Reitmans (Canada) Limited announces its results for the three months ended May 2, 2015

MONTREAL, June 2, 2015 /CNW Telbec/ - Sales for the three months ended May 2, 2015 were $201.7 million as compared with $206.5 million for the three months ended May 3, 2014, a decrease of 2.3%, with 52 fewer stores in operation.  Same store sales1 increased by 3.0% with mall and power centre stores increasing 0.3% and e-commerce sales increasing 97.7%.

Gross margin for the three months ended May 2, 2015 increased to 59.5% from 58.0% for the three months ended May 3, 2014, largely due to improved margins in the plus-size banners and e-commerce.  The Company's gross profit includes changes in fair value on foreign exchange contracts not eligible for hedge accounting previously reported in finance income or finance costs.  For the three months ended May 2, 2015 a loss of $2.3 million on these contracts is included in gross profit (loss of $3.0 million for the three months ended May 3, 2014).

Net loss for the three months ended May 2, 2015 was $7.7 million ($0.12 diluted loss per share) as compared with a net loss of $13.4 million ($0.21 diluted loss per share) for the three months ended May 3, 2014. Adjusted EBITDA1 for the three months ended May 2, 2015 was $2.3 million as compared with an adjusted EBITDA1 loss of $4.1 million for the three months ended May 3, 2014, an increase of $6.4 million.  The reduction of the net loss and the improvement of the adjusted EBITDA1 was primarily attributable to improved gross margins and reduced operating costs both at store level and head office in the first quarter ended May 2, 2015.

Dividend
At the Board of Directors meeting held on June 2, 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 July 30, 2015 to shareholders of record on July 16, 2015.

Sales for the four weeks ended May 30, 2015
Sales for the month of May (the four weeks ended May 30, 2015) decreased 2.3% with same store sales1 increasing 1.5%, mall and power centre stores decreasing 0.4% and e-commerce sales increasing 70.9%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 810 stores consisting of 337 Reitmans, 138 Penningtons, 107 Addition Elle, 78 RW & CO., 68 Thyme Maternity and 82 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 available-for-sale financial assets, interest expense, depreciation, amortization and net impairment losses.  The following table reconciles the most comparable GAAP measure, net earnings, 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 and interest income eliminates the impact of revenue 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 May 2, 2015 and May 3, 2014:




(in millions of Canadian dollars)

(unaudited)

May 2, 2015

May 3, 2014

Net loss

$

(7.7)

$

(13.4)

Depreciation, amortization and net impairment losses


11.9


13.5

Dividend income


(0.7)


(0.7)

Interest income


(0.2)


(0.2)

Net change in fair value of marketable securities


1.2


-

Interest expense


0.1


0.1

Income tax recovery


(2.3)


(3.4)

ADJUSTED EBITDA

$

2.3

$

(4.1)

ADJUSTED EBITDA as % of Sales


1.1%


(2.0%)

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. 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 described in the Operating Risk Management and Financial Risk Management sections of the Company's Management Discussion and Analysis.  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 first quarter ended May 2, 2015 are available on the SEDAR website at www.sedar.com.

Montreal, June 2, 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


May 2, 2015

May 3, 2014






Sales

$

201,731

$

206,478

Cost of goods sold


81,636


86,708

Gross profit


120,095


119,770

Selling and distribution expenses


118,881


125,261

Administrative expenses


11,378


11,138

Results from operating activities


(10,164)


(16,629)






Finance income


1,477


830

Finance costs


1,250


1,041

Loss before income taxes


(9,937)


(16,840)






Income tax recovery


2,266


3,425






Net loss

$

(7,671)

$

(13,415)






Loss per share:






Basic

$

(0.12)

$

(0.21)


Diluted


(0.12)


(0.21)



REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)




For the three months ended


May 2, 2015

May 3, 2014






Net loss

$

(7,671)

$

(13,415)

Other comprehensive (loss) income






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 $313 for 2014)


-


2,050



Net loss on derivatives designated as cash flow hedges (net of tax of $1,506; 2014 - nil)


(4,169)


-



Foreign currency translation differences


182


(173)






Total other comprehensive (loss) income


(3,987)


1,877






Total comprehensive loss

$

(11,658)

$

(11,538)



