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:

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

SOURCE Reitmans (Canada) Limited