjusted EBITDA1 for the six months ended July 30, 2016 was $18.8 million as compared with $19.7 million for the six months ended August 1, 2015, a decrease of $0.9 million. The decrease in adjusted EBITDA was primarily attributable to the impact of lower gross profit in the first quarter of fiscal 2017 partially offset by reduced store operating costs.

Dividends
At the Board of Directors meeting held on September 8, 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 October 27, 2016 to shareholders of record on October 13, 2016.

Sales for the four weeks ended August 27, 2016
Sales for the month of August (the four weeks ended August 27, 2016) increased 1.1% with same store sales1 increasing 6.2%, stores increasing 2.5% and e-commerce increasing 63.6%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 719 stores consisting of 307 Reitmans, 130 Penningtons, 103 Addition Elle, 82 RW & CO., 63 Thyme Maternity, 19 Hyba and 15 Smart Set. The Company also operated 18 Thyme Maternity shop-in-shop boutiques in select Babies"R"Us locations in Canada.  The Company terminated its agreement with Toys"R"Us and no longer operates Babies"R"Us shop-in-shop locations as of August 31, 2016.

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.  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 six months ended July 30, 2016 and August 1, 2015:

 

(in millions of Canadian dollars)

(unaudited)

For the three months ended

For the six months ended


July 30, 2016

August 1, 2015

July 30, 2016

August 1, 2015

Net earnings (loss)

$

9.0

$

(0.2)

$

3.0

$

(7.9)

Depreciation, amortization and net impairment losses


10.7


12.2


21.1


24.1

Dividend income


(0.6)


(0.6)


(1.3)


(1.3)

Interest income


(0.2)


(0.1)


(0.3)


(0.3)

Net change in fair value of marketable securities


0.5


5.2


(3.6)


6.4

Interest expense


-


0.1


0.1


0.2

Income tax expense (recovery)


3.7


0.8


(0.2)


(1.5)

ADJUSTED EBITDA

$

23.1

$

17.4

$

18.8

$

19.7

ADJUSTED EBITDA as % of Sales


9.1%


6.9%


4.1%


4.3%







 

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 six months ended July 30, 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 six months ended July 30, 2016 are available online at www.sedar.com.

Montreal, September 8, 2016

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



July 30, 2016

August 1, 2015

July 30, 2016

August 1, 2015







Sales


$

254,447

$

252,998

$

457,934

$

454,729

Cost of goods sold



111,297


113,835


201,290


195,471

Gross profit



143,150


139,163


256,644


259,258

Selling and distribution expenses



119,704


124,779


234,897


243,660

Administrative expenses



10,996


11,701


21,771


23,079

Results from operating activities



12,450


2,683


(24)


(7,481)











Finance income



824


3,169


5,163


4,646

Finance costs



612


5,323


2,362


6,573

Earnings (loss) before income taxes



12,662


529


2,777


(9,408)











Income tax expense (recovery)



3,691


751


(212)


(1,515)











Net earnings (loss)


$

8,971

$

(222)

$

2,989

$

(7,893)











Earnings (loss) per share :











Basic


$

0.14

$

0.00

$

0.05

$

(0.12)


Diluted


$

0.14

$

0.00

$

0.05

$

(0.12)

 


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


July 30, 2016

August 1, 2015

July 30, 2016

August 1, 2015






Net earnings (loss)

$

8,971

$

(222)

$

2,989

$

(7,893)

Other comprehensive income (loss)






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






Cash flow hedges (net of tax of $2,777 for the three months ended July 30, 2016 and $4,939 for the six months ended July 30, 2016; net of tax of $2,829 for three months ended August 1, 2015 and $1,323 for the six months ended August 1, 2015)

7,617

7,808

(13,500)

3,639


Foreign currency translation differences

(220)

(301)

259

(119)






Total other comprehensive income (loss)

7,397

7,507

(13,241)

3,520






Total comprehensive income (loss)

$

16,368

$

7,285

$

(10,252)

$

(4,373)

 


REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of Canadian dollars)





