Reitmans (Canada) Limited announces its results for the three and six months ended August 4, 2018

MONTREAL, Sept. 6, 2018 /CNW Telbec/ -

Three months ended August 4, 2018

Sales for the three months ended August 4, 2018 ("second quarter of fiscal 2019") were $248.8 million, as compared with $250.7 million for the three months ended July 29, 2017 ("second quarter of fiscal 2018") with a net reduction of 28 stores. The Company continues to execute against a plan adapting to the new retail environment by reducing its store presence in select markets while enhancing its e-commerce capabilities. Sales were negatively impacted by approximately $6.1 million due to the second quarter of fiscal 2019 ending one week later than the second quarter of fiscal 2018.  Same store sales¹ increased 3.4%, compared to the comparable 13 weeks ended August 5, 2017, with stores sales decreasing 1.2% and e-commerce sales increasing 40.8% as the Company continues to experience strong growth in its e-commerce channel.

Gross profit for the second quarter of fiscal 2019 decreased $0.7 million or 0.5%, to $137.6 million as compared with $138.3 million for the second quarter of fiscal 2018. Gross profit was negatively impacted by approximately $5.0 million due to the second quarter of fiscal 2019 ending one week later than the second quarter of fiscal 2018 as the current quarter's results included a week with traditionally lower margins, and by increased promotional activity. These declines were largely offset by a positive foreign exchange impact of approximately $0.9 million in the second quarter of fiscal 2019 on U.S. denominated purchases included in cost of goods sold and cost reductions realized through distribution and global sourcing efficiencies.

Results from operating activities for the second quarter of fiscal 2019 were $10.2 million as compared with $10.4 million for the second quarter of fiscal 2018, a decrease of $0.2 million.

Net earnings for the second quarter of fiscal 2019 were $10.0 million ($0.16 basic and diluted earnings per share) as compared with $9.4 million net earnings ($0.15 basic and diluted earnings per share) for the second quarter of fiscal 2018. The reduction in gross profit and the increase in income taxes was more than offset by reduced general operating costs and an increase in net finance income.

Adjusted EBITDA¹ for the second quarter of fiscal 2019 was $21.4 million, as compared with $19.5 million for the second quarter of fiscal 2018, an increase of $1.9 million.

Six months ended August 4, 2018

Sales for the six months ended August 4, 2018 ("year to date fiscal 2019") were $456.4 million, as compared with $457.8 million for the six months ended July 29, 2017 ("year to date fiscal 2018"), with a net reduction of 28 stores. The Company continues to execute against a plan adapting to the new retail environment by reducing its store presence in select markets while enhancing its e-commerce capabilities.  Sales for the year to date fiscal 2019 were positively impacted by approximately $2.7 million due to the second quarter of fiscal 2019 ending one week later than the second quarter of fiscal 2018.  Same store sales¹ increased 1.5% compared to the comparable 26 weeks ended August 5, 2017, driven by increased e-commerce sales of 31.5%, while stores sales decreased by 2.4%.

Gross profit as a percentage of sales for the year to date fiscal 2019 increased to 55.6% from 54.9% for the year to date fiscal 2018 primarily due to the positive foreign exchange impact of approximately $5.9 million on U.S. dollar denominated purchases included in cost of goods sold. In addition, gross profit was positively impacted by approximately $3.6 million due to the second quarter of fiscal 2019 ending one week later than the second quarter of fiscal 2018. These improvements were largely offset by increased promotional activity in the year to date fiscal 2019.

Results from operating activities for the year to date fiscal 2019 were $5.9 million as compared with a loss of $1.9 million for the year to date fiscal 2018, an improvement of $7.8 million. The improvement is primarily attributable to a reduction in store operating costs due to fewer stores, lower depreciation and net impairment losses, a reduction in general operating costs along with the improvement in gross profit.

Net earnings for the year to date fiscal 2019 were $6.8 million ($0.11 basic and diluted earnings per share) as compared with net earnings of $2.8 million ($0.04 basic and diluted earnings per share) for the year to date fiscal 2018. The improvement in net earnings of $4.0 million is primarily attributable to the increase in results from operating activities, partially offset by the decrease in net finance income and the increase in income tax expense.

Adjusted EBITDA¹ for the year to date fiscal 2019 was $28.3 million, as compared with $19.4 million for the year to date fiscal 2018, an increase of $8.9 million. The improvement in adjusted EBITDA is primarily due to the increase in gross profit resulting from the year to date fiscal 2019 ending one week later than the year to date fiscal 2018 coupled with the positive foreign exchange impact on U.S. dollar denominated purchases included in cost of goods sold and the reduction in operating costs.

Dividends

At the Board of Directors meeting held on September 6, 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 October 25, 2018 to shareholders of record on October 11, 2018.

Sales for the four weeks ended September 1, 2018

Sales for the month of August (the four weeks ended September 1, 2018) decreased 3.8%. Same store sales¹ decreased 0.7% with stores decreasing 5.9% and e-commerce sales increasing 44.8%.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 636 stores consisting of 268 Reitmans, 119 Penningtons, 88 Addition Elle, 84 RW & CO., 62 Thyme Maternity and 15 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 earnings to adjusted EBITDA:

 

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 August 4, 2018.

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 three and six months ended August 4, 2018 are available online at www.sedar.com.

Montreal, September 6, 2018

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

 

 

 

 

 

 

SOURCE Reitmans (Canada) Limited