Reitmans (Canada) Limited Reports Fiscal 2023 and Fourth Quarter Fiscal 2023 Financial Results

(All amounts are in Canadian dollars)

Fiscal 2023 net sales increased by 20.9% to $800.6 million
Q4 net sales increased by 11.4% to $211.9 million

MONTREAL, April 13, 2023 /CNW/ - Unless otherwise indicated, all comparisons of results for the 52 weeks ended January 28, 2023 ("fiscal 2023") and the 13 weeks ended January 28, 2023 ("fourth quarter of 2023") are against the respective comparative periods of the 52 weeks ended January 29, 2022 ("fiscal 2022") and the 13 weeks ended January 29, 2022 ("fourth quarter of 2022"). 

"I am extremely proud of our team's performance in fiscal 2023 after exiting from the Companies' Creditors Arrangement Act in January 2022 with net sales up 20.9% over fiscal 2022" said Stephen F. Reitman, President and CEO of Reitmans. "And despite near term headwinds related to the economic environment, which impacted our performance in the fourth quarter of 2023 and which may persist through the first part of fiscal 2024, we remain excited about our strong competitive positioning and ability to serve our customers, as we work towards delivering on our long-term growth aspirations".

The Company leveraged pent-up demand for work and social gathering apparel, and successfully drove compelling marketing campaigns that led to a 47.6% increase in store traffic and an 8.9% increase in e-commerce traffic year over year. In addition, the Company successfully mitigated difficult economic headwinds and supply chain delays by closely managing logistics and inventory levels throughout fiscal 2023.

Fiscal 2023

Net sales for fiscal 2023 increased by $138.6 million, or 20.9%, to $800.6 million. There were no government-imposed lockdowns during fiscal 2023 as compared to a partial lockdown of the Company's stores network during a portion of fiscal 2022. Continued strength in the Company's merchandising assortment, coupled with strong customer traffic, higher average transaction value and less markdowns and promotional discounting contributed to the increase in sales. The Company's e-commerce net sales continue to be strong representing approximately 28%¹ of the total net sales for fiscal 2023.

Gross profit for fiscal 2023 increased $95.5 million to $448.7 million as compared with $353.2 million for fiscal 2022. Gross profit as a percentage of net sales for fiscal 2023 increased to 56.0% from 53.4% for fiscal 2022. The increase both in gross profit and as a percentage of net sales is primarily attributable to increased net sales and lower markdowns and promotional activity in fiscal 2023 combined with lower overall supply chain costs, partially offset by an unfavorable foreign exchange impact on U.S. dollar denominated purchases included in cost of goods sold.

Net earnings from continuing operations for fiscal 2023 was $77.7 million ($1.59 basic and diluted earnings per share) as compared with $143.2 million ($2.93 basic and diluted earnings per share) for fiscal 2022. The decrease in net earnings from continuing operations in fiscal 2023 of $65.5 million is primarily attributable to the non-recurring $88.6 million gain on settlement of liabilities subject to compromise recognized in fiscal 2022, the reduction of Federal subsidies of $21.5 million, lower restructuring recoveries of $10.8 million, the increase in overall operating costs, including performance incentive plan awards, and an increase in net finance costs in fiscal 2023, partially offset by an increase in gross profits and an increase in the income tax recovery of $31.7 million arising from the recognition of previously unrecognized deferred tax assets.

Adjusted EBITDA¹ from continuing operations for fiscal 2023 was $57.0 million as compared to $38.6 million for fiscal 2022. The increase of $18.4 million is primarily attributable to the increase in gross profit, partially offset by an increase in operating costs, as noted above.

Adjusted ROA¹ for the fiscal 2023 was $45.7 million as compared to $19.6 million for the fiscal 2022. The increase of $26.1 million is primarily attributable to the increase in gross profit, partially offset by an increase in operating costs, as noted above.

