Reitmans (Canada) Limited announces its results for the nine and three months ended November 2, 2013 Français
MONTREAL, Dec. 3, 2013 /CNW Telbec/ - Sales for the nine months ended November 2, 2013 were $719,720,000 as compared with $732,854,000 for the nine months ended October 27, 2012, a decrease of 1.8%. Same store sales1 decreased 3.0%. Sales were negatively impacted due to a reduction in the number of stores as the Company rationalizes underperforming locations combined with competitive pressures necessitating more promotional pricing. Sales were also impacted by significantly slower than anticipated acceptance by consumers of the Company's repositioning and rebranding efforts in its Smart Set banner. The retail environment remains challenging with increased competitive pressure for apparel retailers. The Company's gross margin for the nine months ended November 2, 2013 decreased to 62.6% from 64.1% for the nine months ended October 27, 2012. Increased markdowns in the Smart Set banner significantly contributed to the reduction in gross margin. Net earnings for the nine months ended November 2, 2013 were $13,359,000 ($0.21 diluted earnings per share) as compared with $27,501,000 ($0.42 diluted earnings per share) for the nine months ended October 27, 2012. In the nine months ended November 2, 2013, adjusted EBITDA1 was $62,317,000 as compared with $77,543,000 for the nine months ended October 27, 2012, a decrease of 19.6%.
Sales for the three months ended November 2, 2013 increased 5.6% to $249,414,000 as compared with $236,247,000 for the three months ended October 27, 2012. Same store sales1 increased 1.6%, however Smart Set sales declined significantly for the third quarter of fiscal 2014 as compared to the third quarter of fiscal 2013.The Company's gross margin for the three months ended November 2, 2013 decreased to 61.0% from 63.0% for the three months ended October 27, 2012. A highly promotional environment combined with increased markdowns in the Smart Set banner significantly contributed to the gross margin decline. Net earnings for the three months ended November 2, 2013 were $5,763,000 ($0.09 diluted earnings per share) as compared with a loss of $29,000 ($0.00 diluted earnings per share) for the three months ended October 27, 2012. Adjusted EBITDA1 increased by 50.1% to $21,011,000 for the three months ended November 2, 2013 as compared with $14,001,000 for the three months ended October 27, 2012.
During the three months ended November 2, 2013, the Company opened 8 new stores, comprised of 2 Reitmans, 4 RW & CO. , 1 Penningtons and 1 Addition Elle. Thirteen stores were closed, comprised of 4 Reitmans, 3 Smart Set, 1 RW & CO., 1 Thyme Maternity, 3 Penningtons and 1 Addition Elle. At November 2, 2013, there were 895 stores in operation, consisting of 355 Reitmans, 138 Smart Set, 77 RW & CO., 71 Thyme Maternity, 151 Penningtons and 103 Addition Elle, as compared with a total of 923 stores as at October 27, 2012. In addition, there were 22 Thyme Maternity boutiques in select Babies"R"Us locations in Canada and 166 boutiques in Babies"R"Us stores in the United States. During the three months ended November 2, 2013, the Company began offering consumers Penningtons plus-size apparel, under a wholesale agreement, in five Sears stores in Canada, as well as online at sears.ca.
Sales for the month of November (the four weeks ended November 30, 2013) increased 1.4% with same store sales1 increasing 1.1% compared to the comparable 4 weeks ended November 24, 2012.
As a result of the disappointing earnings for the nine months ended November 2, 2013, the Board of Directors has decided to reduce the quarterly cash dividend from $0.20 per share to $0.05 per share. Accordingly, at the Board of Directors meeting held on December 3, 2013, a quarterly cash dividend (constituting eligible dividends) of $0.05 per share on all outstanding Class A non-voting and Common shares of the Company was declared, payable January 30, 2014 to shareholders of record on January 20, 2014.
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 and includes e-commerce sales for banners that have been operational 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 earnings before income taxes for the nine and three months ended November 2, 2013 and October 27, 2012:
(unaudited) | For the nine months ended | For the three months ended | ||||||
November 2, 2013 | October 27, 20122 | November 2, 2013 | October 27, 20122 | |||||
Earnings (loss) before income taxes | $ | 17,876,000 | $ | 36,317,000 | $ | 7,792,000 | $ | (193,000) |
Dividend income | (2,608,000) | (2,615,000) | (872,000) | (874,000) | ||||
Interest income | (437,000) | (859,000) | (133,000) | (198,000) | ||||
Impairment losses on available-for-sale financial assets | 692,000 | 106,000 | 190,000 | - | ||||
Interest expense | 382,000 | 453,000 | 121,000 | 145,000 | ||||
Depreciation, amortization and net impairment losses | 46,412,000 | 44,141,000 | 13,913,000 | 15,121,000 | ||||
ADJUSTED EBITDA | $ | 62,317,000 | $ | 77,543,000 | $ | 21,011,000 | $ | 14,001,000 |
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 November 2, 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 nine and three months ended November 2, 2013 are available online at www.sedar.com.
