Reitmans (Canada) Limited announces its results for the three months ended April 30, 2011May 31, 2011 MONTREAL, May 31 /CNW Telbec/ - Sales for the first quarter ended April 30, 2011 decreased 7.0% to $219,296,000 as compared with $235,745,000 for the first quarter ended May 1, 2010. Same store sales decreased 8.7%. The first quarter ended April 30, 2011 yielded disappointing sales results primarily due to poor weather which resulted in a difficult retail environment marked by increased promotional activity. Other factors that contributed to the sales decline included the impact of higher gasoline prices reducing consumer disposable income for apparel purchases and a late Easter holiday that traditionally initiates increased sales of spring and summer merchandise. The Company's gross margin decreased from 67.8% to 65.8% for the quarter ended April 30, 2011. An improvement in the gross margin attributable to the strength of the Canadian dollar in the quarter ended April 30, 2011 was offset by a reduction due to increased promotional activity. Earnings before interest, taxes, depreciation and amortization and investment income ("EBITDA") decreased 47.7% to $19,503,000 as compared with $37,278,000 last year. Net earnings decreased 96.0% to $624,000 or $0.01 diluted earnings per share as compared with $15,770,000 or $0.23 diluted earnings per share last year. During the quarter, the Company opened 8 new stores comprised of 2 Reitmans, 2 Smart Set, 1 Thyme Maternity, 1 Cassis and 2 Addition Elle. Eleven stores were closed comprised of 3 Reitmans, 3 Smart Set, 3 Thyme Maternity, 1 Penningtons and 1 Addition Elle. Accordingly, at April 30, 2011, there were 965 stores in operation, consisting of 363 Reitmans, 157 Smart Set, 67 RW & CO., 73 Thyme Maternity, 23 Cassis, 160 Penningtons and 122 Addition Elle, as compared with a total of 982 stores as at May 1, 2010. Sales for the month of May (the four weeks ended May 28, 2011) decreased 8% with same store sales decreasing 8% due to the continuing unseasonable weather conditions. At the Board of Directors meeting held on May 31, 2011, a quarterly cash dividend (constituting eligible dividends) of $0.20 per share on all outstanding Class A non-voting and Common shares of the Company was declared, payable July 28, 2011 to shareholders of record on July 14, 2011. Effective for the first quarter ended April 30, 2011, Reitmans began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"), including comparative information. Previously reported financial results prepared in accordance with Canadian generally accepted accounting principles have been presented to conform to the new standards adopted.
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Non-GAAP Financial Measures
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In addition to discussing earnings in accordance with IFRS, this press release provides EBITDA as a supplementary earnings measure, which is defined as earnings before income taxes, finance income, finance costs and depreciation and amortization. Depreciation and amortization includes the write-off of property and equipment. The Company also discloses same store sales, which are defined as sales generated by stores that have been open for at least one year. The Company believes these measures provide meaningful information on the Company's performance and operating results. However, readers should know that these non-GAAP financial measures have no standardized meaning as prescribed by IFRS and may not be comparable to similar measures presented by other companies. Accordingly, they should not be considered in isolation.
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Forward-Looking Statements
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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. Consequently, actual future results may differ materially from the anticipated results expressed in forward-looking statements. The reader should not place undue reliance on the 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 unaudited interim condensed financial statements including notes and Management's Discussion and Analysis for the first quarter ended April 30, 2011 are available online at www.sedar.com.
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Montreal, May 31, 2011
Jeremy H. Reitman
Chairman and Chief Executive Officer
Telephone: (514) 385-2630
Corporate Website: www.reitmans.ca
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CONDENSED STATEMENTS OF EARNINGS (Unaudited)
(in thousands of Canadian dollars except per share amounts)
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For the three months ended
April 30, May 1,
2011 2010
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Sales $ 219,296 $ 235,745
Cost of goods sold 74,941 75,972
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Gross profit 144,355 159,773
Selling and distribution expenses 129,225 126,482
Administrative expenses 10,112 10,466
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Results from operating activities 5,018 22,825
Finance income 1,164 810
Finance costs 5,313 1,391
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Earnings before income taxes(1) 869 22,244
Income taxes 245 6,474
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Net earnings $ 624 $ 15,770
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Earnings per share:
Basic $ 0.01 $ 0.23
Diluted 0.01 0.23
(1) A reconciliation of earnings before income taxes to earnings before
interest, taxes, depreciation and amortization and investment income
("EBITDA") is as follows:
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Earnings before income taxes $ 869 $ 22,244
Finance income 1,164 810
Finance costs 5,313 1,391
Depreciation and amortization 14,485 14,453
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EBITDA $ 19,503 $ 37,278
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CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(in thousands of Canadian dollars)
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For the three months ended
April 30, May 1,
2011 2010
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Net earnings $ 624 $ 15,770
Other comprehensive income:
Net unrealized gain on available-for-sale
financial assets arising during the
period (net of tax of $60; $89 for the
three months ended May 1, 2010) 401 598
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Total comprehensive income $ 1,025 $ 16,368
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CONDENSED BALANCE SHEETS (Unaudited)
