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Reitmans (Canada) Limited ("RCL") announces its results for the 13 weeks ended April 29, 2023

Jun 14, 2023
4:15pm

First Quarter Highlights

  • Net sales increased by $11.1 million, or 7.2%, to $165.0 million
  • Gross margin increased by $4.1 million from $84.0 million to $ 88.1 million
  • Adjusted ROA1 decreased by $2.6 million
  • Adjusted EBITDA1 decreased by $4.3 million
  • Subsequent to quarter end, Andrea Limbardi appointed as President & CEO effective September 2023

MONTREAL, June 14, 2023 /CNW/ - Reitmans (Canada) Limited ("RCL" or the "Company") (TSXV: RET), Canada's leading specialty apparel retailer, is pleased to announce its results for the first quarter of fiscal 2024. Unless otherwise indicated, all comparisons of results for the 13 weeks ended April 29, 2023 ("first quarter of 2024") are against results for the 13 weeks ended April 30, 2022 ("first quarter of 2023").

"I am very pleased with the start to fiscal 2024, against a background of higher interest rates and inflation impacting customers' shopping behaviours, and the foreign exchange impact on RCL's U.S. dollar-denominated purchases," said Stephen F. Reitman, President and Chief Executive Officer of RCL. "With supply chain conditions considerably improved in comparison to the first quarter of 2023, we benefitted from lower supply chain costs in the first quarter of 2024. We believe our ability to provide customers fashion merchandise at affordable prices through shopping in our stores or online, where orders are fulfilled from our network of stores or from our distribution centre, is an important contributor to our success."

"We would also like to welcome Andrea Limbardi, who will become the President and CEO of RCL," Mr. Reitman added. "We are confident that Andrea's deep experience in the retail industry and expertise at applying digital strategies will positively contribute in delivering on our long-term growth aspirations".

Select Financial Information

(in millions of dollars, except for gross profit %)

First Quarter of



2024

2023

Change

Net Sales

165.0

153.9

7.2 %

Gross Profit

88.1

84.0

4.9 %

Gross Profit %

53.4 %

54.6 %

-120 bps

Selling, distribution and administrative expenses

91.7

84.42

8.6 %

Net Loss

(3.8)

(1.7)

n/a

Adjusted EBITDA1

(1.2)

3.1

n/a

Adjusted ROA1

(3.6)

(1.0)

n/a


1 This is a Non-GAAP Financial Measure. See "Non-GAAP Financial Measures & Supplementary Financial Measures" for reconciliations of these measures.

2 Includes $0.6 million of restructuring costs for the first quarter of 2023.


13 weeks ended April 29, 2023

Net sales for the first quarter of 2024 increased by $11.1 million, or 7.2%, to $165.0 million. The increase was primarily due to the growth in comparable sales, mainly driven by increased in-store traffic and improved sales dollars per unit. Comparable sales1, which includes e-commerce net sales, increased 6.4% during the first quarter of 2024.

Gross profit for the first quarter of 2024 increased by $4.1 million to $88.1 million as compared with $84.0 million for the first quarter of 2023. The increase in gross profit is primarily attributable to the increase in net sales during the first quarter of 2024.  Gross profit as a percentage of net sales for the first quarter of 2024 decreased to 53.4% from 54.6% for the first quarter of 2023, primarily attributable to higher promotional activity combined with an unfavourable foreign exchange impact on U.S. dollar-denominated purchases included in cost of goods sold, partially offset by lower supply chain costs.

Net loss for the first quarter of 2024 was $3.8 million ($0.08 basic and diluted loss per share) as compared with a net loss of $1.7 million ($0.04 basic and diluted loss per share) for the first quarter of 2023. The increase in the net loss of $2.1 million is primarily attributable to an increase in store and corporate personnel costs, higher rent as a result of previous preferential lease arrangements being renewed at closer to market lease rates, partially offset by an increase in gross profits and an increase in the income tax recovery.  

Adjusted results from operating activities ("Adjusted ROA") for the first quarter of 2024 was ($3.6) million as compared with ($1.0) million for the first quarter of 2023. The decrease of $2.6 million in Adjusted ROA is primarily attributable to an increase in operating costs, partially offset by the increase in gross profit. 

Adjusted EBITDA for the first quarter of 2024 was $(1.2) million as compared to $3.1 million for the first quarter of 2023. The decrease of $4.3 million is primarily attributable to an increase in operating costs, partially offset by the increase in gross profits.

