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

MONTREAL, May 31, 2016 /CNW Telbec/ - Sales for the three months ended April 30, 2016 were $203.5 million as compared with $201.7 million for the three months ended May 2, 2015, an increase of 0.9%, with a net reduction of 60 stores primarily attributable to the closure of Smart Set stores. Same store sales1 increased 8.8% with stores increasing 6.3% and e-commerce increasing 52.5%.

The Company's gross margin for the three months ended April 30, 2016 decreased to 55.8% from 59.5% for the three months ended May 2, 2015. Gross profit for the three months ended April 30, 2016 decreased $6.6 million or 5.5% to $113.5 million as compared with $120.1 million for three months ended May 2, 2015, with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross profit by approximately $3.5 million, while also being impacted by increased markdowns.

Results from operating activities for the three months ended April 30, 2016 was a loss of $12.5 million as compared with a loss of $10.2 million for the three months ended May 2, 2015, an increase of $2.3 million.

Net loss for the three months ended April 30, 2016 was $6.0 million ($0.09 basic and diluted loss per share) as compared with net loss of $7.7 million ($0.12 basic and diluted loss per share) for the three months ended May 2, 2015.

Adjusted EBITDA1 for the three months ended April 30, 2016 was a loss of $4.3 million as compared with earnings of $2.3 million for the three months ended May 2, 2015, a decrease of $6.6 million.  The reduction in adjusted EBITDA was primarily attributable to lower gross profit as a result of the impact of the weakness of the Canadian dollar vis-à-vis the U.S. dollar and increased markdowns.

The Company operates three stores in Fort McMurray (two Reitmans and one Penningtons), which were impacted by the wildfires.  In response to the Fort McMurray disaster, the Company moved quickly to support our employees and their families.  Additionally, the displaced residents of the community were offered, for a specified period, clothing at any of the Company's stores located across Canada at a 75% discount and the Company was delighted that many people affected by the fires were able to take advantage of this offer.  The Company looks forward to re-opening its stores in Fort McMurray and continuing to support and serve the community.

Dividends
At the Board of Directors meeting held on May 31, 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 July 28, 2016 to shareholders of record on July 14, 2016.

Sales for the four weeks ended May 28, 2016
Sales for the month of May (the four weeks ended May 28, 2016) increased 1.1%. Same store sales1 increased 7.9% with stores increasing 4.9% and e-commerce sales increasing 66.9%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 750 stores consisting of 327 Reitmans, 130 Penningtons, 104 Addition Elle, 83 RW & CO., 66 Thyme Maternity, 17 Hyba and 23 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
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 loss to adjusted EBITDA for the three months ended April 30, 2016 and May 2, 2015:

 



(in millions of Canadian dollars)

For the three months ended

(Unaudited)

April 30, 2016

May 2, 2015

Net loss

$

(6.0)

$

(7.7)

Depreciation, amortization and net impairment losses


10.3


11.9

Dividend income


(0.6)


(0.7)

Interest income


(0.1)


(0.2)

Net change in fair value of marketable securities


(4.1)


1.2

Interest expense


0.1


0.1

Income tax recovery


(3.9)


(2.3)

ADJUSTED EBITDA

$

(4.3)

$

2.3

ADJUSTED EBITDA as % of Sales


(2.1%)


1.1%

 

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 year ended January 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 months ended April 30, 2016 are available online at www.sedar.com.

Montreal, May 31, 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


April 30, 2016

May 2, 2015




Sales

$

203,487

$

201,731

Cost of goods sold


89,993


81,636

Gross profit


113,494


120,095

Selling and distribution expenses


115,193


118,881

Administrative expenses


10,775


11,378

Results from operating activities


(12,474)


(10,164)






Finance income


4,826


1,477

Finance costs


2,237


1,250

Loss before income taxes


(9,885)


(9,937)






Income tax recovery


3,903


2,266






Net loss

$

(5,982)

$

(7,671)






Loss per share:






Basic

$

(0.09)

$

(0.12)


Diluted


(0.09)


(0.12)

 


REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended


April 30, 2016

May 2, 2015




Net loss

$

(5,982)

$

(7,671)

Other comprehensive (loss) income






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







Cash flow hedges (net of tax of $7,716; 2015 - $1,506)


(21,117)


(4,169)



Foreign currency translation differences


479


182






Total other comprehensive loss


(20,638)


(3,987)






Total comprehensive loss

$

(26,620)

$

(11,658)

 



REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)