Montreal, December 3, 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 nine months ended | For the three months ended | ||||||||
November 2, 2013 | October 27, 2012 | November 2, 2013 | October 27, 2012 | ||||||
(note 3a) | (note 3a) | ||||||||
Sales | $ | 719,720 | $ | 732,854 | $ | 249,414 | $ | 236,247 | |
Cost of goods sold | 269,119 | 262,803 | 97,190 | 87,417 | |||||
Gross profit | 450,601 | 470,051 | 152,224 | 148,830 | |||||
Selling and distribution expenses | 405,235 | 402,769 | 135,956 | 138,276 | |||||
Administrative expenses | 33,837 | 34,087 | 10,946 | 11,537 | |||||
Results from operating activities | 11,529 | 33,195 | 5,322 | (983) | |||||
Finance income | 7,421 | 4,332 | 2,781 | 1,464 | |||||
Finance costs | 1,074 | 1,210 | 311 | 674 | |||||
Earnings (loss) before income taxes | 17,876 | 36,317 | 7,792 | (193) | |||||
Income tax expense (recovery) | 4,517 | 8,816 | 2,029 | (164) | |||||
Net earnings (loss) | $ | 13,359 | $ | 27,501 | $ | 5,763 | $ | (29) | |
Earnings per share: | |||||||||
Basic | $ | 0.21 | $ | 0.42 | $ | 0.09 | $ | 0.00 | |
Diluted | 0.21 | 0.42 | 0.09 | 0.00 |
REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)
For the nine months ended | For the three months ended | ||||||||
November 2, 2013 | October 27, 2012 | November 2, 2013 | October 27, 2012 | ||||||
Net earnings (loss) | $ | 13,359 | $ | 27,501 | $ | 5,763 | $ | (29) | |
Other comprehensive (loss) income | |||||||||
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 $93 for nine months and $25 for three months ended November 2, 2013; $14 for nine months ended October 27, 2012) | 599 | 92 | 165 | - | |||||
Net change in fair value of available-for-sale financial assets (net of tax of $422 for nine months and $237 for the three months ended November 2, 2013; $100 for nine months and $29 for the three months ended October 27, 2012) | (2,770) | (704) | (1,547) | 184 | |||||
Cumulative translation reserve | 223 | - | 223 | - | |||||
Total other comprehensive (loss) income | (1,948) | (612) | (1,159) | 184 | |||||
Total comprehensive income | $ | 11,411 | $ | 26,889 | $ | 4,604 | $ | 155 |
REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)
November 2, 2013 | October 27, 2012 | February 2, 2013 | ||||||
ASSETS | (note 3a) | (note 3a) | ||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 52,381 | $ | 108,935 | $ | 97,626 | ||
Marketable securities | 68,753 | 70,954 | 71,630 | |||||
Trade and other receivables | 5,163 | 4,382 | 3,969 | |||||
Derivative financial asset | 2,794 | 527 | 548 | |||||
Income taxes recoverable | 2,951 | 8,283 | 8,709 | |||||
Inventories | 127,749 | 117,795 | 93,317 | |||||
Prepaid expenses | 27,433 | 11,789 | 25,944 | |||||
Total Current Assets | 287,224 | 322,665 | 301,743 | |||||
NON-CURRENT ASSETS | ||||||||
Property and equipment | 189,851 | 203,401 | 205,131 | |||||
Intangible assets | 17,089 | 18,652 | 19,224 | |||||
Goodwill | 42,426 | 42,426 | 42,426 | |||||
Deferred income taxes | 29,680 | 26,265 | 26,444 | |||||
Total Non-Current Assets | 279,046 | 290,744 | 293,225 | |||||
TOTAL ASSETS | $ | 566,270 | $ | 613,409 | $ | 594,968 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Trade and other payables | $ | 76,040 | $ | 81,896 | $ | 69,150 | ||
Derivative financial liability | 1,472 | 423 | 266 | |||||
Deferred revenue | 6,424 | 8,153 | 16,297 | |||||
Current portion of long-term debt | 1,646 | 1,545 | 1,570 | |||||
Total Current Liabilities | 85,582 | 92,017 | 87,283 | |||||
NON-CURRENT LIABILITIES | ||||||||
Other payables | 11,910 | 11,541 | 11,425 | |||||
Deferred lease credits | 16,613 | 17,719 | 16,805 | |||||
Long-term debt | 5,760 | 7,406 | 7,003 | |||||