About Reitmans (Canada) Limited

The Company is a leading women's specialty apparel retailer with retail outlets throughout Canada.  As at April 29, 2023, the Company operated 406 stores consisting of 235 Reitmans, 91 Penningtons and 80 RW&CO.

1NON-GAAP Financial Measures & Supplementary 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.

NON-GAAP Financial Measures

This press announcement discusses the following non-GAAP financial measures: adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), and adjusted results from operating activities ("Adjusted ROA"). This press announcement also indicates Adjusted EBITDA 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 and Adjusted ROA is to provide additional useful information to investors and analysts. Adjusted EBITDA is defined as net earnings before income tax expense/recovery, interest income, interest expense, loss on foreign currency translation differences reclassified to net earnings, 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 and restructuring costs and recoveries. 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 this metric for this purpose. Management believes that Adjusted EBITDA 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 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 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, as this better reflects the operational cash flow impact of its leases.

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

Reconciliation of NON-IFRS Measures

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

(in millions of dollars, except %)

For the first quarter of


2024

2023

Net loss

$     (3.8)

$    (1.7)

Depreciation, amortization and net impairment losses on property and equipment, and intangible assets

3.6

5.1

Depreciation on right-of-use assets

7.8

5.8

Interest income

(0.9)

-

Interest expense on lease liabilities

1.6

1.0

Interest expense on revolving credit facility

-

0.3

Loss on foreign currency translation differences reclassified to net earnings

1.0

-

Income tax recovery

(1.1)

-

Rent impact from IFRS 16, Leases1

(9.4)

(6.8)

Federal subsidies

-

(1.2)

Restructuring costs 

-

0.6

Adjusted EBITDA2

$     (1.2)

$     3.1

Adjusted EBITDA as % of Net sales

(0.7) %

2.0 %


1 Rent Impact from IFRS 16, Leases is comprised as follows;


(in millions of dollars)

For the first quarter of


2024

2023

Depreciation on right-of use assets

$      7.8

$     5.8

Interest expense on lease liabilities

1.6

1.0

Rent impact from IFRS 16, Leases   

$      9.4

$     6.8


2 As a result of the current definition of Adjusted EBITDA, the comparative figure has been restated to include the rent impact from IFRS 16, Leases of $6.8 million for the first quarter of 2023. Management believes that the current definition of Adjusted EBITDA better reflects the operational cash flow of the Company.


(in millions of dollars)

For the first quarter of


2024

2023

Results from operating activities

$     (3.6)

$    (0.4)

Federal subsidies

-

(1.2)

Restructuring costs

-

0.6

Adjusted ROA

$     (3.6)

$    (1.0)


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.

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 on the Company's 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 the first quarter of 2024.

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 the first quarter of 2024 are available online at www.sedar.com.

Montreal, June 14, 2023

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

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF LOSS

(Unaudited)

(in thousands of Canadian dollars except per share amounts)




For the 13 weeks ended



April 29, 2023

April 30, 2022





Net sales


$   165,018

$   153,859

Cost of goods sold


76,917

69,896

Gross profit


88,101

83,963

Selling and distribution expenses


80,269

73,257

Administrative expenses


11,408

10,482

Restructuring


-

620

Results from operating activities


(3,576)

(396)





Finance income


1,292

80

Finance costs


(2,630)

(1,361)

Loss before income taxes


(4,914)

(1,677)





Income tax recovery (expense)


1,074

(40)





Net loss


$      (3,840)

$      (1,717)





Loss per share:




        Basic


$       (0.08)

$       (0.04)

        Diluted


(0.08)

(0.04)






 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands of Canadian dollars)



For the 13 weeks ended




April 29, 2023

April 30, 2022







Net loss


$    (3,840)

$    (1,717)


Other comprehensive income (loss)





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





Loss on foreign currency translation differences reclassified to net earnings


1,044

-


Foreign currency translation differences


-

(7)







Items that will not be reclassified to net earnings:





Actuarial gain on defined benefit plan (net of tax of $346 for the 13
     weeks ended April 29, 2023; nil for the 13 weeks ended April 30, 2022)


958

911







Total other comprehensive income


2,002

904







Total comprehensive loss


$    (1,838)

$       (813)


 

REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(Unaudited)

(in thousands of Canadian dollars)




