Reitmans (Canada) Limited Reports Fiscal 2024 and Fourth Quarter Fiscal 2024 Financial Results

Fourth Quarter of 2024

• Net revenues were $221.0 million
• Results from operating activities were $0.5 million 
• Net earnings were $0.0 million

Fiscal 2024

• Net revenues were $794.7 million
• Results from operating activities were $22.9 million  
• Net earnings were $14.8 million

MONTREAL, April 18, 2024 /CNW/ - Reitmans (Canada) Limited ("RCL" or the "Company") (TSXV: RET) (TSXV: RET-A), Canada's leading specialty apparel retailer, announces its results for the fourth quarter of fiscal 2024. Unless otherwise indicated, all comparisons of results for the 14 weeks ended February 3, 2024 ("fourth quarter of 2024") are against results for the 13 weeks ended January 28, 2023 ("fourth quarter of 2023") and all comparisons of results for the 53 weeks ended February 3, 2024 ("fiscal 2024") are against the results for the 52 weeks ended January 28, 2023 ("fiscal 2023"). The inclusion of an extra week occurs every fifth or sixth fiscal year due to the Company's floating year-end date. All amounts are in Canadian dollars. 

"We are pleased with the results for the fourth quarter of 2024 which capped off a year that saw significant headwinds for the retail industry with high inflation and high interest rates negatively impacting consumer shopping behaviour", said Andrea Limbardi, President and Chief Executive Officer of RCL. "Results from operating activities for the fourth quarter of fiscal 2024 and the full fiscal 2024 year were amongst the best for RCL in a decade, even after excluding the extra week of fiscal 2024 and an unfavourable foreign exchange impact. Having come off an exceptional year in fiscal 2023, driven by post COVID demand, fiscal 2024 was a year adjusting to a new reality in consumer shopping behaviour. RCL is positioning itself to accelerate growth through initiatives aimed at delivering exceptional product at competitive prices across all channels. To facilitate this growth, modernization in digital technology including 3D design capabilities, improved handling systems in our distribution facility and a new point of sale system are but a few of the improvements being delivered over the next 12 months.  We are confident of the future and remain focused on delivering long-term value to our shareholders".

Net revenues for the fourth quarter of 2024, which includes an additional week of net revenue of $10.0 million, increased by $8.1 million, or 3.8%, to $221.0 million compared to the fourth quarter of fiscal 2023. Comparable sales¹, which include e-commerce net sales, decreased 1.6% during the fourth quarter of 2024. The decrease in comparable sales was primarily due to lower average transaction values and higher promotional activity. We believe that comparatively higher interest rates and inflation overall compared to the corresponding period last year negatively impacted consumer spending during the fourth quarter of 2024.

Gross profit for the fourth quarter of 2024 increased $5.4 million to $114.9 million as compared with $109.5 million for the fourth quarter of 2023. Gross profit as a percentage of net revenues for the fourth quarter of 2024 increased to 52.0% from 51.4% for the fourth quarter of 2023. The improvement in gross profit and the increase in gross profit as a percentage of net revenues was primarily a result of the impact of inclusion of a 14^th week (instead of the normal 13 weeks) of $5.5 million, lower supply chain costs in the fourth quarter of 2024 as global shipping industry disruptions were prevalent in the fourth quarter of 2023, partially offset by an unfavorable foreign exchange impact of approximately $2.6 million on U.S. dollar denominated purchases in the fourth quarter of 2024.

Adjusted results from operating activities ("Adjusted ROA") for the fourth quarter of 2024 was $0.5 million as compared with $(6.3) million for the fourth quarter of 2023. The increase of $6.8 million is primarily attributable to the increase in gross profit.

The Company had net earnings of nil for the fourth quarter of 2024 ($0.00 basic and diluted earnings per share) as compared with net earnings of $27.5 million ($0.56 basic and diluted earnings per share) for the fourth quarter of 2023. The decrease in net earnings of $27.5 million is primarily attributable to the recognition of previously unrecognized tax assets in fiscal 2023, as well as to the increase in operating costs in fiscal 2024, partially offset by the increase in gross profit in fiscal 2024.