April 30, 2016

May 2, 2015

January 30, 2016

ASSETS







CURRENT ASSETS








Cash and cash equivalents

$

75,749

$

67,658

$

118,595


Marketable securities


49,259


58,933


45,189


Trade and other receivables


5,729


6,095


4,103


Derivative financial asset


-


5,458


14,405


Income taxes recoverable


5,413


2,992


3,301


Inventories


139,550


134,977


124,848


Prepaid expenses


9,467


24,396


8,921



Total Current Assets


285,167


300,509


319,362








NON-CURRENT ASSETS








Property and equipment


131,165


147,461


134,363


Intangible assets


24,459


20,997


24,347


Goodwill


38,183


42,426


38,183


Deferred income taxes


35,764


30,397


25,828



Total Non-Current Assets


229,571


241,281


222,721








TOTAL ASSETS

$

514,738

$

541,790

$

542,083








LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES








Trade and other payables

$

84,789

$

70,442

$

98,135


Derivative financial liability


19,549


132


1,816


Deferred revenue


18,476


16,115


19,325


Current portion of long-term debt


1,926


1,808


1,896



Total Current Liabilities


124,740


88,497


121,172








NON-CURRENT LIABILITIES








Other payables


7,699


9,491


8,112


Deferred lease credits


9,977


12,120


10,640


Long-term debt


1,162


3,088


1,655


Pension liability


19,578


22,218


19,336



Total Non-Current Liabilities


38,416


46,917


39,743








SHAREHOLDERS' EQUITY








Share capital


38,397


39,229


38,397


Contributed surplus


9,208


8,152


9,007


Retained earnings


318,221


357,681


327,370


Accumulated other comprehensive income


(14,244)


1,314


6,394



Total Shareholders' Equity


351,582


406,376


381,168








TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

$

514,738

$

541,790

$

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 loss


-


-


(5,982)


-


(5,982)

Total other comprehensive loss


-


-


-


(20,638)


(20,638)

Total comprehensive loss for the period


-


-


(5,982)


(20,638)


(26,620)












Share-based compensation costs


-


201


-


-


201

Dividends


-


-


(3,167)


-


(3,167)

Total contributions by (distributions to) owners of the Company


-


201


(3,167)


-


(2,966)












Balance as at April 30, 2016

$

38,397

$

9,208

$

318,221

$

(14,244)

$

351,582























Balance as at February 1, 2015

$

39,227

$

8,014

$

368,581

$

5,301

$

421,123












Net loss


-


-


(7,671)


-


(7,671)

Total other comprehensive loss


-


-


-


(3,987)


(3,987)

Total comprehensive loss for the period


-


-


(7,671)


(3,987)


(11,658)












Cash consideration on exercise of share options


2


-


-


-


2

Share-based compensation costs


-


138


-


-


138

Dividends


-


-


(3,229)


-


(3,229)

Total contributions by (distributions to) owners of the Company


2


138


(3,229)


-


(3,089)












Balance as at May 2, 2015

$

39,229

$

8,152

$

357,681

$

1,314

$

406,376

 


REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended


April 30, 2016

May 2, 2015

CASH FLOWS USED IN OPERATING ACTIVITIES




Net loss

$

(5,982)

$

(7,671)


Adjustments for:







Depreciation, amortization and net impairment losses


10,347


11,880



Share-based compensation costs


201


138



Amortization of deferred lease credits


(795)


(1,443)



Deferred lease credits


132


385



Pension contribution


(368)


(275)



Pension expense


610


525



Net change in fair value of marketable securities


(4,070)


1,168



Net change in fair value of derivatives


-


9,536



Foreign exchange loss (gain)


3,634


(946)



Interest and dividend income, net


(702)


(785)



Interest paid


(54)


(82)



Interest received


161


252



Dividends received


560


613



Income tax recovery


(3,903)


(2,266)




(229)

11,029


Changes in:







Trade and other receivables


(1,591)


(1,494)



Inventories


(14,702)


(28,537)



Prepaid expenses


(546)


(12,248)



Trade and other payables


(13,218)


(19,469)



Deferred revenue


(849)


(4,958)


Cash used in operating activities


(31,135)


(55,677)


Income taxes received


-


2


Income taxes paid


(430)


(1,178)


Net cash flows used in operating activities


(31,565)


(56,853)






CASH FLOWS USED IN INVESTING ACTIVITIES





Purchases of marketable securities


-


(2,736)


Additions to property and equipment and intangible assets


(8,218)


(10,132)


Proceeds on disposal of property and equipment and intangibles


416


-


Cash flows used in investing activities


(7,802)


(12,868)






CASH FLOWS USED IN FINANCING ACTIVITIES





Dividends paid


(3,167)


(3,229)


Repayment of long-term debt


(463)


(435)


Proceeds from issue of share capital


-


2


Cash flows used in financing activities


(3,630)


(3,662)






FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY


151

1,128






NET DECREASE IN CASH AND CASH EQUIVALENTS


(42,846)

(72,255)






CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


118,595

139,913






CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

75,749

$

67,658

 

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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