Reitmans (Canada) Limited announces its results for the nine months ended October 29, 2011

MONTREAL, Nov. 30, 2011 /CNW Telbec/ - Sales for the nine months ended October 29, 2011 decreased 3.9% to $759,443,000 as compared with $790,286,000 for the nine months ended October 30, 2010. Same store sales¹ decreased 5.2%.  Sales for the nine months ended October 29, 2011 as compared to the nine months ended October 30, 2010 were impacted by weaker customer traffic as consumers were faced with higher personal debt levels, high commodity costs and concern over economic conditions.  The Company's gross margin decreased from 67.7% to 65.7% for the nine months ended October 29, 2011.  While the strength of the Canadian dollar in the nine months ended October 29, 2011 was favourable to the gross margin, this improvement was offset by a more promotional environment which negatively impacted gross margin.  The average rate for a US dollar in the first nine months of fiscal 2012 was $0.98 Canadian as compared to $1.03 Canadian in the first nine months of fiscal 2011.  EBITDA¹ for the nine months ended October 29, 2011 decreased 29.7% to $104,767,000 as compared with $148,975,000 last year.  Net earnings decreased 43.0% to $42,865,000 or $0.65 diluted earnings per share as compared with $75,168,000 or $1.11 diluted earnings per share last year.

Sales for the third quarter ended October 29, 2011 decreased 3.2% to $254,072,000 as compared with $262,515,000 for the third quarter ended October 30, 2010. Same store sales decreased by 5.8%. The Company's gross margin decreased from 66.2% to 65.8% for the third quarter ended October 29, 2011. While the strength of the Canadian dollar in the third quarter ended October 29, 2011 was favourable to the gross margin, this improvement was offset by a more promotional environment which negatively impacted gross margin.  The average rate for a US dollar in the third quarter ended October 29, 2011 was $1.00 Canadian as compared to $1.03 Canadian in the third quarter ended October 30, 2010. EBITDA for the third quarter ended October 29, 2011 decreased by $11,566,000 or 26.6% to $31,845,000 as compared with $43,411,000 last year.  Net earnings decreased 49.0% to $10,561,000 or $0.16 diluted earnings per share as compared to $20,692,000 or $0.31 diluted earnings per share for the same period last year.

On October 19, 2011 the Company announced its plan to close its 25 Cassis stores, primarily through conversion to other Company banners.  In the third quarter ended October 29, 2011 the Company has recorded costs associated with store conversions and closures, primarily related to fixed asset impairment losses and employee severance costs, of $5,100,000 ($3,700,000 after tax).

During the third quarter, the Company opened 14 new stores, comprised of 5 Reitmans, 1 Smart Set, 1 RW & CO., 3 Thyme Maternity, 1 Cassis, 1 Penningtons and 2 Addition Elle.  Four stores were closed, comprised of 2 Reitmans and 2 Penningtons.  At October 29, 2011, there were 975 stores in operation, consisting of 366 Reitmans, 158 Smart Set, 68 RW & CO., 77 Thyme Maternity, 25 Cassis, 158 Penningtons and 123 Addition Elle, as compared with a total of 979 stores as at October 30, 2010.

Sales for the month of November (the four weeks ended November 26, 2011) decreased 2.2% with same store sales decreasing 2.3%.

At the Board of Directors meeting held on November 30, 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 January 26, 2012 to shareholders of record on January 6, 2012.

As reported in the November 24, 2011 press release, the Company received approval from the Toronto Stock Exchange to proceed with a normal course issuer bid, under which the Company may purchase up to 2,579,895 Class A non-voting shares, representing 5% of the issued and outstanding Class A non-voting shares as at November 14, 2011. The bid commenced on November 28, 2011 and may continue to November 27, 2012.

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.

¹Non-GAAP Financial Measures

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, dividend income, interest income, impairment losses on available-for-sale financial assets, interest expense and depreciation, amortization and impairment losses related to 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.

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. 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 third quarter ended October 29, 2011 are available online at www.sedar.com.