Pension liability | 18,247 | 16,117 | 17,559 | |||||
Total Non-Current Liabilities | 52,530 | 52,783 | 52,792 | |||||
SHAREHOLDERS' EQUITY | ||||||||
Share capital | 39,227 | 39,227 | 39,227 | |||||
Contributed surplus | 7,126 | 5,979 | 6,521 | |||||
Retained earnings | 375,088 | 415,278 | 400,480 | |||||
Accumulated other comprehensive income | 6,717 | 8,125 | 8,665 | |||||
Total Shareholders' Equity | 428,158 | 468,609 | 454,893 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 566,270 | $ | 613,409 | $ | 594,968 | ||
REITMANS (CANADA) LIMITED
CONDENSED 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 income for the period | ||||||||||||
Net earnings | 13,359 | 13,359 |
||||||||||
Total other comprehensive loss | (1,948) | (1,948) | ||||||||||
Total comprehensive income for the period | - | - | 13,359 | (1,948) | 11,411 | |||||||
Contributions by (distributions to) owners of the Company | ||||||||||||
Share-based compensation costs | 605 | 605 | ||||||||||
Dividends | (38,751) | (38,751) | ||||||||||
Total contributions by (distributions to) owners of the Company | - | 605 | (38,751) | - | (38,146) | |||||||
Balance as at November 2, 2013 | $ | 39,227 | $ | 7,126 | $ | 375,088 | $ | 6,717 | $ | 428,158 | ||
Balance as at August 4, 2013 | $ | 39,227 | $ | 6,997 | $ | 382,242 | $ | 7,876 | $ | 436,342 | ||
Total comprehensive income for the period | ||||||||||||
Net earnings | 5,763 | 5,763 | ||||||||||
Total other comprehensive loss | (1,159) | (1,159) | ||||||||||
Total comprehensive income for the period | - | - | 5,763 | (1,159) | 4,604 | |||||||
Contributions by (distributions to) owners of the Company | ||||||||||||
Share-based compensation costs | 129 | 129 | ||||||||||
Dividends | (12,917) | (12,917) | ||||||||||
Total contributions by (distributions to) owners of the Company | - | 129 | (12,917) | - | (12,788) | |||||||
Balance as at November 2, 2013 | $ | 39,227 | $ | 7,126 | $ | 375,088 | $ | 6,717 | $ | 428,158 | ||
Share Capital | Contributed Surplus |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total Shareholders' Equity |
||||||||
Balance as at January 29, 2012 | $ | 39,890 | $ | 5,158 | $ | 438,880 | $ | 8,737 | $ | 492,665 | ||
Total comprehensive income for the period | ||||||||||||
Net earnings | 27,501 | 27,501 | ||||||||||
Total other comprehensive loss | (612) | (612) | ||||||||||
Total comprehensive income for the period | - | - | 27,501 | (612) | 26,889 | |||||||
Contributions by (distributions to) owners of the Company | ||||||||||||
Cancellation of shares pursuant to share repurchase program | (663) | (663) | ||||||||||
Share-based compensation costs | 821 | 821 | ||||||||||
Dividends | (39,151) | (39,151) | ||||||||||
Premium on repurchases of Class A non-voting shares | (11,952) | (11,952) | ||||||||||
Total contributions by (distributions to) owners of the Company | (663) | 821 | (51,103) | - | (50,945) | |||||||
Balance as at October 27, 2012 | $ | 39,227 | $ | 5,979 | $ | 415,278 | $ | 8,125 | $ | 468,609 | ||
Balance as at July 29, 2012 | $ | 39,890 | $ | 5,694 | $ | 440,176 | $ | 7,941 | $ | 493,701 | ||
Total comprehensive income for the period | ||||||||||||
Net loss | (29) | (29) | ||||||||||
Total other comprehensive income | 184 | 184 | ||||||||||
Total comprehensive income for the period | - | - | (29) | 184 | 155 | |||||||
Contributions by (distributions to) owners of the Company | ||||||||||||
Cancellation of shares pursuant to share repurchase program | (663) | (663) | ||||||||||
Share-based compensation costs | 285 | 285 | ||||||||||
Dividends | (12,917) | (12,917) | ||||||||||
Premium on repurchases of Class A non-voting shares | (11,952) | (11,952) | ||||||||||
