Results for the Third Quarter and First Nine Months of Fiscal 2016 - La Cage's Repositioning Continues to Have a Beneficial Effect on the Network's Sales

MONTREAL, July 14, 2016 /CNW Telbec/ - SPORTSCENE GROUP INC. ("Sportscene" or "the Company") (TSXV: SPS.A) today disclosed its financial results for the 13 and 39-week periods ended May 29, 2016. Looking back on fiscal 2016, which will close in a few weeks, Sportscene's management is satisfied with the improvements that the extensive repositioning of the La Cage – Brasserie sportive banner has generated thus far in terms of customer traffic and network results. Today, it is on stronger bases — including a new brand image and an enhanced menu — that the Company can move on to the next phase: consolidation.

Improved Performance for the La Cage Network

The first nine months of fiscal 2016 gave rise to an increase in average same-Cage sales(2) and an overall improvement in network profitability, a direct result of the repositioning of the La Cage banner. The Cages that have been renovated according to the new design notably continue to perform as management expected. The fact that these results were achieved despite a less favourable sporting context than the previous year tends to demonstrate that La Cage's repositioning contributes to offset the seasonal and sporting cycle of the network's sales by reducing the relative weight of the "event" component in favour of the "foodservice" component. This greater stability will facilitate and help to optimize the restaurants' operations going forward, which should contribute to improve the Company's profitability.

Financial Results for the 13 and 39-Week Periods Ended May 29, 2016

During the 13-week period ended May 29, 2016, La Cage's total network sales(1) amounted to $27.5 million, down 4.5% from the same period in 2015, due primarily to the fact that the network comprised two fewer units than in 2015. Sportscene's revenues totalled $19.9 million, compared with $21.7 million for the same quarter of the previous year, mainly as a result of lower revenues derived from the organization of sporting events and the sale of products in grocery stores, which was partly offset by the addition of the sales from the other-banner restaurants acquired at the end of fiscal 2015.  Consolidated adjusted EBITDA(3), which amounted to $1.3 million, posted a slight  $0.1 million decline mainly attributable to lower sales of La Cage branded products in grocery stores resulting from a different promotional schedule and to an increase in certain investments connected with the repositioning of the La Cage banner, notably to develop new technological platforms designed to enhance customers' experience and to reinforce the Company's management team. "If we exclude the higher amounts invested in our repositioning, I wish to point out that the Cage restaurants showed a significant improvement in their profitability," said Sportscene's President and C.E.O. Jean Bédard. M. Bédard added that the plan to turn around the other-banner restaurants is progressing.  

Sportscene recorded an asset writedown of $0.1 million related primarily to its decision to divest a corporate Cage as part of its strategy of optimizing its assets so as to focus its efforts and funds on markets offering the greatest sales potential.

Consequently, the Company closed the third quarter of fiscal 2016 with a net loss of $0.4 million or $0.08 per share (basic and diluted), compared with a net profit of $0.2 million or $0.05 per share (basic and diluted) for the same quarter of the previous year.

During the 39-week period ended May 29, 2016, despite a fewer number of Cages in operation, La Cage's total network sales(1) were relatively stable, amounting to $80.2 million, compared with $80.8 million in 2015. Consolidated revenues rose 6.2% to $62.4 million, whereas consolidated adjusted EBITDA(3) reached $3.7 million, up 14.4% over the previous year. In line with management's expectations, the La Cage network's profitability improved over 2015, driven by the increase in average same-Cage sales(2) and the lesser impact of sporting events and seasonal fluctuations on the Cages' operational management. However, the net result was slightly lower than in 2015, as Sportscene closed the nine-month period with a net loss of $0.3 million or $0.04 per share (basic and diluted). This can largely be explained by the initiatives taken throughout the year to strengthen the banner's positioning and enhance its growth potential.

Sportscene's Objectives: Consolidate its Base and Take Advantage of Growth Opportunities

"Considering the major task achieved since 2014 and its beneficial impact on the Company's development, we are confident that our strategic decisions are sound and that Sportscene is moving in the right direction, as shown by the increase in average same-Cage sales and the improvement in the restaurants' profitability " indicated Jean Bédard. "However, we do not consider our job done. On the contrary, as we progressively implement our strategic vision, we are meeting new challenges and identifying new opportunities that we intend to take advantage of in an efficient and orderly fashion."

For instance, the strong sales growth generated thus far by the implementation of the new Cage design is prompting Sportscene to accelerate the modernization of the network. To that end, management recently undertook a review of the Company's investment program and the impact thereof on its financial structure and financing strategies. Several improvements will be made within the network, so as to ensure that each unit benefits from an ideal market positioning. 