Fourth quarter of 2023

Net sales for the fourth quarter of 2023 increased by $21.7 million, or 11.4%, to $211.9 million. The increase was primarily due to the strong growth in comparable sales. Comparable sales¹, which include e-commerce net sales, increased 12.7% during the fourth quarter of 2023. The increase in comparable sales was primarily due to an increase in store and online traffic and customers' overall transaction value. The Company's e-commerce net sales continue to be strong representing approximately 34%¹ of the total net sales for the fourth quarter of 2023.

Gross profit for the fourth quarter of 2023 increased $12.3 million to $108.5 million as compared with $96.2 million for the fourth quarter of 2022. Gross profit as a percentage of net sales for the fourth quarter of 2023 increased to 51.2% from 50.6% for the fourth quarter of 2022. The increase both in gross profit and as a percentage of net sales is primarily attributable to the increase in net sales and lower promotional activity combined with lower overall supply chain costs, partially offset by an unfavorable foreign exchange impact on U.S. dollar denominated purchases included in cost of goods sold.

Net earnings from continuing operations for the fourth quarter of 2023 were $27.5 million ($0.56 basic and diluted earnings per share) as compared with $97.2 million ($1.99 basic and diluted earnings per share) for the fourth quarter of 2022. The decrease in net earnings of $69.7 million is primarily attributable to the non-recurring $88.6 million gain on settlement of liabilities subject to compromise recognized in the fourth quarter of 2022, the reduction of Federal subsidies of $4.7 million and the increase in overall operating costs including performance incentive plan awards, partially offset by an increase in gross profits, the increase in recoveries of restructuring costs of $2.4 million and an increase in the income tax recovery of $31.7 million arising from the recognition of previously unrecognized deferred tax assets.  

Adjusted EBITDA from continuing operations for the fourth quarter of 2023 was $(3.7) million as compared to $10.6 million for the fourth quarter of 2022. The decrease of $14.3 million is primarily attributable to an increase in operating costs, partially offset by the increase in gross profits, as noted above.

Adjusted ROA for the fourth quarter of 2023 was $(6.3) million as compared with $3.3 million for the fourth quarter of 2022. The decrease of $9.6 million is primarily attributable to an increase in operating costs, partially offset by the increase in gross profit, as noted above.

About Reitmans (Canada) Limited

The Company is a leading women's specialty apparel retailer with retail outlets throughout Canada.  As at January 28, 2023, the Company operated 406 stores consisting of 235 Reitmans, 91 Penningtons and 80 RW&CO.

¹Non-GAAP Financial Measures

This press announcement makes reference to certain non-GAAP measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for the Company's analysis of its financial information reported under IFRS.

Financial Measures

This press announcement discusses adjusted earnings from continuing operations before interest, taxes, depreciation and amortization ("Adjusted EBITDA from continuing operations"), adjusted results from operating activities ("Adjusted ROA") and both are considered non-GAAP financial measures. This press announcement also indicates Adjusted EBITDA from continuing operations as a percentage of net sales and is considered a non-GAAP financial ratio. Net sales represent the sale of merchandise less discounts and returns. The intent of presenting Adjusted EBITDA from continuing operations and Adjusted ROA is to provide additional useful information to investors and analysts. Adjusted EBITDA from continuing operations is defined as net earnings before income tax expense/recovery, interest income, interest expense, depreciation, amortization, net impairment of non-financial assets, adjusted for the impact of certain items, including a deduction of interest expense and depreciation relating to leases accounted for under IFRS 16, Leases, Federal subsidies, restructuring costs and recoveries and the gain on settlement of liabilities subject to compromise. Management believes that Adjusted EBITDA from continuing operations 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 this metric for this purpose. Management believes that Adjusted EBITDA from continuing operations as a percentage of net sales indicates how much liquidity is generated for each dollar of net sales. The exclusion of interest income and expenses, other than interest expense related to lease liabilities as explained hereafter, eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation, amortization and net impairment charges, other than depreciation and net impairment charges related to right-of-use assets as explained hereafter, eliminates the non-cash impact, and the exclusion of restructuring items and Federal subsidies presents the results of the on-going business. Under IFRS 16, Leases, the characteristics of some leases result in lease payments being recognized in net earnings in the period in which the performance or use occurs while other leases are recorded as right-of-use assets with a corresponding lease liability recognized, which results in depreciation of those assets and interest expense from those liabilities. Management is presenting its Adjusted EBITDA from continuing operations to reflect the payments of its store and equipment lease obligations on a consistent basis. As such, the initial add-back of depreciation of right-of-use assets and interest on lease obligations are removed from the calculation of Adjusted EDITDA from continuing operations, as this better reflects the operational cash flow impact of its leases.

