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Reitmans (Canada) Limited announces its results for the three and six months ended July 29, 2017

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MONTREAL, Sept. 7, 2017 /CNW Telbec/ -

Three months ended July 29, 2017

Sales for the three months ended July 29, 2017 were $251.1 million as compared with $254.4 million for the three months ended July 30, 2016, a decrease of 1.3%, with a net reduction of 55 stores.  Same store sales1 increased 2.5%, with store sales decreasing 0.6% and e-commerce sales increasing 39.9%.  This marks the thirteenth consecutive quarter of positive same store sales.

Gross profit for the three months ended July 29, 2017 decreased by $4.5 million or 3.1% to $138.7 million as compared with $143.2 million for the three months ended July 30, 2016.  Gross margin was 55.2% for the three months ended July 29, 2017 as compared to 56.3% for the three months ended July 30, 2016 driven primarily by the adverse foreign exchange impact of approximately $3.7 million on U.S. denominated purchases.  The Company continues to drive cost efficiencies through its global sourcing activities thereby helping to mitigate the negative impact of foreign exchange.

Results from operating activities for the three months ended July 29, 2017 were $10.8 million as compared to $12.5 million for the three months ended July 30, 2016, a decrease of $1.7 million.

Net earnings for the three months ended July 29, 2017 was $9.7 million ($0.15 basic and diluted earnings per share) as compared with a $9.0 million net earnings ($0.14 basic and diluted earnings per share) for the three months ended July 30, 2016.  The increased net earnings of $0.7 million is due to increased net finance income and a lower income tax expense offsetting reduced results from operating activities.

Adjusted EBITDA1 for the three months ended July 29, 2017 was $19.9 million as compared with $23.1 million for the three months ended July 30, 2016.  The decrease of $3.2 million in adjusted EBITDA was primarily attributable to lower results from operating activities and an unfavorable net foreign exchange impact of $1.2 million on U.S. denominated monetary assets and liabilities included in net finance income.

Six months ended July 29, 2017

Sales for the six months ended July 29, 2017 were $458.2 million as compared with $457.9 million for the six months ended July 30, 2016, an increase of 0.1%, with a net reduction of 55 stores.  Same store sales1 increased 3.8%, with store sales increasing 0.2% and e-commerce sales increasing 46.9%.

Gross profit for the six months ended July 29, 2017 decreased by $4.7 million or 1.8% to $251.9 million as compared with $256.6 million for the six months ended July 30, 2016.  Gross margin was 55.0% for the six months ended July 29, 2017 as compared to 56.0% for the six months ended July 30, 2016 driven primarily by the adverse foreign exchange impact of approximately $11.2 million on U.S. dollar denominated purchases.  The Company continues to drive cost efficiencies through its global sourcing activities thereby helping to mitigate the negative impact of foreign exchange.

Net earnings were $3.1 million for the six months ended July 29, 2017 ($0.05 basic and diluted earnings per share) as compared with a $3.0 million net earnings ($0.05 basic and diluted earnings per share) for the six months ended July 30, 2016. The increase in net earnings of $0.1 million is due to increased net finance income offsetting reduced results from operating activities.

Adjusted EBITDA1 for the six months ended July 29, 2017 was $19.8 million as compared with $18.8 million for the six months ended July 30, 2016. The improvement of $1.0 million in adjusted EBITDA was primarily attributable to a favorable net foreign exchange impact of $1.9 million on U.S. denominated monetary assets and liabilities included in net finance income partially offset by reduced results from operating activities.

Dividends

At the Board of Directors meeting held on September 7, 2017, 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 26, 2017 to shareholders of record on October 12, 2017.

Sales for the four weeks ended August 26, 2017

Sales for the month of August (the four weeks ended August 26, 2017) increased 0.2%. Same store sales1 increased 2.4% with stores increasing 1.1% and e-commerce sales increasing 16.3%.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 664 stores consisting of 280 Reitmans, 125 Penningtons, 95 Addition Elle, 85 RW & CO., 60 Thyme Maternity and 19 Hyba.

