Reitmans (Canada) Limited announces its results for the three months ended May 4, 2013

MONTREAL, June 4, 2013 /CNW Telbec/ - Sales for the first quarter ended May 4, 2013 were $216,861,000 as compared with $217,094,000 for the first quarter ended April 28, 2012, a decrease of 0.1%.  Same store sales¹ decreased 3.5%, compared to the comparable 13 weeks ended May 5, 2012, impacted by our customers' preference to focus their expenditures on non-discretionary purchases, as well as unseasonable weather conditions that were prevalent during the period.  Sales through the various banners' e-commerce channels showed significant gains, with a 96% increase in sales for the first quarter ended May 4, 2013 as compared to the first quarter ended April 28, 2012.  The Company's gross margin remained unchanged at 64.6% for the first quarter ended May 4, 2013 as compared to the first quarter ended April 28, 2012.  The Company recorded a net loss of $2,586,000 ($0.04 diluted loss per share) for the first quarter ended May 4, 2013 as compared with a net loss of $119,000 ($0.00 diluted loss per share) for the first quarter ended April 28, 2012.  In the first quarter ended May 4, 2013, adjusted EBITDA¹ was $10,683,000 as compared with $12,451,000 for the first quarter ended April 28, 2012, a decrease of 14.2%.

Early in 2013, management began a corporate initiative to analyze and review its processes, expenditures and complement of employees throughout the Company. The purpose of this initiative is to develop and implement a plan targeted at improving efficiencies and costs at the Company. We have made progress during the first quarter ended May 4, 2013 on this initiative and identified areas within our business that will enable us to realize considerable savings without adversely affecting our business.  This initiative included a reduction in the number of our employees and resulted in severance costs of approximately $1,000,000 in the first quarter ended May 4, 2013. These terminations are projected to result in annualized savings of approximately $3,000,000.

During the first quarter, the Company opened 13 new stores, comprised of 2 Reitmans, 1 Smart Set, 9 Penningtons and 1 Addition Elle.  Fifteen stores were closed, comprised of 4 Reitmans, 2 Smart Set, 5 Penningtons and 4 Addition Elle.  At May 4, 2013, there were 909 stores in operation, consisting of 359 Reitmans, 145 Smart Set, 73 RW & CO., 72 Thyme Maternity, 157 Penningtons and 103 Addition Elle, as compared with a total of 925 stores as at April 28, 2012.  In addition, there were 20 Thyme Maternity boutiques in select Babies"R"Us locations in Canada and 154 boutiques in Babies"R"Us stores in the United States.

Sales for the month of May (the four weeks ended June 1, 2013) decreased 4.7% with same store sales¹ decreasing 5.5%.

At the Board of Directors meeting held on June 4, 2013, 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 25, 2013 to shareholders of record on July 11, 2013.

¹Non-GAAP Financial Measures

In addition to discussing earnings in accordance with IFRS, this press release provides adjusted EBITDA as a supplementary earnings measure, which is defined as earnings (loss) before income taxes, dividend income, interest income, realized gains or losses on disposal of available-for-sale financial assets, impairment losses on available-for-sale financial assets, interest expense, depreciation, amortization and net 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.

The following table reconciles adjusted EBITDA to loss before income taxes for the three months ended May 4, 2013 and April 28, 2012:

(unaudited)	For the three months ended
	May 4, 2013			April 28, 20122
Loss before income taxes	$	(3,495,000)		$	(299,000)
Dividend income		(868,000)			(874,000)
Interest income		(134,000)			(330,000)
Impairment losses on available-for-sale financial assets		50,000			-
Interest expense		134,000			157,000
Depreciation, amortization and net impairment losses		14,996,000			13,797,000
ADJUSTED EBITDA	$	10,683,000		$	12,451,000

2	Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found  in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.

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 condensed consolidated interim financial statements including notes and Management's Discussion and Analysis for the first quarter ended May 4, 2013 are available online at www.sedar.com.

Montreal, June 4, 2013

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  (514) 385-2630
Corporate Website: www.reitmans.ca

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands of Canadian dollars except per share amounts)

		For the three months ended
		May 4, 2013			April 28, 20122
Sales		$	216,861		$	217,094
Cost of goods sold			76,687			76,778
Gross profit			140,174			140,316
Selling and distribution expenses			132,376			129,468
Administrative expenses			11,871			11,047
Results from operating activities			(4,073)			(199)
Finance income			2,361			1,204
Finance costs			1,783			1,304
Loss before income taxes			(3,495)			(299)
Income tax recovery			909			180
Net loss		$	(2,586)		$	(119)
Earnings per share:
	Basic	$	(0.04)		$	0.00
	Diluted		(0.04)			0.00

2	Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)

			For the three months ended
			May 4, 2013			April 28, 2012
Net loss			$	(2,586)		$	(119)
Other comprehensive income (loss)
	Items that are or may be reclassified subsequently to net earnings:
		Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $8)		42			-
		Net change in fair value of available-for-sale financial assets (net of tax of $101; 2012 - $29)		663			(197)
Total other comprehensive income (loss)				705			(197)
Total comprehensive loss			$	(1,881)		$	(316)