Total contributions by (distributions to) owners of the Company | (663) | 285 | (24,869) | - | (25,247) | |||||||
Balance as at October 27, 2012 | $ | 39,227 | $ | 5,979 | $ | 415,278 | $ | 8,125 | $ | 468,609 |
REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)
For the nine months ended | For the three months ended | |||||||||
November 2, 2013 | October 27, 2012 | November 2, 2013 | October 27, 2012 | |||||||
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES | ||||||||||
Net earnings (loss) | $ | 13,359 | $ | 27,501 | $ | 5,763 | $ | (29) | ||
Adjustments for: | ||||||||||
Depreciation, amortization and net impairment losses | 46,412 | 44,141 | 13,913 | 15,121 | ||||||
Share-based compensation costs | 605 | 821 | 129 | 285 | ||||||
Amortization of deferred lease credits | (3,407) | (3,381) | (1,149) | (1,123) | ||||||
Deferred lease credits | 3,215 | 3,783 | 388 | 2,243 | ||||||
Pension contribution | (662) | (271) | (539) | (32) | ||||||
Pension expense | 1,350 | 1,258 | 450 | 420 | ||||||
Impairment loss on available-for-sale financial assets | 692 | 106 | 190 | - | ||||||
Net change in fair value of derivatives | (1,040) | (858) | (103) | (392) | ||||||
Foreign exchange (gain) loss on cash and cash equivalents | (270) | 203 | (115) | (651) | ||||||
Interest and dividend income, net | (2,663) | (3,021) | (884) | (927) | ||||||
Interest paid | (382) | (453) | (121) | (145) | ||||||
Interest received | 445 | 977 | 135 | 250 | ||||||
Dividends received | 2,603 | 2,610 | 869 | 872 | ||||||
Income tax expense | 4,517 | 8,816 | 2,029 | (164) | ||||||
64,774 | 82,232 | 20,955 | 15,728 | |||||||
Changes in: | ||||||||||
Trade and other receivables | (1,163) | (968) | (1,542) | (994) | ||||||
Inventories | (34,272) | (24,607) | (10,994) | (15,860) | ||||||
Prepaid expenses | (1,489) | 113 | 436 | 3,483 | ||||||
Trade and other payables | 7,436 | 3,880 | (5,054) | 184 | ||||||
Deferred revenue | (9,873) | (14,125) | (4,538) | (1,806) | ||||||
Cash generated from (used in) operating activities | 25,413 | 46,525 | (737) | 735 | ||||||
Income taxes received | 650 | 4,497 | - | 22 | ||||||
Income taxes paid | (2,306) | (19,800) | - | (2,354) | ||||||
Net cash flows from (used in) operating activities | 23,757 | 31,222 | (737) | (1,597) | ||||||
CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||||||
Purchases of marketable securities | (315) | (315) | (105) | (105) | ||||||
Additions to property and equipment and intangible assets | (29,039) | (65,742) | (10,139) | (24,243) | ||||||
Cash flows used in investing activities | (29,354) | (66,057) | (10,244) | (24,348) | ||||||
CASH FLOWS USED IN FINANCING ACTIVITIES | ||||||||||
Dividends paid | (38,751) | (39,151) | (12,917) | (12,917) | ||||||
Purchase of Class A non-voting shares for cancellation | - | (12,615) | - | (12,615) | ||||||
Repayment of long-term debt | (1,167) | (1,096) | (395) | (371) | ||||||
Cash flows used in financing activities | (39,918) | (52,862) | (13,312) | (25,903) | ||||||
FOREIGN EXCHANGE GAIN (LOSS) ON CASH HELD IN FOREIGN CURRENCY | 270 | (203) | 115 | 651 | ||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | (45,245) | (87,900) | (24,178) | (51,197) | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD | 97,626 | 196,835 | 76,559 | 160,132 | ||||||
CASH AND CASH EQUIVALENTS, END OF THE PERIOD | $ | 52,381 | $ | 108,935 | $ | 52,381 | $ | 108,935 |
SOURCE: Reitmans (Canada) Limited
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Jeremy H. Reitman
Chairman and Chief Executive Officer
Telephone: (514) 385-2630
Corporate Website: www.reitmans.ca
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