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/recovery, dividend income, interest income, net change in fair value of marketable securities, interest expense, 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 income, interest income and expense and the 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.  The measure does not have any standardized meaning under IFRS. Although depreciation, amortization and impairment charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, as such, adjusted EBITDA does not reflect any cash requirements for these replacements.  Adjusted EBITDA should not be considered either as discretionary cash available to invest in the growth of the business or as a measure of cash that will be available to meet the Company's obligations. 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.  Adjusted EBITDA should not be used in substitute for measures of performance prepared in accordance with IFRS or as an alternative to net earnings, net cash provided by operating, investing or financing activities or any other financial statement data presented as indicators of financial performance or liquidity, each as presented in accordance with IFRS. Although adjusted EBITDA is frequently used by securities analysts, lenders and others in their evaluation of companies, it has limitations as an analytical tool, and should not be considered in isolation, or as a substitute for analysis of the Company's results as reported under IFRS.

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.  Same store sales exclude sales from wholesale accounts. 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 online sales 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 not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

The following table reconciles net earnings to adjusted EBITDA:

 




(in millions of Canadian dollars)
(unaudited)

For the three months ended

For the six months ended


July 29, 2017

July 30, 2016

July 29, 2017

July 30, 2016

Net earnings

$

9.7

$

9.0

$

3.1

$

3.0

Depreciation, amortization and net impairment losses


10.4


10.7


21.7


21.1

Dividend income


(0.6)


(0.6)


(1.2)


(1.3)

Interest income


(0.2)


(0.2)


(0.4)


(0.3)

Net change in fair value of marketable securities


(1.7)


0.5


(3.2)


(3.6)

Interest expense


-


-


-


0.1

Income tax expense (recovery)


2.3


3.7


(0.2)


(0.2)

ADJUSTED EBITDA

$

19.9

$

23.1

$

19.8

$

18.8

ADJUSTED EBITDA as % of Sales


7.9%


9.1%


4.3%


4.1%

 

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 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 Management Discussion & Analysis ("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 MD&A for the three and six months ended July 29, 2017.

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 29, 2017 are available online at www.sedar.com.

Montreal, September 7, 2017

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 29, 2017

July 30, 2016

July 29, 2017

July 30, 2016










Sales

$

251,121

$

254,447

$

458,228

$

457,934

Cost of goods sold


112,447


111,297


206,332


201,290

Gross profit


138,674


143,150


251,896


256,644

Selling and distribution expenses


117,017


119,987


232,011


235,463

Administrative expenses


10,896


10,713


21,374


21,205

Results from operating activities


10,761


12,450


(1,489)


(24)










Finance income


2,540


824


4,796


5,163

Finance costs


1,319


612


438


2,362

Earnings before income taxes


11,982


12,662


2,869


2,777










Income tax expense (recovery)


2,305


3,691


(236)


(212)










Net earnings

$

9,677

$

8,971

$

3,105

$

2,989










Earnings per share :










Basic

$

0.15

$

0.14

$

0.05

$

0.05


Diluted

$

0.15

$

0.14

$

0.05

$

0.05


 

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 29, 2017

July 30, 2016

July 29, 2017

July 30, 2016










Net earnings

$

9,677

$

8,971

$

3,105

$

2,989

Other comprehensive (loss) income










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











Cash flow hedges (net of tax of $5,420 for the three months and $3,260 for the six months ended July 29, 2017; net of tax of $2,777 for the three months ended and $4,939 for the six months ended July 30, 2016)


(14,966)


7,617


(9,004)


(13,500)



Foreign currency translation differences


408


(220)


230


259










Total other comprehensive (loss) income


(14,558)


7,397


(8,774)


(13,241)










Total comprehensive (loss) income

$

(4,881)

$

16,368

$

(5,669)

$

(10,252)

 

