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Reitmans (Canada) Limited announces its results for the three months ended May 5, 2018

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Reitmans (Canada) Limited announces its results for the three months ended May 5, 2018

Canada NewsWire

MONTREAL, June 5, 2018 /CNW Telbec/ - Sales for the three months ended May 5, 2018 ("first quarter of fiscal 2019") were $207.6 million, as compared with $207.1 million for the three months ended April 29, 2017 ("first quarter of fiscal 2018") despite a net reduction of 32 stores. Sales were positively impacted by approximately $8.8 million due to the first quarter of fiscal 2019 ending one week later than the first quarter of fiscal 2018.  Same store sales1 decreased 0.8%, compared to the comparable 13 weeks ended May 6, 2017, with stores sales decreasing 3.9% and e-commerce sales increasing 21.9% as the Company continues to experience strong growth in its e-commerce channel.

Gross profit for the first quarter of fiscal 2019 increased $3.1 million or 2.7%, to $116.3 million as compared with $113.2 million for the first quarter of fiscal 2018. Gross profit was positively impacted by approximately $8.6 million due to the first quarter of fiscal 2019 ending one week later than the first quarter of fiscal 2018.  In addition, the first quarter of fiscal 2019 included a positive foreign exchange impact of approximately $5.0 million on U.S. denominated purchases included in cost of goods sold. These improvements were largely offset by increased promotional activity in the first quarter of fiscal 2019.

Results from operating activities for the first quarter of fiscal 2019 were a loss of $4.3 million as compared with a loss of $12.3 million for the first quarter of fiscal 2018, an improvement of $8.0 million. The improvement is primarily attributable to a reduction in store operating costs due to fewer stores and lower depreciation and net impairment losses, along with the improved gross profit impact, as noted above.

Net loss for the first quarter of fiscal 2019 was $3.2 million ($0.05 basic and diluted loss per share) as compared with a $6.6 million net loss ($0.10 basic and diluted loss per share) for the first quarter of fiscal 2018.  The decreased loss of $3.4 million is primarily attributable to the positive impact in gross profit, as described above, along with reduced store operating costs partially offset by a decrease in net finance income and a lower income tax recovery.

Adjusted EBITDA1 for the first quarter of fiscal 2019 was $6.9 million, as compared with a loss of $0.1 million for the first quarter of fiscal 2018, an increase of $7.0 million, primarily due to the positive impact of the shift in weeks, as noted above.

Dividends

At the Board of Directors meeting held on June 5, 2018, 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 26, 2018 to shareholders of record on July 12, 2018.

Sales for the four weeks ended June 2, 2018

Sales for the month of May (the four weeks ended June 2, 2018) increased 4.6%. Same store sales1 increased 7.7% with stores increasing 4.9% and e-commerce sales increasing 29.2%.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 637 stores consisting of 269 Reitmans, 121 Penningtons, 89 Addition Elle, 80 RW & CO., 62 Thyme Maternity and 16 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 charges.  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 considers results from operating activities a useful measure of the Company's performance from its retail operations.  This measure should not be considered in isolation or used in substitute for measures of performance prepared in accordance with 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 loss to adjusted EBITDA for the first quarter ended May 5, 2018 and April 29, 2017:

 



(in millions of Canadian dollars)

(unaudited)

For the three months ended


May 5, 2018

 

April 29, 2017

Net loss

$

(3.2)

$

(6.6)

Depreciation, amortization and net impairment losses


9.9


11.3

Dividend income


(0.6)


(0.6)

Interest income


(0.4)


(0.2)

Net change in fair value of marketable securities


1.8


(1.5)

Income tax recovery


(0.6)


(2.5)

ADJUSTED EBITDA

$

6.9

$

(0.1)

ADJUSTED EBITDA as % of Sales


3.3%


(0.0%)

 

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.  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 first quarter of fiscal 2019.

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 condensed consolidated interim financial statements including notes and Management's Discussion and Analysis for the first quarter of fiscal 2019 are available online at www.sedar.com.

Montreal, June 5, 2018

Jeremy H. Reitman
Chairman and Chief Executive Officer
Telephone: (514) 385-2630
Corporate Website: www.reitmanscanadalimited.com

 

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS
(Unaudited)
(in thousands of Canadian dollars except per share amounts)






For the three months ended



May 5, 2018

April 29, 2017 (1)







Sales

$

207,621

$

207,090

Cost of goods sold


91,308


93,885

Gross profit


116,313


113,205

Selling and distribution expenses


109,946


114,994

Administrative expenses


10,678


10,478

Results from operating activities


(4,311)


(12,267)







Finance income


2,290


3,161

Finance costs


1,805


24

Loss before income taxes


(3,826)


(9,130)







Income tax recovery


(618)


(2,546)







Net loss

$

(3,208)

$

(6,584)







Loss per share:






Basic

$

(0.05)

$

(0.10)


Diluted


(0.05)


(0.10)








(1) Certain comparative figures have been restated due to the adoption of IFRS 15.

 

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)








For the three months ended




May 5, 2018

April 29, 2017 (1)








Net loss

$

(3,208)

$

(6,584)

Other comprehensive income






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







Cash flow hedges (net of tax of $2,542; 2017 - $2,160)


6,925


5,962



Foreign currency translation differences


(187)


(178)








Total other comprehensive income


6,738


5,784








Total comprehensive income (loss)

$

3,530

$

(800)








(1) Certain comparative figures have been restated due to the adoption of IFRS 15.