Montreal, November 30, 2011
Jeremy H. Reitman Chairman and Chief Executive Officer
Telephone:   Corporate Website:	(514) 385-2630 www.reitmans.ca

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts)
		For the nine months ended				For the three months ended
		October 29, 2011		October 30, 2010		October 29, 2011		October 30, 2010
Sales		$	759,443	$	790,286	$	254,072	$	262,515
Cost of goods sold			260,374		255,458		86,982		88,715
Gross profit			499,069		534,828		167,090		173,800
Selling and distribution expenses			408,947		391,039		144,125		132,723
Administrative expenses			33,527		39,533		12,356		13,258
Results from operating activities			56,595		104,256		10,609		27,819
Finance income			3,546		3,511		4,088		1,996
Finance costs			969		583		241		189
Earnings before income taxes1			59,172		107,184		14,456		29,626
Income taxes			16,307		32,016		3,895		8,934
Net earnings		$	42,865	$	75,168	$	10,561	$	20,692
Earnings per share:
	Basic	$	0.65	$	1.12	$	0.16	$	0.31
	Diluted		0.65		1.11		0.16		0.31
1	A reconciliation of earnings before income taxes to earnings before income taxes, dividend income, interest income, impairment loss on available-for-sale financial assets, interest expense and depreciation, amortization and impairment losses ("EBITDA") is as follows:
Earnings before income taxes		$	59,172	$	107,184	$	14,456	$	29,626
Dividend income			2,598		1,941		850		655
Interest income			948		733		336		375
Impairment loss on available-for-sale financial assets			73		-		73		-
Interest expense			520		583		168		189
Depreciation, amortization and impairment losses			48,548		43,882		18,334		14,626
EBITDA		$	104,767	$	148,975	$	31,845	$	43,411

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
			For the nine months ended					For the three months ended
			October 29, 2011		October 30, 2010			October 29, 2011		October 30, 2010
Net earnings			$	42,865	$	75,168		$	10,561	$	20,692
Other comprehensive income:
		Net unrealized (loss) gain on available-for-sale financial assets arising during the period (net of tax of $121 for the nine months and $246 for the three months ended October 29, 2011; $394 for the nine months and $250 for the three months ended October 30, 2010)		(808)		2,643			(1,647)		1,674
		Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $9)		64		-			64		-
Total comprehensive income			$	42,121	$	77,811		$	8,978	$	22,366

REITMANS (CANADA) LIMITED CONDENSED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			October 29, 2011			October 30, 2010			January 29, 2011
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	159,309		$	218,944		$	230,034
	Marketable securities			69,799			51,345			70,413
	Trade and other receivables			3,516			3,622			2,866
	Income taxes recoverable			7,396			-			-
	Inventories			107,591			94,078			73,201
	Prepaid expenses			13,964			13,095			12,491
		Total Current Assets		361,575			381,084			389,005
NON-CURRENT ASSETS
	Property and equipment			184,666			202,379			193,064
	Intangibles			15,962			11,740			13,841
	Goodwill			42,426			42,426			42,426
	Deferred income taxes			22,492			20,937			21,021
		Total Non-Current Assets		265,546			277,482			270,352
TOTAL ASSETS			$	627,121		$	658,566		$	659,357
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	65,830		$	68,617		$	64,093
	Deferred revenue			9,279			14,768			19,834
	Income taxes payable			-			7,711			5,998
	Current portion of long-term debt			1,451			1,363			1,384
		Total Current Liabilities		76,560			92,459			91,309
NON-CURRENT LIABILITIES
	Other payables			11,022			9,929			10,180
	Deferred revenue			2,323			2,677			2,384
	Deferred lease credits			18,513			19,591			19,011
	Long-term debt			8,951			10,402			10,047
	Pension liability			13,948			12,414			13,626
		Total Non-Current Liabilities		54,757			55,013			55,248
SHAREHOLDERS' EQUITY
	Share capital			31,512			27,985			29,614
	Contributed surplus			6,462			6,134			6,266
	Retained earnings			451,208			468,977			469,554
	Accumulated other comprehensive income			6,622			7,998			7,366
		Total Shareholders' Equity		495,804			511,094			512,800
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	627,121		$	658,566		$	659,357
REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (in thousands of Canadian dollars)
		For the nine months ended
		October 29, 2011			October 30, 2010
SHARE CAPITAL
Balance, beginning of the period		$	29,614		$	25,888
	Cash consideration on exercise of share options		2,133			2,273
	Ascribed value credited to share capital from exercise of share options		545			555
	Cancellation of shares pursuant to share repurchase program		(780)			(731)
Balance, end of the period			31,512			27,985
CONTRIBUTED SURPLUS
Balance, beginning of the period			6,266			5,164
	Share-based compensation costs		741			1,525
	Ascribed value credited to share capital from exercise of share options		(545)			(555)
Balance, end of the period			6,462			6,134
RETAINED EARNINGS
Balance, beginning of the period			469,554			461,845
	Net earnings		42,865			75,168
	Dividends		(39,581)			(38,655)
	Premium on repurchase of Class A non-voting shares		(21,630)			(29,381)
Balance, end of the period			451,208			468,977
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of the period			7,366			5,355
	Net unrealized (loss) gain on available-for-sale financial assets arising during the period (net of tax of $121; $394 for the nine months ended October 30, 2010)		(808)			2,643
	Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $9)		64			-
Balance, end of the period			6,622			7,998
Total Shareholders' Equity		$	495,804		$	511,094

