Reitmans (Canada) Limited Announces Year-End Results

MONTRÉAL, April 1, 2015 /CNW Telbec/ -

Twelve months ended January 31, 2015

Sales for the twelve months ended January 31, 2015 were $939.4 million as compared with $960.4 million for the twelve months ended February 1, 2014, a decrease of 2.2%, impacted by a net reduction of 55 stores as the Company closes underperforming locations and converts or closes Smart Set stores. Same store sales increased 1.2% with mall and power centre stores decreasing 0.2% and e-commerce sales increasing 63.5%.  Mall and power centre stores were impacted by e-commerce alternatives, a highly competitive environment and consumers with near record high debt levels.  The initiative to close the Smart Set banner negatively impacted sales, despite same store sales for the Smart Set banner showing positive results.  Sales through the various banners' e-commerce channels continued to show strong growth, although representing a small proportion of total Company sales. 

The Company's gross margin for the twelve months ended January 31, 2015 was 60.4% compared with 61.9% for the twelve months ended February 1, 2014.  The Company's gross margin includes gains on foreign exchange contracts previously reported in finance income (gain of $10,921 for the twelve months ended January 31, 2015 and $12,455 for the twelve months ended February 1, 2014).

Net earnings for the twelve months ended January 31, 2015 were $13.4 million ($0.21 diluted earnings per share) as compared with net earnings of $10.8 million ($0.17 diluted earnings per share) for the twelve months ended February 1, 2014.  The increase in net earnings was primarily attributable to the closure of non-performing stores and previously reported initiatives aimed at reducing costs across the organization.  For the twelve months ended January 31, 2015, adjusted EBITDA1 was $64.8 million as compared with $70.5 million in the twelve months ended February 1, 2014, a decrease of $5.7 million or 8.0% largely attributable to lower sales and margins.

On November 25, 2014 the Company announced its plan to close all Smart Set stores.  Management determined that its optimum strategy to improve operating results was to refocus its sales and merchandising efforts either through conversion of Smart Set stores to other Company banners or through store closures.  The majority of the stores that will be converted will occur by October 31, 2015 while the remaining stores are anticipated to close by the year ending January 28, 2017.

The Smart Set banner sales for the twelve months ended January 31, 2015 were $88.9 million as compared to $95.8 million for the twelve months ended February 1, 2014, while losses from operating activities for the twelve months ended January 31, 2015 were $10.0 million as compared to $29.5 million for the twelve months ended February 1, 2014 (including an allocation of general overhead costs).  The Smart Set banner non-cash asset write-offs amounted to $3.1 million for the twelve months ended January 31, 2015.  The Company does not anticipate inventory write-downs or material employee severance costs.

Three months ended January 31, 2015

Sales for the three months ended January 31, 2015 were $236.3 million as compared with $240.7 million for the three months ended February 1, 2014, a decrease of 1.8%, impacted by a net reduction of 55 stores as the Company closes underperforming locations and converts or closes Smart Set stores.  Same store sales increased by 2.1% with mall and power centre stores decreasing 0.6% and e-commerce sales increasing 84.9%. 

The Company's gross margin for the three months ended January 31, 2015 increased to 61.0% from 58.7% for the three months ended February 1, 2014, largely due to improved margins in the plus-size banners and e-commerce. The Company's gross margin includes gains on foreign exchange contracts previously reported in finance income (gain of $10,041 for the three months ended January 31, 2015 and $9,505 for the three months ended February 1, 2014).

Net earnings for the three months ended January 31, 2015 were $4.4 million ($0.07 diluted earnings per share) as compared with a net loss of $2.6 million ($0.04 diluted loss per share) for the three months ended February 1, 2014.  Adjusted EBITDA1 for the three months ended January 31, 2015 was $14.1 million as compared with $8.1 million for the three months ended February 1, 2014, an increase of $6.0 million or 73.8%.  The increase in net earnings and adjusted EBITDA1 was primarily attributable to improved gross margins in the fourth quarter of fiscal 2015 combined with reduced operating costs both at store level and head office. 