Adjusted EBITDA for the fourth quarter of 2024 was $1.7 million as compared to $(3.7) million for the fourth quarter of 2023. The increase of $5.4 million is primarily attributable to the increase in gross profit.

Net revenues for the fiscal 2024 decreased by $8.6 million, or 1.1%, to $794.7 million, despite an additional week of net revenues of $10.0 million in fiscal 2024.  Comparable sales¹, which include e-commerce net sales, decreased 3.2% during the fiscal 2024. The decrease in net revenues and comparable sales was primarily due to lower average transaction values and higher promotional activity. We believe that comparatively higher interest rates and inflation overall compared to the corresponding period last year negatively impacted consumer spending during the fiscal 2024. In fiscal 2023, following the lifting of pandemic restrictions, net revenues of $803.3 million were exceptional, as the Company leveraged pent-up demand for work and social gathering apparel, and successfully drove compelling marketing campaigns that led to an increase in store and e-commerce traffic, all with lower promotional activity.  

Gross profit for fiscal 2024 decreased $20.4 million to $431.0 million as compared with $451.4 million for fiscal 2023, despite the inclusion of a 53^rd week (instead of the normal 52 weeks) of $5.5 million. Gross profit as a percentage of net revenues for fiscal 2024 decreased to 54.2% from 56.2% for fiscal 2023. The decrease both in gross profit and as a percentage of net revenues is primarily attributable to higher markdowns and promotional activity in fiscal 2024 combined with an unfavourable foreign exchange impact of approximately $14.0 million on U.S. dollar denominated purchases included in cost of goods sold, partially offset by lower supply chain costs in  fiscal 2024.

Adjusted ROA for fiscal 2024 was $22.0 million as compared to $45.7 million for the fiscal 2023. The decrease of $23.7 million is primarily attributable to the decrease in gross profit and the increase in operating costs.

Net earnings for fiscal 2024 was $14.8 million ($0.30 basic and diluted earnings per share) as compared with $77.7 million ($1.59 basic and diluted earnings per share) for fiscal 2023. The decrease in net earnings of $62.9 million is primarily attributable to the Company's recognition of deferred income taxes in fiscal 2023, the decrease in gross profit and the increase in operating costs in fiscal 2024.

Adjusted EBITDA for fiscal 2024 was $29.2 million as compared to $57.0 million for fiscal 2023. The decrease of $27.8 million is primarily attributable to the decrease in gross profit and the increase in operating costs.

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.

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 revenues and is considered a non-GAAP financial ratio. Net revenues represent the sale of merchandise less discounts and returns ("net sales"), and includes shipping fees charged to customers on e-commerce orders. The intent of presenting Adjusted EBITDA and Adjusted ROA is to provide additional useful information to investors and analysts. Adjusted EBITDA is currently defined as net earnings before income tax expense/recovery, interest income, interest expense, loss on foreign currency translation differences reclassified to net earnings, pension curtailment gain, 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 recoveries/costs. 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 revenues indicates how much liquidity is generated for each dollar of net revenues. 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 recoveries /costs, Federal subsidies, loss on foreign currency translation differences reclassified to net earnings and pension curtailment gain 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, restructuring recoveries/costs and pension curtailment gain. Management believes that Adjusted ROA provides a more relevant indicator in assessing current operational performance. The exclusion of restructuring recoveries /costs, pension curtailment gain and Federal subsidies presents the on-going operational performance of the business.

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

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 and Financial Risk Management" section 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 fourth 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 fiscal 2024 are available online at www.sedarplus.ca.

The Company is a leading women's specialty apparel retailer with retail outlets throughout Canada. As at February 3, 2024, the Company operated 393 stores consisting of 226 Reitmans, 86 Penningtons and 81 RW&CO.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Montreal, April 18, 2024

Andrea Limbardi
President and Chief Executive Officer
Telephone:                  (514) 384-1140
Corporate Website:     www.reitmanscanadalimited.com

 

 

SOURCE Reitmans (Canada) Ltd