July 30, 2016

August 1, 2015

January 30, 2016

ASSETS




CURRENT ASSETS





Cash and cash equivalents

$

114,538

$

114,422

$

118,595


Marketable securities

48,772

54,930

45,189


Trade and other receivables

5,361

4,803

4,103


Derivative financial asset

623

13,166

14,405


Income taxes recoverable

3,367

2,226

3,301


Inventories

147,159

131,488

124,848


Prepaid expenses

8,647

8,983

8,921



Total Current Assets

328,467

330,018

319,362





NON-CURRENT ASSETS





Property and equipment

128,289

141,957

134,363


Intangible assets

23,741

22,535

24,347


Goodwill

38,183

42,426

38,183


Deferred income taxes

30,973

27,975

25,828



Total Non-Current Assets

221,186

234,893

222,721





TOTAL ASSETS

$

549,653

$

564,911

$

542,083





LIABILITIES AND SHAREHOLDERS' EQUITY




CURRENT LIABILITIES





Trade and other payables

$

119,272

$

94,741

$

98,135


Derivative financial liability

8,962

1

1,816


Deferred revenue

17,228

15,956

19,325


Current portion of long-term debt

1,957

1,837

1,896



Total Current Liabilities

147,419

112,535

121,172





NON-CURRENT LIABILITIES





Other payables

7,468

9,060

8,112


Deferred lease credits

9,236

11,914

10,640


Long-term debt

661

2,618

1,655


Pension liability

19,897

22,315

19,336



Total Non-Current Liabilities

37,262

45,907

39,743





SHAREHOLDERS' EQUITY





Share capital

38,397

38,814

38,397


Contributed surplus

9,397

8,464

9,007


Retained earnings

324,025

350,370

327,370


Accumulated other comprehensive income

(6,847)

8,821

6,394



Total Shareholders' Equity

364,972

406,469

381,168





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

549,653

$

564,911

$

542,083

 


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 January 31, 2016

$

38,397

$

9,007

$

327,370

$

6,394

$

381,168







Net earnings

-

-

2,989

-

2,989

Total other comprehensive loss

-

-

-

(13,241)

(13,241)

Total comprehensive loss for the period

-

-

2,989

(13,241)

(10,252)







Share-based compensation costs

-

390

-

-

390

Dividends

-

-

(6,334)

-

(6,334)

Total contributions by (distributions to) owners of the Company

-

390

(6,334)

-

(5,944)







Balance as at July 30, 2016

$

38,397

$

9,397

$

324,025

$

(6,847)

$

364,972













Balance as at February 1, 2015

$

39,227

$

8,014

$

368,581

$

5,301

$

421,123







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)







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 contributions by (distributions to) 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

 

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


July 30, 2016

August 1, 2015

July 30, 2016

August 1, 2015

CASH FLOWS FROM OPERATING ACTIVITIES





Net earnings (loss)

$

8,971

$

(222)

$

2,989

$

(7,893)

Adjustments for:






Depreciation, amortization and net impairment losses

10,720

12,226

21,067

24,106


Share-based compensation costs

277

312

478

450


Amortization of deferred lease credits

(773)

(991)

(1,568)

(2,434)


Deferred lease credits

32

785

164

1,170


Pension contribution

(291)

(428)

(659)

(703)


Pension expense

610

525

1,220

1,050


Realized loss on sale of marketable securities

-

15

-

15


Net change in fair value of marketable securities

487

5,233

(3,583)

6,401


Net change in fair value of derivatives

-

2,799

-

12,335


Foreign exchange (gain) loss on cash and cash equivalents

(960)

(4,521)

2,674

(5,467)


Interest and dividend income, net

(778)

(643)

(1,480)

(1,428)


Interest paid

(46)

(75)

(100)

(157)


Interest received

156

127

317

379


Dividends received

632

635

1,192

1,248


Income tax expense (recovery)

3,691

751

(212)

(1,515)


22,728

16,528

22,499

27,557

Changes in:






Trade and other receivables

404

1,248

(1,187)

(246)


Inventories

(7,609)

3,489

(22,311)

(25,048)


Prepaid expenses

820

15,413

274

3,165


Trade and other payables

35,178

24,702

21,960

5,233


Deferred revenue

(1,248)

(159)

(2,097)

(5,117)

Cash from operating activities

50,273

61,221

19,138

5,544

Income taxes received

370

-

370

2

Income taxes paid

(1)

(392)

(431)

(1,570)

Net cash flows from operating activities

50,642

60,829

19,077

3,976






CASH FLOWS USED IN INVESTING ACTIVITIES





Purchases of marketable securities

-

(2,924)

-

(5,660)

Proceeds on sale of marketable securities

-

1,678

-

1,678

Additions to property and equipment and intangible assets

(8,141)

(9,094)

(16,359)

(19,226)

Proceeds on disposal of property and equipment and intangibles

-

-

416

-

Cash flows used in investing activities

(8,141)

(10,340)

(15,943)

(23,208)






CASH FLOWS USED IN FINANCING ACTIVITIES





Dividends paid

(3,167)

(3,198)

(6,334)

(6,427)

Purchase of Class A non-voting shares for cancellation

-

(4,306)

-

(4,306)

Repayment of long-term debt

(470)

(441)

(933)

(876)

Proceeds from issuance of share capital

-

-

-

2

Cash flows used in financing activities

(3,637)

(7,945)

(7,267)

(11,607)






FOREIGN EXCHANGE (LOSS) GAIN ON CASH HELD IN FOREIGN CURRENCY

(75)

4,220

76

5,348

NET INCREASE (DECREASE)  IN CASH AND CASH EQUIVALENTS

38,789

46,764

(4,057)

(25,491)

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD

75,749

67,658

118,595

139,913






CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

114,538

$

114,422

$

114,538

$

114,422

 

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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