Adjusted ROA is defined as results from operating activities excluding Federal subsidies, restructuring costs and recoveries and the gain on settlement of liabilities subject to compromise. Management believes that Adjusted ROA provides a more relevant indicator in assessing current operational performance. The exclusion of restructuring items, Federal subsidies and the gain on settlement of liabilities subject to compromise presents the on-going operational performance of the business.

The tables below provide a reconciliation of net earnings from continuing operations to Adjusted EBITDA from continuing operations and results from operating activities to Adjusted ROA:

 

 

Supplementary Financial Measures

The Company uses a key performance indicator ("KPI"), comparable sales, to assess store performance and sales growth. The Company engages in an omnichannel approach in connecting with its customers by appealing to their shopping habits through either online or store channels.  This approach allows customers to shop online for home delivery or to pick up in store, purchase in any of our store locations or ship to home from another store when the products are unavailable in a particular store.  Due to customer cross-channel behavior, the Company reports a single comparable sales metric, inclusive of store and e-commerce channels. Comparable sales are defined as net sales generated by stores that have been continuously open during both of the periods being compared and include e-commerce net sales. The comparable sales metric compares the same calendar days for each period. Although this KPI is expressed as a ratio, it is a supplementary 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 comparable sales in evaluating the performance of stores and online net sales and considers it useful in helping to determine what portion of new net sales has come from sales growth and what portion can be attributed to the opening of new stores. Comparable sales is a measure widely used amongst retailers and is considered useful information for both investors and analysts. Comparable sales should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

This press announcement does not include a discussion of the Company's comparable sales in respect of fiscal 2023 as management believes that comparable sales were not representative of the underlying trends of our business due to partial lockdowns and consequently would not provide a meaningful metric in comparisons of year-over-year net sales results. However, it does include a discussion of the Company's comparable sales for the fourth quarter of fiscal 2023 as compared to the fourth quarter of 2022 given that the Company's store network was operating at full capacity in both the fourth quarter of 2023 and 2022.

This press announcement discloses the Company's e-commerce net sales as a percentage of the Company's net sales and is defined as the net sales recognized from its e-commerce channel in relation to the Company's total net sales. This supplementary financial measure does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies. Management uses this measure to analyze trends in the customers' cross-channel behaviour for operating and capital expenditure funding allocation decisions.

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, including statements regarding the impact of COVID-19 on the Company's business, financial position and operations, and are based on several assumptions which give rise to the possibility that actual results could differ materially from the Company's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved.  Consequently, the Company cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits the Company will derive from them. Forward-looking statements are provided in this press announcement for the purpose of giving information about management's current expectations and plans as of the date of this press announcement, and allowing investors and others to get a better understanding of the Company's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose. 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, expectations, 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 belief in its strategies and its brands and their capacity to generate long-term profitable growth, 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 Risk Management" and "Financial Risk Management" sections of the 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 fiscal 2023.

This is not an exhaustive list of the factors that may affect the Company's forward-looking statements. 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 fiscal 2023 are available online at www.sedar.com.

Montreal, April 13, 2023

Stephen F. Reitman
President and Chief Executive Officer
Telephone:                  (514) 384-1140
Corporate Website:     www.reitmanscanadalimited.com

 

 

 

 

 

SOURCE Reitmans (Canada) Limited