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the nine months ended				For the three months ended
			October 29, 2011		October 30, 2010		October 29, 2011		October 30, 2010
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
	Net earnings		$	42,865	$	75,168	$	10,561	$	20,692
	Adjustments for:
		Depreciation, amortization and impairment losses		48,548		43,882		18,334		14,626
		Share-based compensation costs		741		1,525		(153)		522
		Amortization of deferred lease credits		(3,468)		(3,731)		(1,148)		(1,236)
		Deferred lease credits		2,970		2,713		2,146		1,549
		Pension contribution		(816)		(465)		(459)		(155)
		Pension expense		1,138		1,014		380		338
		Impairment loss on available-for-sale financial assets		73		-		73		-
		Foreign exchange loss		2,793		358		342		198
		Interest and dividend income, net		(3,024)		(2,091)		(1,016)		(841)
		Interest paid		(522)		(583)		(170)		(189)
		Interest received		969		770		336		344
		Dividends received		2,592		1,817		866		651
		Income taxes		16,307		32,016		3,895		8,934
				111,166		152,393		33,987		45,433
	Changes in:
		Trade and other receivables		(665)		(609)		(809)		(1,005)
		Inventories		(34,390)		(30,951)		(26,114)		(25,649)
		Prepaid expenses		(1,473)		(2,085)		300		1,121
		Trade and other payables		3,531		13,367		7,265		15,271
		Deferred revenue		(10,616)		(1,191)		(5,066)		2,446
	Cash generated from operating activities			67,553		130,924		9,563		37,617
	Income taxes received			-		5,870		-		5,856
	Income taxes paid			(31,060)		(37,870)		(3,546)		(8,529)
	Net cash flows from operating activities			36,493		98,924		6,017		34,944
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			(315)		(282)		(105)		(105)
	Additions to property and equipment and intangibles			(43,223)		(40,457)		(18,604)		(16,514)
	Cash flows used in investing activities			(43,538)		(40,739)		(18,709)		(16,619)
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
	Dividends paid			(39,581)		(38,655)		(13,007)		(13,241)
	Purchase of Class A non-voting shares for cancellation			(22,410)		(30,112)		(22,410)		-
	Repayment of long-term debt			(1,029)		(966)		(349)		(327)
	Proceeds from exercise of share options			2,133		2,273		617		849
	Cash flows used in financing activities			(60,887)		(67,460)		(35,149)		(12,719)
FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN CURRENCY				(2,793)		(358)		(342)		(198)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(70,725)		(9,633)		(48,183)		5,408
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				230,034		228,577		207,492		213,536
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	159,309	$	218,944	$	159,309	$	218,944