Dividends

At the Board of Directors meeting held on April 1, 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 April 30, 2015 to shareholders of record on April 16, 2015.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 823 stores consisting of 341 Reitmans, 139 Penningtons, 105 Addition Elle, 76 RW & CO., 68 Thyme Maternity and 94 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, 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 earnings (loss) to adjusted EBITDA for the three months and fiscal year ended January 31, 2015 and February 1, 2014:





For the three months ended

For the fiscal year ended

(Unaudited)

(in thousands of Canadian dollars)

January 31, 2015

February 1, 2014

January 31, 2015

February 1, 2014

Net earnings (loss)

$ 4,407

$ (2,571)

$ 13,415

$ 10,788

Depreciation, amortization and net impairment losses

12,265

17,312

54,038

63,724

Other Income1

-

(6,054)

-

(6,054)

Dividend income

(409)

(873)

(2,298)

(3,481)

Interest income

(377)

(184)

(994)

(621)

Realized (gains) losses on disposal of available-for-sale financial assets

(4,045)

248

(4,820)

248

Impairment losses on available-for-sale financial assets

384

2,007

958

2,699

Interest expense

88

114

394

496

Income tax expense (recovery)

1,829

(1,863)

4,112

2,654

ADJUSTED EBITDA

$ 14,142

$ 8,136

$ 64,805

$ 70,453

ADJUSTED EBITDA as % of Sales

5.99%

3.38%

6.90%

7.34%

1 Other income comprises a gain on sale of intellectual property rights and proceeds from the settlement of a trademark dispute

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 year ended January 31, 2015 are available online at www.sedar.com.

Montreal, April 1, 2015

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone: (514) 385-2630
Corporate Website: www.reitmans.ca

REITMANS (CANADA) LIMITED

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in thousands of Canadian dollars except per share amounts)





For the three months ended

For the years ended


January 31, 2015

February 1, 2014

January 31, 2015

February 1, 2014






Sales

$ 236,277

$ 240,677

$ 939,376

$ 960,397

Cost of goods sold

92,173

99,289

372,033

365,458

Gross profit

144,104

141,388

567,343

594,939

Selling and distribution expenses

127,545

140,307

507,244

544,448

Administrative expenses

12,416

12,454

47,603

47,385

Results from operating activities

4,143

(11,373)

12,496

3,106






Other income

-

6,054

-

6,054

Finance income

4,831

3,254

8,112

7,725

Finance costs

2,738

2,369

3,081

3,443

Earnings (loss) before income taxes

6,236

(4,434)

17,527

13,442






Income tax expense (recovery)

1,829

(1,863)

4,112

2,654






Net earnings (loss)

$ 4,407

$ (2,571)

$ 13,415

$ 10,788






Earnings (loss) per share:






Basic

$ 0.07

$ (0.04)

$ 0.21

$ 0.17


Diluted

0.07

(0.04)

0.21

0.17

 

REITMANS (CANADA) LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands of Canadian dollars)





For the three months ended

For the years ended


January 31, 2015

February 1, 2014

January 31, 2015

February 1, 2014






Net earnings (loss)

$ 4,407

$ (2,571)

$ 13,415

$ 10,788

Other comprehensive (loss) income





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






Reclassification of realized (gains) losses on available-for-sale financial assets to net earnings (net of tax of $538 for the three months and $639 for the year ended January 31, 2015; $31 for the three months and the year ended February 1, 2014)

(3,507)

217

(4,181)

217


Net change in fair value of available-for-sale financial assets (net of tax of $681 for the three months and $557 for the year ended January 31, 2015; $170 for the three months and $592 for the year ended February 1, 2014)

(4,462)

(1,126)

(3,637)

(3,896)


Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $51 for the three months and $127 for the year ended January 31, 2015; $265 for the three months and $358 for the year ended February 1, 2014)

333

1,742

831

2,341


Net change in fair value of cash flow hedges (net of tax of $2,177 for the three months and for the year ended January 31, 2015; 2014 - nil)

6,026

-

6,026

-







Foreign currency translation differences

(491)

(194)

(754)

29


(2,101)

639

(1,715)

(1,309)






Items that will not be reclassified to net earnings:






Actuarial (loss) gain on defined benefit plans (net of tax of $692 for the three months and year ended January 31, 2015; $124 for the three months and year ended February 1, 2014)

(1,917)

373

(1,917)

373

Total other comprehensive (loss) income

(4,018)

1,012

(3,632)

(936)






Total comprehensive income (loss)

$ 389

$ (1,559)

$ 9,783

$ 9,852

 


REITMANS (CANADA) LIMITED

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of Canadian dollars)







As at January 31, 2015

As at February 1, 2014

ASSETS




CURRENT ASSETS





Cash and cash equivalents


$ 139,913

$ 122,355


Marketable securities


57,364

55,062


Trade and other receivables


4,599

6,422


Derivative financial asset


20,635

11,775


Income taxes recoverable


1,977

5,656


Inventories


106,440

109,601


Prepaid expenses


12,148

12,512



Total Current Assets


343,076

323,383





NON-CURRENT ASSETS





Property and equipment


152,349

178,341


Intangible assets


20,077

17,211


Goodwill


42,426

42,426


Deferred income taxes


26,463

28,578



Total Non-Current Assets


241,315

266,556





TOTAL ASSETS


$ 584,391

$ 589,939





LIABILITIES AND SHAREHOLDERS' EQUITY




CURRENT LIABILITIES





Trade and other payables


$ 91,719

$ 90,734


Derivative financial liability


96

3,065


Deferred revenue


21,073

19,998


Current portion of long-term debt


1,780

1,672



Total Current Liabilities


114,668

115,469





NON-CURRENT LIABILITIES





Other payables


9,903

11,842


Deferred lease credits


13,178

15,607


Long-term debt


3,551

5,331


Pension liability


21,968

18,259



Total Non-Current Liabilities


48,600

51,039





SHAREHOLDERS' EQUITY





Share capital


39,227

39,227


Contributed surplus


8,014

7,188


Retained earnings


368,241

369,660


Accumulated other comprehensive income


5,641

7,356



Total Shareholders' Equity


421,123

423,431





TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$ 584,391

$ 589,939

 


REITMANS (CANADA) LIMITED

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 November 2, 2014


$ 39,227

$ 7,847

$ 368,980

$ 7,742

$ 423,796








Total comprehensive income for the period








Net earnings


-

-

4,407

-

4,407


Total other comprehensive loss


-

-

(1,917)

(2,101)

(4,018)

Total comprehensive income for the period


-

-

2,490

(2,101)

389








Contributions by and distributions to owners of the Company








Share-based compensation costs


-

167

-

-

167


Dividends


-

-

(3,229)

-

(3,229)

Total contributions by and distributions to owners of the Company


-

167

(3,229)

-

(3,062)








Balance as at January 31, 2015


$ 39,227

$ 8,014

$ 368,241

$ 5,641

$ 421,123








Balance as at February 2, 2014


$ 39,227

$ 7,188

$ 369,660

$ 7,356

$ 423,431








Total comprehensive income for the year








Net earnings


-

-

13,415

-

13,415


Total other comprehensive loss


-

-

(1,917)

(1,715)

(3,632)

Total comprehensive income for the year


-

-

11,498

(1,715)

9,783








Contributions by and distributions to owners of the Company








Share-based compensation costs


-

826

-

-

826


Dividends


-

-

(12,917)

-

(12,917)

Total contributions by and distributions to owners of the Company


-

826

(12,917)

-

(12,091)








Balance as at January 31, 2015


$ 39,227

$ 8,014

$ 368,241

$ 5,641

$ 421,123




Share Capital

Contributed
Surplus

Retained
Earnings

Accumulated Other
Comprehensive
Income

Total
Shareholders'
Equity








Balance as at November 3, 2013


$ 39,227

$ 7,126

$ 375,088

$  6,717

$ 428,158








Total comprehensive loss for the period








Net loss


-

-

(2,571)

-

(2,571)


Total other comprehensive income


-

-

373

639

1,012

Total comprehensive loss for the period


-

-

(2,198)

639

(1,559)








Contributions by and distributions to owners of the Company








Share-based compensation costs


-

62

-

-

62


Dividends


-

-

(3,230)

