Reitmans (Canada) Limited announces its results for the six and three months ended August 3, 2013

MONTREAL, Sept. 11, 2013 /CNW Telbec/ - Sales for the six months ended August 3, 2013 were $470,306,000 as compared with $496,607,000 for the six months ended July 28, 2012, a decrease of 5.3%.  Same store sales¹ decreased 5.3% compared to the comparable 26 weeks ended August 4, 2012.  The retail environment remained challenging with consumer debt remaining high and heightened competitive pressures. Sales continued to be impacted by our customers' preference to focus their expenditures on non-discretionary purchases, as well as slower than anticipated acceptance by consumers of the Company's repositioning and rebranding efforts in certain of its banners.  Sales through the various banners' e-commerce channels continued to show strong growth, with all banners now offering a wide assortment across virtually all product categories.  The Company's gross margin for the six months ended August 3, 2013 decreased to 63.4% from 64.7% for the six months ended July 28, 2012.  Net earnings for the six months ended August 3, 2013 were $7,596,000 ($0.12 diluted earnings per share) as compared with $27,530,000 ($0.42 diluted earnings per share) for the six months ended July 28, 2012.  In the six months ended August 3, 2013, adjusted EBITDA¹ was $41,306,000 as compared with $63,542,000 for the six months ended July 28, 2012, a decrease of 35.0%.

Sales for the three months ended August 3, 2013 decreased 9.3% to $253,445,000 as compared with $279,513,000 for the three months ended July 28, 2012.  Same store sales¹ decreased 6.8% compared to the comparable 13 weeks ended August 4, 2012.  The Company's gross margin for the three months ended August 3, 2013 decreased to 62.4% from 64.7% for the three months ended July 28, 2012.  Net earnings for the three months ended August 3, 2013 were $10,182,000 ($0.16 diluted earnings per share) as compared with $27,649,000 ($0.42 diluted earnings per share) for the three months ended July 28, 2012.  Adjusted EBITDA¹ decreased by 40.1% to $30,623,000 for the three months ended August 3, 2013 as compared with $51,091,000 for the three months ended July 28, 2012.

During the three months ended August 3, 2013, the Company opened 3 new stores, comprised of 1 Reitmans, 1 RW & CO. and 1 Penningtons.  Twelve stores were closed, comprised of 3 Reitmans, 4 Smart Set and 5 Penningtons.  At August 3, 2013, there were 900 stores in operation, consisting of 357 Reitmans, 141 Smart Set, 74 RW & CO., 72 Thyme Maternity, 153 Penningtons and 103 Addition Elle, as compared with a total of 918 stores as at July 28, 2012.  In addition, there were 21 Thyme Maternity boutiques in select Babies"R"Us locations in Canada and 158 boutiques in Babies"R"Us stores in the United States.

Sales for the month of August (the four weeks ended August 31, 2013) increased 4.6% with same store sales¹ increasing 3.1% compared to the comparable 4 weeks ended September 1, 2012.

At the Board of Directors meeting held on September 11, 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 October 24, 2013 to shareholders of record on October 10, 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 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 six and three months ended August 3, 2013 and July 28, 2012:

(unaudited)	For the six months ended					For the three months ended
	August 3, 2013		July 28, 2012^1			August 3, 2013		July 28, 2012^1
Earnings before income taxes	$	10,084,000	$	36,510,000		$	13,579,000	$	36,809,000
Dividend income		(1,736,000)		(1,741,000)			(868,000)		(867,000)
Interest income		(304,000)		(661,000)			(170,000)		(331,000)
Impairment losses on available-for-sale financial assets		502,000		106,000			452,000		106,000
Interest expense		261,000		308,000			127,000		151,000
Depreciation, amortization and net impairment losses		32,499,000		29,020,000			17,503,000		15,223,000
ADJUSTED EBITDA	$	41,306,000	$	63,542,000		$	30,623,000	$	51,091,000

^1	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 August 3, 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 six and three months ended August 3, 2013 are available online at www.sedar.com.