(in thousands of Canadian dollars)
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April 30, May 1, January 29, January 31,
2011 2010 2011 2010
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ASSETS
CURRENT ASSETS
Cash and cash
equivalents $ 176,871 $ 209,148 $ 230,034 $ 228,577
Marketable securities 70,979 48,783 70,413 48,026
Trade and other
receivables 4,214 3,765 2,866 2,926
Income taxes
recoverable 10,846 8,540 - -
Inventories 99,066 81,858 73,201 63,127
Prepaid expenses 12,715 11,631 12,491 11,010
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Total Current
Assets 374,691 363,725 389,005 353,666
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NON-CURRENT ASSETS
Property and
equipment 189,487 207,594 193,064 208,362
Intangibles 14,012 8,455 13,841 9,964
Goodwill 42,426 42,426 42,426 42,426
Deferred income taxes 19,438 19,445 21,021 18,313
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Total Non-Current
Assets 265,363 277,920 270,352 279,065
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TOTAL ASSETS $ 640,054 $ 641,645 $ 659,357 $ 632,731
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LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade and other
payables $ 67,940 $ 66,068 $ 64,093 $ 54,684
Deferred revenue 13,870 14,789 19,834 18,122
Income taxes payable - - 5,998 4,677
Current portion of
long-term debt 1,406 1,320 1,384 1,300
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Total Current
Liabilities 83,216 82,177 91,309 78,783
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NON-CURRENT LIABILITIES
Other payables 10,393 9,306 10,180 9,105
Deferred revenue 2,395 2,575 2,384 2,686
Deferred lease credits 18,112 20,245 19,011 20,609
Long-term debt 9,688 11,093 10,047 11,431
Pension liability 13,876 12,048 13,626 11,865
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Total Non-Current
Liabilities 54,464 55,267 55,248 55,696
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SHAREHOLDERS' EQUITY
Share capital 31,426 27,524 29,614 25,888
Contributed surplus 6,291 5,296 6,266 5,164
Retained earnings 456,890 465,428 469,554 461,845
Accumulated other
comprehensive income 7,767 5,953 7,366 5,355
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Total Shareholders'
Equity 502,374 504,201 512,800 498,252
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TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 640,054 $ 641,645 $ 659,357 $ 632,731
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CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
(in thousands of Canadian dollars)
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For the three months ended
April 30, May 1,
2011 2010
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SHARE CAPITAL
Balance, beginning of the period $ 29,614 $ 25,888
Cash consideration on exercise of share
options 1,443 1,314
Ascribed value credited to share capital
from exercise of share options 369 322
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Balance, end of the period 31,426 27,524
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CONTRIBUTED SURPLUS
Balance, beginning of the period 6,266 5,164
Share-based compensation costs 394 454
Ascribed value credited to share capital
from exercise of share options (369) (322)
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Balance, end of the period 6,291 5,296
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RETAINED EARNINGS
Balance, beginning of the period 469,554 461,845
Net earnings 624 15,770
Dividends (13,288) (12,187)
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Balance, end of the period 456,890 465,428
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ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of the period 7,366 5,355
Net unrealized gain on available-for-sale
financial assets arising during the
period (net of tax of $60; $89 for the
three months ended May 1, 2010) 401 598
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Balance, end of the period 7,767 5,953
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Total Shareholders' Equity $ 502,374 $ 504,201
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CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(in thousands of Canadian dollars)
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For the three months ended
April 30, May 1,
2011 2010
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CASH FLOWS FROM (USED IN) OPERATING
ACTIVITIES
Net earnings $ 624 $ 15,770
Adjustments for:
Depreciation and amortization 14,485 14,453
Share-based compensation costs 394 454
Amortization of deferred lease credits (1,214) (1,269)
Deferred lease credits 315 905
Pension contribution (129) (155)
Pension expense 379 338
Foreign exchange loss 2,931 490
Interest and dividend income, net (985) (611)
Interest paid (179) (199)
Interest received 322 86
Dividends received 862 797
Income taxes 245 6,474
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18,050 37,533
Changes in:
Trade and other receivables (1,368) (912)
Inventories (25,865) (18,731)
Prepaid expenses (224) (621)
Trade and other payables 6,143 13,263
Deferred revenue (5,953) (4,207)
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Cash (used in) generated from operating
activities (9,217) 26,325
Income taxes paid (15,566) (20,912)
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Net cash flows (used in) from operating
activities (24,783) 5,413
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchases of marketable securities (105) (70)
Additions to property and equipment and
intangibles (13,162) (13,091)
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Cash flows used in investing activities (13,267) (13,161)
CASH FLOWS (USED IN) FROM FINANCING
ACTIVITIES
Dividends paid (13,288) (12,187)
Repayment of long-term debt (337) (318)
Proceeds from exercise of share options 1,443 1,314
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Cash flows used in financing activities (12,182) (11,191)
FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN
CURRENCY (2,931) (490)
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NET DECREASE IN CASH AND CASH EQUIVALENTS (53,163) (19,429)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE
PERIOD 230,034 228,577
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CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 176,871 $ 209,148
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For further information: Jeremy H. Reitman, Chairman and Chief Executive Officer, (514) 385-2630, Corporate Website: www.reitmans.ca |