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









July 29, 2017

July 30, 2016

January 28, 2017

ASSETS







CURRENT ASSETS








Cash and cash equivalents

$

115,441

$

114,538

$

120,265


Marketable securities


57,951


48,772


54,764


Trade and other receivables


5,284


5,361


4,256


Derivative financial asset


-


623


1,386


Income taxes recoverable


2,434


3,367


3,480


Inventories


147,273


147,159


146,059


Prepaid expenses


9,349


8,647


6,846



Total Current Assets


337,732


328,467


337,056








NON-CURRENT ASSETS








Property and equipment


113,732


128,289


124,106


Intangible assets


19,828


23,741


23,110


Goodwill


38,183


38,183


38,183


Deferred income taxes


29,892


30,973


25,891



Total Non-Current Assets


201,635


221,186


211,290








TOTAL ASSETS

$

539,367

$

549,653

$

548,346








LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES








Trade and other payables

$

111,426

$

119,272

$

114,254


Derivative financial liability


14,414


8,962


3,160


Deferred revenue


17,820


17,228


21,478


Current portion of long-term debt


661


1,957


1,655



Total Current Liabilities


144,321


147,419


140,547








NON-CURRENT LIABILITIES








Other payables


7,101


7,468


7,186


Deferred lease credits


6,973


9,236


8,230


Long-term debt


-


661


-


Pension liability


19,182


19,897


18,869



Total Non-Current Liabilities


33,256


37,262


34,285








SHAREHOLDERS' EQUITY








Share capital


38,397


38,397


38,397


Contributed surplus


10,048


9,397


9,769


Retained earnings


323,446


324,025


326,675


Accumulated other comprehensive loss


(10,101)


(6,847)


(1,327)



Total Shareholders' Equity


361,790


364,972


373,514








TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

539,367

$

549,653

$

548,346









 

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 (Loss)

Total
Shareholders'
Equity























Balance as at January 29, 2017

$

38,397

$

9,769

$

326,675

$

(1,327)

$

373,514












Net earnings


-


-


3,105


-


3,105

Total other comprehensive loss


-


-


-


(8,774)


(8,774)

Total comprehensive income (loss) for the period


-


-


3,105


(8,774)


(5,669)












Share-based compensation costs


-


279


-


-


279

Dividends


-


-


(6,334)


-


(6,334)

Total contributions by (distributions to) owners of the Company


-


279


(6,334)


-


(6,055)












Balance as at July 29, 2017

$

38,397

$

10,048

$

323,446

$

(10,101)

$

361,790























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 income (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

 

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 29, 2017

July 30, 2016

July 29, 2017

July 30, 2016

CASH FLOWS FROM OPERATING ACTIVITIES










Net earnings

$

9,677

$

8,971

$

3,105

$

2,989


Adjustments for:











Depreciation, amortization and net impairment losses


10,412


10,720


21,715


21,067



Share-based compensation costs


208


277


520


478



Net change in fair value of marketable securities


(1,732)


487


(3,187)


(3,583)



Net change in transfer of realized loss (gain) on cash flow hedges to inventory


3,302


(814)


376


2,490



Foreign exchange loss (gain)


115


(146)


(292)


184



Interest and dividend income, net


(793)


(778)


(1,570)


(1,480)



Income tax expense (recovery)


2,305


3,691


(236)


(212)



23,494


22,408


20,431


21,933


Changes in:











Trade and other receivables


1,563


404


(1,058)


(1,187)



Inventories


7,455


(7,609)


(1,214)


(22,311)



Prepaid expenses


(267)


820


(2,503)


274



Trade and other payables


1,324


35,178


(2,433)


21,960



Pension liability


154


319


313


561



Deferred lease credits


(575)


(741)


(1,256)


(1,404)



Deferred revenue


(502)


(1,248)


(3,658)


(2,097)


Cash from operating activities


32,646


49,531


8,622


17,729


Interest paid


(15)


(46)


(39)


(100)


Interest received


215


156


432


317


Dividends received


603


632


1,207


1,192


Income taxes received


548


370


548


370


Income taxes paid


(4)


(1)


(7)


(431)


Net cash flows from operating activities


33,993


50,642


10,763


19,077










CASH FLOWS USED IN INVESTING ACTIVITIES










Additions to property and equipment and intangible assets


(5,651)


(8,141)


(8,780)


(16,359)


Proceeds on disposal of property and equipment and intangibles


-


-


-


416


Cash flows used in investing activities


(5,651)


(8,141)


(8,780)


(15,943)










CASH FLOWS USED IN FINANCING ACTIVITIES










Dividends paid


(3,167)


(3,167)


(6,334)


(6,334)


Repayment of long-term debt


(501)


(470)


(994)


(933)


Cash flows used in financing activities


(3,668)


(3,637)


(7,328)


(7,267)










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


292


(75)


521


76










NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


24,966


38,789


(4,824)


(4,057)










CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


90,475


75,749


120,265


118,595










CASH AND CASH EQUIVALENTS, END OF THE PERIOD

$

115,441

$

114,538

$

115,441

$

114,538

 

SOURCE Reitmans (Canada) Limited

View original content: http://www.newswire.ca/en/releases/archive/September2017/07/c7804.html

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