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)

			May 4, 2013			April 28, 20122			February 2, 20132
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	66,729		$	138,187		$	97,626
	Marketable securities			72,499			71,321			71,630
	Trade and other receivables			5,194			3,783			3,600
	Derivative financial asset			903			74			548
	Income taxes recoverable			10,174			15,507			8,709
	Inventories			112,253			112,785			93,317
	Prepaid expenses			25,791			12,330			25,944
		Total Current Assets		293,543			353,987			301,374
NON-CURRENT ASSETS
	Property and equipment			200,953			191,577			205,131
	Intangible assets			18,892			17,329			19,224
	Goodwill			42,426			42,426			42,426
	Deferred income taxes			27,439			23,287			26,444
		Total Non-Current Assets		289,710			274,619			293,225
TOTAL ASSETS			$	583,253		$	628,606		$	594,599
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	75,158		$	81,776		$	68,781
	Derivative financial liability			2,220			914			266
	Deferred revenue			11,126			13,557			16,297
	Current portion of long-term debt			1,595			1,497			1,570
		Total Current Liabilities		90,099			97,744			86,914
NON-CURRENT LIABILITIES
	Other payables			11,415			11,095			11,425
	Deferred lease credits			16,797			16,768			16,805
	Long-term debt			6,596			8,191			7,003
	Pension liability			17,977			15,386			17,559
		Total Non-Current Liabilities		52,785			51,440			52,792
SHAREHOLDERS' EQUITY
	Share capital			39,227			39,890			39,227
	Contributed surplus			6,795			5,348			6,521
	Retained earnings			384,977			425,644			400,480
	Accumulated other comprehensive income			9,370			8,540			8,665
		Total Shareholders' Equity		440,369			479,422			454,893
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	583,253		$	628,606		$	594,599

2	Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.

REITMANS (CANADA) LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of Canadian dollars)

		Share Capital			Contributed Surplus			Retained Earnings			Accumulated Other Comprehensive Income			Total Shareholders' Equity
Balance as at February 3, 2013		$	39,227		$	6,521		$	400,480		$	8,665		$	454,893
Total comprehensive loss for the period
	Net loss								(2,586)						(2,586)
	Total other comprehensive income											705			705
Total comprehensive loss for the period			-			-			(2,586)			705			(1,881)
Contributions by and distributions to owners of the Company
	Share-based compensation costs					274									274
	Dividends								(12,917)						(12,917)
Total contributions by and distributions to owners of the Company			-			274			(12,917)			-			(12,643)
Balance as at May 4, 2013		$	39,227		$	6,795		$	384,977		$	9,370		$	440,369
Balance as at January 29, 2012		$	39,890		$	5,158		$	438,880		$	8,737		$	492,665
Total comprehensive loss for the period
	Net loss								(119)						(119)
	Total other comprehensive loss											(197)			(197)
Total comprehensive loss for the period			-			-			(119)			(197)			(316)
Contributions by and distributions to owners of the Company
	Share-based compensation costs					190									190
	Dividends								(13,117)						(13,117)
Total contributions by and distributions to owners of the Company			-			190			(13,117)			-			(12,927)
Balance as at April 28, 2012		$	39,890		$	5,348		$	425,644		$	8,540		$	479,422

REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)

			For the three months ended
			May 4, 2013			April 28, 2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
	Net loss		$	(2,586)		$	(119)
	Adjustments for:
		Depreciation, amortization and impairment losses		14,996			13,797
		Share-based compensation costs		274			190
		Amortization of deferred lease credits		(1,176)			(1,194)
		Deferred lease credits		1,168			645
		Pension contribution		(32)			(163)
		Pension expense		450			418
		Impairment loss on available-for-sale financial assets		50			-
		Net change in fair value of derivatives		1,599			86
		Foreign exchange loss on cash and cash equivalents		41			623
		Interest and dividend income, net		(868)			(1,047)
		Interest paid		(134)			(157)
		Interest received		138			368
		Dividends received		867			868
		Income tax recovery		(909)			(180)
				13,878			14,135
	Changes in:
		Trade and other receivables		(1,598)			(782)
		Inventories		(18,936)			(19,597)
		Prepaid expenses		153			(428)
		Trade and other payables		5,987			1,804
		Deferred revenue		(5,171)			(8,721)
	Cash from operating activities			(5,687)			(13,589)
	Income taxes received			647			-
	Income taxes paid			(2,306)			(10,610)
	Net cash flows from operating activities			(7,346)			(24,199)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			(105)			(105)
	Additions to property and equipment and intangible assets			(10,106)			(20,245)
	Cash flows used in investing activities			(10,211)			(20,350)
CASH FLOWS USED IN FINANCING ACTIVITIES
	Dividends paid			(12,917)			(13,117)
	Repayment of long-term debt			(382)			(359)
	Cash flows used in financing activities			(13,299)			(13,476)
FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN CURRENCY				(41)			(623)
NET DECREASE IN CASH AND CASH EQUIVALENTS				(30,897)			(58,648)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				97,626			196,835
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	66,729		$	138,187

 

 

SOURCE: Reitmans (Canada) Limited