April 29, 2023

April 30, 2022

January 28, 2023


ASSETS






CURRENT ASSETS






     Cash


$    69,394

$    40,210

$  103,004


     Restricted cash


2,838

-

2,808


     Trade and other receivables


3,857

4,923

3,241


     Inventories


139,053

137,505

142,302


     Prepaid expenses and other assets


18,565

36,678

14,502


           Total Current Assets


233,707

219,316

265,857








NON-CURRENT ASSETS






     Restricted cash


-

2,759

-


     Property and equipment


63,483

63,572

63,833


     Intangible assets


2,240

4,095

2,638


     Right-of-use assets


88,355

51,583

79,894


     Pension asset


1,290

418

-


     Deferred income taxes


33,067

190

32,308


           Total Non-Current Assets


188,435

122,617

178,673








TOTAL ASSETS


$  422,142

$  341,933

$  444,530








LIABILITIES AND SHAREHOLDERS' EQUITY






CURRENT LIABILITIES






      Revolving credit facility


$             -

$    34,439

$             -


      Trade and other payables


53,684

53,427

81,087


      Deferred revenue


12,223

12,150

14,100


      Income taxes payable


457

535

1,018


      Current portion of lease liabilities


27,622

21,954

26,741


           Total Current Liabilities


93,986

122,505

122,946








NON-CURRENT LIABILITIES






      Lease liabilities


68,859

36,413

60,758


           Total Non-Current Liabilities


68,859

36,413

60,758








SHAREHOLDERS' EQUITY






     Share capital


27,406

27,406

27,406


     Contributed surplus


11,180

10,295

10,871


     Retained earnings


220,711

146,174

223,593


     Accumulated other comprehensive loss


-

(860)

(1,044)


           Total Shareholders' Equity


259,297

183,015

260,826








TOTAL LIABILITIES AND

        SHAREHOLDERS' EQUITY


$  422,142

$  341,933

$  444,530







 

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
Loss

Total
Shareholders'
Equity










Balance as at January 29, 2023


$     27,406

$   10,871

$   223,593

$    (1,044)

$   260,826










Net loss


-

-

(3,840)

-

(3,840)


Total other comprehensive income


-

-

958

1,044

2,002


Total comprehensive loss (income) for the period


-

-

(2,882)

1,044

(1,838)










Share based compensation costs


-

309

-

-

309


Total contributions by owners of the Company


-

309

-

-

309










Balance as at April 29, 2023


$     27,406

$   11,180

$   220,711

$              -

$   259,297


























Balance as at January 30, 2022


$     27,406

$   10,295

$   146,980

$       (853)

$   183,828










Net loss


-

-

(1,717)

-

(1,717)


Total other comprehensive income (loss)


-

-

911

(7)

904


Total comprehensive loss for the period


-

-

(806)

(7)

(813)










Balance as at April 30, 2022


$     27,406

$   10,295

$   146,174

$       (860)

$   183,015


 


REITMANS (CANADA) LIMITED

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of Canadian dollars)




For the 13 weeks ended



April 29, 2023

April 30, 2022

CASH FLOWS (USED IN) FROM OPERATING ACTIVITIES




Net loss


$      (3,840)

$      (1,717)

Adjustments for:




Depreciation, amortization and net impairment losses on property and
     equipment, and intangible assets


3,575

5,080

Depreciation on right-of-use assets


7,774

5,811

Share-based compensation costs


309

-

Foreign exchange gain


(308)

(1,847)

Loss on foreign currency translation differences reclassified to

net earnings


1,044

-

Interest on lease liabilities


1,586

1,015

Interest on revolving credit


-

346

Interest income


(921)

(34)

Income tax (recovery) expense


(1,074)

40



8,145

8,694

Changes in:




Trade and other receivables


(666)

2,666

Inventories


3,249

(18,533)

Prepaid expenses and other assets


(4,063)

5,912

Trade and other payables


(26,769)

20,231

Pension asset


14

593

Deferred revenue


(1,877)

(1,340)

Cash (used in) from operating activities


(21,967)

18,223

Interest paid


-

(316)

Interest received


971

51

Income taxes paid


(592)

(46)

Net cash flows (used in) from operating activities


(21,588)

17,912





CASH FLOWS USED IN INVESTING ACTIVITIES




Additions to property and equipment and intangible assets


(3,462)

(2,476)

Cash flows used in investing activities


(3,462)

(2,476)





CASH FLOWS USED IN FINANCING ACTIVITIES




Restricted cash


(30)

(2)

Net proceeds from revolving credit facility


-

4,805

Payment of lease liabilities


(8,873)

(7,364)

Cash flows used in financing activities


(8,903)

(2,561)





FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY


343

1,833





NET (DECREASE) INCREASE IN CASH


(33,610)

14,708





CASH, BEGINNING OF THE PERIOD


103,004

25,502





CASH, END OF THE PERIOD


$     69,394

$     40,210






SOURCE Reitmans (Canada) Limited

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