-

(3,230)

Total contributions by and distributions to owners of the Company


-

62

(3,230)

-

(3,168)








Balance as at February 1, 2014


$ 39,227

$ 7,188

$ 369,660

$ 7,356

$ 423,431















Balance as at February 3, 2013


$ 39,227

$ 6,521

$ 400,480

$ 8,665

$ 454,893








Total comprehensive income for the year








Net earnings


-

-

10,788

-

10,788


Total other comprehensive income (loss)


-

-

373

(1,309)

(936)

Total comprehensive income for the year


-

-

11,161

(1,309)

9,852








Contributions by and distributions to owners of the Company








Share-based compensation costs


-

667

-

-

667


Dividends


-

-

(41,981)

-

(41,981)

Total contributions by and distributions to owners of the Company


-

667

(41,981)

-

(41,314)








Balance as at February 1, 2014


$ 39,227

$ 7,188

$ 369,660

$ 7,356

$ 423,431



REITMANS (CANADA) LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)





For the three months ended

For the years ended


January 31, 2015

February 1, 2014

January 31, 2015

February 1, 2014

CASH FLOWS FROM OPERATING ACTIVITIES






Net earnings (loss)

$ 4,407

$ (2,571)

$ 13,415

$ 10,788


Adjustments for:







Depreciation, amortization and net impairment losses

12,265

17,312

54,038

63,724



Share-based compensation costs

167

62

826

667



Amortization of deferred lease credits

(994)

(1,110)

(3,935)

(4,517)



Deferred lease credits

(122)

104

1,506

3,319



Pension contribution

(166)

(298)

(875)

(960)



Pension expense

499

807

1,975

2,157



Other income

-

(6,054)

-

(6,054)



Realized (gain) loss on sale of marketable securities

(4,045)

248

(4,820)

248



Impairment loss on available-for-sale financial assets

384

2,007

958

2,699



Net change in fair value of derivatives

(8,650)

(7,388)

(3,625)

(8,428)



Foreign exchange gain on cash and cash equivalents

(532)

(1,334)

(2,120)

(1,604)



Interest and dividend income, net

(698)

(695)

(2,898)

(3,358)



Interest paid

(88)

(114)

(394)

(496)



Interest received

341

149

904

594



Dividends received

564

752

2,473

3,355



Income tax expense

1,829

(1,863)

4,112

2,654


5,161

14

61,540

64,788


Changes in:







Trade and other receivables

877

630

713

(533)



Inventories

17,884

18,327

3,161

(15,945)



Prepaid expenses

672

14,921

364

13,432



Trade and other payables

9,128

13,493

(3,007)

20,929



Deferred revenue

8,651

13,574

1,075

3,701


Cash from operating activities

42,373

60,959

63,846

86,372


Income taxes received

876

-

6,009

650


Income taxes paid

(871)

-

(4,743)

(2,306)


Net cash flows from operating activities

42,378

60,959

65,112

84,716






CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES






Purchases of marketable securities

(39,719)

(105)

(39,904)

(420)


Proceeds on sale of marketable securities

25,586

12,500

33,408

12,500


Proceeds on sale of trademarks

941

4,329

1,025

4,329


Additions to property and equipment and intangible assets

(6,769)

(5,485)

(28,960)

(34,524)


Proceeds on disposal of property and equipment and intangibles

101

-

101

-


Cash flows (used in) from investing activities

(19,860)

11,239

(34,330)

(18,115)






CASH FLOWS USED IN FINANCING ACTIVITIES






Dividends paid

(3,229)

(3,230)

(12,917)

(41,981)


Repayment of long-term debt

(429)

(403)

(1,672)

(1,570)


Cash flows used in financing activities

(3,658)

(3,633)

(14,589)

(43,551)






FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY

39

1,409

1,365

1,679






NET INCREASE IN CASH AND CASH EQUIVALENTS

18,899

69,974

17,558

24,729

CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD

121,014

52,381

122,355

97,626






CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$ 139,913

$ 122,355

$ 139,913

$ 122,355

SOURCE Reitmans (Canada) Limited

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

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