Reitmans (Canada) Limited announces its results for the three and six months ended August 1, 2015

MONTREAL, Sept. 10, 2015 /CNW Telbec/ -

Three months ended August 1, 2015
Sales for the three months ended August 1, 2015 were $253.0 million as compared with $258.3 million for the three months ended August 2, 2014, a decrease of 2.1%, with 51 fewer stores in operation. Same store sales¹ increased by 1.7% with stores decreasing 0.6% and e-commerce increasing 70.1%.

Gross profit for the three months ended August 1, 2015 decreased $13.3 million or 8.7% to $139.2 million as compared with $152.5 million for the three months ended August 2, 2014. Gross margin for the three months ended August 1, 2015 decreased to 55.0% from 59.0% for the three months ended August 2, 2014, with the fluctuation of the US dollar negatively impacting gross margin by approximately $8.2 million.

Net loss for the three months ended August 1, 2015 was $0.2 million ($0.00 basic and diluted loss per share) as compared with net earnings of $9.6 million ($0.15 basic and diluted earnings per share) for the three months ended August 2, 2014. The net loss was primarily attributable to reduced margins and a $5.2 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities mitigated by reduced operating costs both at the store level and head office.

Adjusted EBITDA¹ for the three months ended August 1, 2015 was $17.4 million as compared with $23.6 million for the three months ended August 2, 2014, a decrease of $6.2 million.

Six months ended August 1, 2015
Sales for the six months ended August 1, 2015 were $454.7 million as compared with $464.8 million for the six months ended August 2, 2014, a decrease of 2.2%, impacted by a net reduction of 51 stores. Same store sales¹ increased 2.1% with stores decreasing 0.3% and e-commerce increasing 81.3%.

Gross profit for the six months ended August 1, 2015 decreased $13.0 million or 4.8% to $259.3 million as compared with $272.3 million for the six months ended August 2, 2014.  The Company's gross margin for the six months ended August 1, 2015 decreased to 57.0% from 58.6% for the six months ended August 2, 2014, with the fluctuation of the US dollar negatively impacting gross margin by approximately $10.3 million. 

Net loss for the six months ended August 1, 2015 was $7.9 million ($0.12 basic and diluted loss per share) as compared with $3.9 million ($0.06 basic and diluted loss per share) for the six months ended August 2, 2014.  The increased loss was primarily attributable to reduced gross margins and a $6.4 million loss (on a pre-tax basis) due to a change in the fair value of marketable securities mitigated by reduced operating costs both at the store level and head office.

Adjusted EBITDA¹ for the six months ended August 1, 2015 was $19.7 million as compared with $19.5 million for the six months ended August 2, 2014, an increase of $0.2 million. 

Dividend
At the Board of Directors meeting held on September 10, 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 October 29, 2015 to shareholders of record on October 15, 2015.

Sales for the four weeks ended August 29, 2015
Sales for the month of August (the four weeks ended August 29, 2015) increased 0.9% with same store sales¹ increasing 6.8%, stores increasing 4.5% and e-commerce increasing 81.8%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada. The Company operates 794 stores consisting of 333 Reitmans, 135 Penningtons, 107 Addition Elle, 80 RW & CO., 69 Thyme Maternity and 70 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 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, interest income, net change in fair value of marketable securities and realized gains or losses on disposal 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 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) earnings to adjusted EBITDA for the three and six months ended August 1, 2015 and August 2, 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 listed in the "Operating Risk Management and Financial Risk Management" sections of the Company's Management Discussion and Analysis for the year ended January 31, 2015.  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 second quarter ended August 1, 2015 are available on the SEDAR website at www.sedar.com.

Montreal, September 10, 2015

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

 

SOURCE Reitmans (Canada) Limited