Opening of La Cage Promenades St-Bruno

"We are proud to announce that the La Cage – Brasserie sportive located in Promenades St-Bruno is opening to the public today. This new unit fits perfectly with the repositioning we undertook. Another large-scale corporate Cage will be added in the fall, which will be opened in Complexe Desjardins, in the heart of the Quartier des Spectacles," Mr. Bédard concluded.

Profile

Sportscene Group is a pioneer and a leader in the ambience restaurant niche in Quebec, where it has operated a chain of sports-themed resto-bars since 1984. Originally known as La Cage aux Sports, the chain's name was changed to La Cage – Brasserie sportive ("La Cage") in September 2015, to reflect its new Food, Beer, Sports positioning. Enjoying a strong brand image, La Cage comprised 49 units located across Quebec at the date hereof. The Cages offer complete foodservices and bar services in a sophisticated sports-inspired décor featuring the most advanced audiovisual technologies.


 

The following items are not performance measures consistent with International Financial Reporting Standards ("IFRS"):

(1)

Total network sales correspond to sales achieved by all La Cage restaurants: franchisees, partnerships and corporate units.

(2)

Average same-Cage sales isolate the impact of restaurant openings and closures to assess the actual trend in restaurant sales.

(3)

In Sportscene's statement of comprehensive income, adjusted EBITDA corresponds to "Earnings before financial expenses, amortization, share of net earnings of joint ventures and associates and income taxes", from which other losses (gains) are excluded.

 


Reconciliation of Non-IFRS Financial Measures




(in million of $)

13 Weeks Ended

39 Weeks Ended


May 29, 2016

May 31, 2015

May 29, 2016

May 31, 2015

Restaurant revenues,  excluding revenues from franchises and sales in grocery stores

16,7

14,7

47,8

41,2

Food concession revenues

(0,7)

(0,2)

(1,6)

(0,2)

Restaurants out of banner

(1,4)

-

(4,0)

-

Revenues from franchises and partnerships

12.9

14,2

38,0

39,8

Total network sales

27,5

28,7

80,2

80,8






Earning before financial expenses, amortization, share of net earnings of joint ventures and associates, and income taxes

1,2

1,4

3,7

3,4

Other (gain) losses

0.1

-

-

(0.2)


1,3

1,4

3,7

3,2

 

Interim Condensed Consolidated Statements of Comprehensive Income


(in thousands of Canadian dollars, except for earnings per share and number of outstanding shares)

(unaudited)


13 weeks ended

39 weeks ended


May 29, 2016

May 31, 2015

May 29, 2016

May 31, 2015


$

$

$

$






Revenues

19,916

21,705

62,396

58,727

Cost of sales

5,814

6,198

19,307

19,132

Selling and administrative expenses,
excluding amortization

12,837

14,075

39,425

36,391

Other losses (gains)

78

12

10

(212)

Earnings before financial expenses, amortization,
share of net loss of joint ventures and
associates and income tax

1,187

1,420

3,654

3,416






Amortization

1,117

979

3,348

2,945

Financial expenses

192

158

549

455

Share of net loss of joint ventures and associates

248

51

82

235

(Loss) income (loss) before income tax expenses

(370)

232

(325)

(219)






Income tax (recovery) expenses

(17)

38

(66)

(24)

Net (loss) income and comprehensive (loss) income

(353)

194

(259)

(195)






Net income (loss) and comprehensive income (loss) attributable to:






The Company's shareholders

(346)

214

(171)

(122)


Non-controlling interests

(7)

(20)

(88)

(73)

Net (loss) income and comprehensive (loss) income

(353)

194

(259)

(195)






(Loss) earnings per share (in $):






Basic

(0.08)

0.05

(0.04)

(0.03)


Diluted

(0.08)

0.05

(0.04)

(0.03)






Weighted average number of outstanding

Class A shares (in thousands):






Basic

4,165

4,165

4,165

4,165


Diluted

4,165

4,220

4,165

4,165

 

For further information regarding the results and financial position of Sportscene Group Inc., refer to the management's report as well as the unaudited consolidated financial statements and accompanying notes for the 13 and 39-week periods ended May 29, 2016, available on SEDAR.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

 

SOURCE Sportscene Group Inc.

For further information: Contacts: Jean Bédard, Chairman of the Board, President and Chief Executive Officer ; Josée Pépin, Vice-President, Finance, 450-641-3011

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