 

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












May 5, 2018

April 29, 2017 (1)

February 3, 2018 (1)

ASSETS







CURRENT ASSETS








Cash and cash equivalents

$

95,566

$

90,475

$

104,656


Marketable securities


60,220


56,219


62,025


Trade and other receivables


8,656


6,857


4,880


Derivative financial asset


2,810


9,274


37


Income taxes recoverable


-


4,334


2,248


Inventories


147,389


156,365


137,105


Prepaid expenses


20,047


9,082


19,187



Total Current Assets


334,688


332,606


330,138











NON-CURRENT ASSETS








Property and equipment


104,945


117,234


110,292


Intangible assets


18,935


21,241


19,433


Goodwill


11,843


38,183


11,843


Deferred income taxes


26,345


25,125


28,015



Total Non-Current Assets


162,068


201,783


169,583











TOTAL ASSETS

$

496,756

$

534,389

$

499,721











LIABILITIES AND SHAREHOLDERS' EQUITY







CURRENT LIABILITIES








Trade and other payables

$

102,491

$

111,899

$

93,711


Derivative financial liability


1,607


-


9,745


Deferred revenue


16,100


17,218


19,994


Income taxes payable


233


-


-


Current portion of long-term debt


-


1,162


-



Total Current Liabilities


120,431


130,279


123,450











NON-CURRENT LIABILITIES








Trade and other payables


8,104


6,988


8,598


Deferred lease credits


6,474


7,549


6,450


Pension liability


19,353


19,029


19,236



Total Non-Current Liabilities


33,931


33,566


34,284





















SHAREHOLDERS' EQUITY








Share capital


38,397


38,397


38,397


Contributed surplus


10,163


9,946


10,119


Retained earnings


292,677


317,744


299,052


Accumulated other comprehensive income (loss)


1,157


4,457


(5,581)



Total Shareholders' Equity


342,394


370,544


341,987











TOTAL LIABILITIES AND

SHAREHOLDERS' EQUITY

$

496,756

$

534,389

$

499,721


(1) Certain comparative figures have been restated due to the adoption of IFRS 15.


 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM 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 February 4, 2018


$

38,397

$

10,119

$

297,895

$

(5,581)

$

340,830

IFRS 15 adoption adjustment


-

-

1,157

-

1,157

Restated balance as at February 4, 2018


38,397

10,119

299,052

(5,581)

341,987








Net loss


-

-

(3,208)

-

(3,208)

Total other comprehensive income


-

-

-

6,738

6,738

Total comprehensive (loss) income for the period


-

-

(3,208)

6,738

3,530








Share-based compensation costs


-

44

-

-

44

Dividends


-

-

(3,167)

-

(3,167)

Total contributions by (distributions to) owners of the Company


-

44

(3,167)

-

(3,123)








Balance as at May 5, 2018


$

38,397

$

10,163

$

292,677

$

1,157

$

342,394















Balance as at January 29, 2017


$

38,397

$

9,769

$

326,675

$

(1,327)

$

373,514

IFRS 15 adoption adjustment


-

-

820

-

820

Restated balance as at January 29, 2017


38,397

9,769

327,495

(1,327)

374,334








Net loss


-

-

(6,584)

-

(6,584)

Total other comprehensive income


-

-

-

5,784

5,784

Total comprehensive (loss) income for the period


-

-

(6,584)

5,784

(800)








Share-based compensation costs


-

177

-

-

177

Dividends


-

-

(3,167)

-

(3,167)

Total contributions by (distributions to) owners of the Company


-

177

(3,167)

-

(2,990)








Balance as at April 29, 2017 (1)


$

38,397

$

9,946

$

317,744

$

4,457

$

370,544













(1) Certain comparative figures have been restated due to the adoption of IFRS 15.

 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)






For the three months ended



May 5, 2018

April 29, 2017 (1)

CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES





Net loss


$

(3,208)

$

(6,584)


Adjustments for:






Depreciation, amortization and net impairment losses


9,869

11,303



Share-based compensation costs


44

311



Net change in fair value of marketable securities


1,805

(1,455)



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


(1,445)

(2,926)



Foreign exchange loss (gain)


1,190

(406)



Interest and dividend income, net


(986)

(777)



Income tax recovery


(618)

(2,546)



6,651

(3,080)


Changes in:






Trade and other receivables


(3,776)

(2,621)



Inventories


(10,284)

(9,440)



Prepaid expenses


(860)

(2,236)



Trade and other payables


8,950

(2,986)



Pension liability


117

159



Deferred lease credits


24

(681)



Deferred revenue


(3,894)

(3,139)


Cash used in operating activities


(3,072)

(24,024)


Interest paid


-

(24)


Interest received


360

217


Dividends received


626

604


Income taxes received


2,230

-


Income taxes paid


(3)

(3)


Net cash flows from (used in) operating activities


141

(23,230)





CASH FLOWS USED IN INVESTING ACTIVITIES





Additions to property and equipment and intangible assets


(4,765)

(3,129)


Proceeds on disposal of property and equipment and intangibles


77

-


Cash flows used in investing activities


(4,688)

(3,129)





CASH FLOWS USED IN FINANCING ACTIVITIES





Dividends paid


(3,167)

(3,167)


Repayment of long-term debt


-

(493)


Cash flows used in financing activities


(3,167)

(3,660)





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


(1,376)

229





NET DECREASE IN CASH AND CASH EQUIVALENTS


(9,090)

(29,790)





CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD


104,656

120,265





CASH AND CASH EQUIVALENTS, END OF THE PERIOD


$

95,566

$

90,475






(1) Certain comparative figures have been restated due to the adoption of IFRS 15.

 

SOURCE Reitmans (Canada) Limited

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