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






May 2, 2015

May 3, 2014

January 31, 2015

ASSETS







CURRENT ASSETS








Cash and cash equivalents

$

67,658

$

67,848

$

139,913


Marketable securities


58,933


54,996


57,364


Trade and other receivables


6,095


7,131


4,599


Derivative financial asset


5,458


4,627


20,635


Income taxes recoverable


2,992


9,069


1,977


Inventories


134,977


120,742


106,440


Prepaid expenses


24,396


25,762


12,148



Total Current Assets


300,509


290,175


343,076







NON-CURRENT ASSETS








Property and equipment


147,461


170,445


152,349


Intangible assets


20,997


17,440


20,077


Goodwill


42,426


42,426


42,426


Deferred income taxes


30,397


30,471


26,463



Total Non-Current Assets


241,281


260,782


241,315







TOTAL ASSETS

$

541,790

$

550,957

$

584,391







LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES








Trade and other payables

$

70,442

$

72,590

$

91,719


Derivative financial liability


132


2,946


96


Deferred revenue


16,115


15,527


21,073


Current portion of long-term debt


1,808


1,698


1,780



Total Current Liabilities


88,497


92,761


114,668






NON-CURRENT LIABILITIES








Other payables


9,491


11,323


9,903


Deferred lease credits


12,120


14,774


13,178


Long-term debt


3,088


4,898


3,551


Pension liability


22,218


18,464


21,968



Total Non-Current Liabilities


46,917


49,459


48,600





SHAREHOLDERS' EQUITY








Share capital


39,229


39,227


39,227


Contributed surplus


8,152


7,261


8,014


Retained earnings


357,681


353,016


368,241


Accumulated other comprehensive income


1,314


9,233


5,641



Total Shareholders' Equity


406,376


408,737


421,123






TOTAL LIABILITIES AND








SHAREHOLDERS' EQUITY

$

541,790

$

550,957

$

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






(7,671)




(7,671)


Total other comprehensive loss








(3,987)


(3,987)

Total comprehensive loss for the period


-


-


(7,671)


(3,987)


(11,658)












Contributions by (distributions to) owners of the Company












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























Balance as at February 2, 2014

$

39,227

$

7,188

$

369,660

$

7,356

$

423,431












Total comprehensive loss for the period












Net loss






(13,415)




(13,415)


Total other comprehensive income








1,877


1,877

Total comprehensive loss for the period


-


-


(13,415)


1,877


(11,538)












Contributions by (distributions to) owners of the Company












Share-based compensation costs




73






73


Dividends






(3,229)




(3,229)

Total contributions by (distributions to) owners of the Company


-


73


(3,229)


-


(3,156)












Balance as at May 3, 2014

$

39,227

$

7,261

$

353,016

$

9,233

$

408,737



REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)




For the three months ended


May 2, 2015

May 3, 2014

CASH FLOWS USED IN OPERATING ACTIVITIES






Net loss

$

(7,671)

$

(13,415)


Adjustments for:







Depreciation, amortization and net impairment losses


11,880


13,467



Share-based compensation costs


138


73



Amortization of deferred lease credits


(1,443)


(1,029)



Deferred lease credits


385


196



Pension contribution


(275)


(287)



Pension expense


525


492



Realized loss on sale of marketable securities


-


24



Impairment loss on available-for-sale financial assets


-


10



Net change in fair value of marketable securities


1,168


-



Net change in fair value of derivatives


9,536


7,029



Foreign exchange gain on cash and cash equivalents


(946)


(680)



Interest and dividend income, net


(785)


(698)



Interest paid


(82)


(108)



Interest received


252


198



Dividends received


613


810



Income tax recovery


(2,266)


(3,425)



11,029


2,657


Changes in:







Trade and other receivables


(1,494)


(916)



Inventories


(28,537)


(11,141)



Prepaid expenses


(12,248)


(13,250)



Trade and other payables


(19,469)


(18,128)



Deferred revenue


(4,958)


(4,471)


Cash used in operating activities


(55,677)


(45,249)


Income taxes received


2


-


Income taxes paid


(1,178)


(2,195)


Net cash flows used in operating activities


(56,853)


(47,444)






CASH FLOWS USED IN INVESTING ACTIVITIES






Purchases of marketable securities


(2,736)


(105)


Proceeds on sale of marketable securities


-


2,500


Proceeds on sale of trademarks


-


29


Additions to property and equipment and intangible assets


(10,132)


(6,335)


Cash flows used in investing activities


(12,868)


(3,911)






CASH FLOWS USED IN FINANCING ACTIVITIES






Dividends paid


(3,229)


(3,229)


Repayment of long-term debt


(435)


(407)


Proceeds from issue of share capital


2


-


Cash flows used in financing activities


(3,662)


(3,636)







FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY


1,128


484






NET DECREASE IN CASH AND CASH EQUIVALENTS


(72,255)


(54,507)






CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


139,913


122,355






CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

67,658

$

67,848

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
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