Montreal, September 11, 2013

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  [phone]
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 six months ended				For the three months ended
		August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
Sales		$	470,306	$	496,607	$	253,445	$	279,513
Cost of goods sold			171,929		175,386		95,242		98,608
Gross profit			298,377		321,221		158,203		180,905
Selling and distribution expenses			269,279		264,493		136,903		135,025
Administrative expenses			22,891		22,550		11,020		11,503
Results from operating activities			6,207		34,178		10,280		34,377
Finance income			4,640		2,868		3,878		2,689
Finance costs			763		536		579		257
Earnings before income taxes			10,084		36,510		13,579		36,809
Income taxes			2,488		8,980		3,397		9,160
Net earnings		$	7,596	$	27,530	$	10,182	$	27,649
Earnings per share:
	Basic	$	0.12	$	0.42	$	0.16	$	0.42
	Diluted		0.12		0.42		0.16		0.42

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
		For the six months ended				For the three months ended
		August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
Net earnings		$	7,596	$	27,530	$	10,182	$	27,649
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 $68 for six months and $60 for three months ended August 3, 2013; $14 for six months and three months ended July 28, 2012)		434		92		392		92
	Net change in fair value of available-for-sale financial assets (net of tax of $185 for six months and $286 for the three months ended August 3, 2013; $129 for six months and $100 for the three months ended July 28, 2012)		(1,223)		(888)		(1,886)		(691)
Total other comprehensive loss			(789)		(796)		(1,494)		(599)
Total comprehensive income		$	6,807	$	26,734	$	8,688	$	27,050

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			August 3, 2013		July 28, 2012		February 2, 2013
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	76,559	$	160,132	$	97,626
	Marketable securities			70,432		70,637		71,630
	Trade and other receivables			3,585		3,437		3,969
	Derivative financial asset			2,475		268		548
	Income taxes recoverable			5,436		6,755		8,709
	Inventories			116,595		101,935		93,317
	Prepaid expenses			27,869		15,272		25,944
		Total Current Assets		302,951		358,436		301,743
NON-CURRENT ASSETS
	Property and equipment			193,556		194,251		205,131
	Intangible assets			17,291		18,026		19,224
	Goodwill			42,426		42,426		42,426
	Deferred income taxes			29,003		25,325		26,444
		Total Non-Current Assets		282,276		280,028		293,225
TOTAL ASSETS			$	585,227	$	638,464	$	594,968
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	81,891	$	81,335	$	69,150
	Derivative financial liability			1,256		556		266
	Deferred revenue			10,962		9,959		16,297
	Current portion of long-term debt			1,620		1,521		1,570
		Total Current Liabilities		95,729		93,371		87,283
NON-CURRENT LIABILITIES
	Other payables			11,265		11,264		11,425
	Deferred lease credits			17,374		16,599		16,805
	Long-term debt			6,181		7,801		7,003
	Pension liability			18,336		15,728		17,559
		Total Non-Current Liabilities		53,156		51,392		52,792
SHAREHOLDERS' EQUITY
	Share capital			39,227		39,890		39,227
	Contributed surplus			6,997		5,694		6,521
	Retained earnings			382,242		440,176		400,480
	Accumulated other comprehensive income			7,876		7,941		8,665
		Total Shareholders' Equity		436,342		493,701		454,893
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	585,227	$	638,464	$	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							7,596				7,596
	Total other comprehensive loss									(789)		(789)
Total comprehensive income for the period				-		-		7,596		(789)		6,807
Contributions by and distributions to owners of the Company
	Share-based compensation costs					476						476
	Dividends							(25,834)				(25,834)
Total contributions by and distributions to owners of the Company				-		476		(25,834)		-		(25,358)
Balance as at August 3, 2013			$	39,227	$	6,997	$	382,242	$	7,876	$	436,342
Balance as at May 5, 2013			$	39,227	$	6,795	$	384,977	$	9,370	$	440,369
Total comprehensive income for the period
	Net earnings							10,182				10,182
	Total other comprehensive loss									(1,494)		(1,494)
Total comprehensive income for the period				-		-		10,182		(1,494)		8,688
Contributions by and distributions to owners of the Company
	Share-based compensation costs					202						202
	Dividends							(12,917)				(12,917)
Total contributions by and distributions to owners of the Company				-		202		(12,917)		-		(12,715)
Balance as at August 3, 2013			$	39,227	$	6,997	$	382,242	$	7,876	$	436,342
Balance as at January 29, 2012			$	39,890	$	5,158	$	438,880	$	8,737	$	492,665
Total comprehensive income for the period
	Net earnings							27,530				27,530
	Total other comprehensive loss									(796)		(796)
Total comprehensive income for the period				-		-		27,530		(796)		26,734
Contributions by and distributions to owners of the Company
	Share-based compensation costs					536						536
	Dividends							(26,234)				(26,234)
Total contributions by and distributions to owners of the Company				-		536		(26,234)		-		(25,698)
Balance as at July 28, 2012			$	39,890	$	5,694	$	440,176	$	7,941	$	493,701
Balance as at April 29, 2012			$	39,890	$	5,348	$	425,644	$	8,540	$	479,422
Total comprehensive income for the period
	Net earnings							27,649				27,649
	Total other comprehensive loss									(599)		(599)
Total comprehensive income for the period				-		-		27,649		(599)		27,050
Contributions by and distributions to owners of the Company
	Share-based compensation costs					346						346
	Dividends							(13,117)				(13,117)
Total contributions by and distributions to owners of the Company				-		346		(13,117)		-		(12,771)
Balance as at July 28, 2012			$	39,890	$	5,694	$	440,176	$	7,941	$	493,701

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the six months ended				For the three months ended
			August 3, 2013		July 28, 2012		August 3, 2013		July 28, 2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
	Net earnings		$	7,596	$	27,530	$	10,182	$	27,649
	Adjustments for:
		Depreciation, amortization and net impairment losses		32,499		29,020		17,503		15,223
		Share-based compensation costs		476		536		202		346
		Amortization of deferred lease credits		(2,258)		(2,258)		(1,082)		(1,064)
		Deferred lease credits		2,827		1,540		1,659		895
		Pension contribution		(123)		(239)		(91)		(76)
		Pension expense		900		838		450		419
		Impairment loss on available-for-sale financial assets		502		106		452		106
		Net change in fair value of derivatives		(937)		(466)		(2,536)		(552)
		Foreign exchange (gain) loss on cash and cash equivalents		(155)		854		(196)		231
		Interest and dividend income, net		(1,779)		(2,094)		(911)		(1,047)
		Interest paid		(261)		(308)		(127)		(151)
		Interest received		310		727		172		359
		Dividends received		1,734		1,738		867		870
		Income tax expense		2,488		8,980		3,397		9,160
				43,819		66,504		29,941		52,368
	Changes in:
		Trade and other receivables		379		26		1,977		1,003
		Inventories		(23,278)		(8,747)		(4,342)		10,850
		Prepaid expenses		(1,925)		(3,370)		(2,078)		(2,942)
		Trade and other payables		12,490		3,696		6,503		1,698
		Deferred revenue		(5,335)		(12,319)		(164)		(3,598)
	Cash from operating activities			26,150		45,790		31,837		59,379
	Income taxes received			650		4,475		3		4,475
	Income taxes paid			(2,306)		(17,446)		-		(6,836)
	Net cash flows from operating activities			24,494		32,819		31,840		57,018
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			(210)		(210)		(105)		(105)
	Additions to property and equipment and intangible assets			(18,900)		(41,499)		(8,794)		(21,254)
	Cash flows used in investing activities			(19,110)		(41,709)		(8,899)		(21,359)
CASH FLOWS USED IN FINANCING ACTIVITIES
	Dividends paid			(25,834)		(26,234)		(12,917)		(13,117)
	Repayment of long-term debt			(772)		(725)		(390)		(366)
	Cash flows used in financing activities			(26,606)		(26,959)		(13,307)		(13,483)
FOREIGN EXCHANGE GAIN (LOSS) ON CASH HELD IN FOREIGN CURRENCY				155		(854)		196		(231)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(21,067)		(36,703)		9,830		21,945
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				97,626		196,835		66,729		138,187
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	76,559	$	160,132	$	76,559	$	160,132

 

 

 

SOURCE: Reitmans (Canada) Limited

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  [phone]
Corporate Website: www.reitmans.ca