Reitmans (Canada) Limited announces its results for the three months ended April 28, 2012

MONTREAL, May 29, 2012 /CNW Telbec/ - Sales for the first quarter ended April 28, 2012 decreased 1% to $217,094,000 as compared with $219,296,000 for the first quarter ended April 30, 2011. Same store sales¹ decreased 0.7%.  The first quarter ended April 28, 2012 resulted in weaker sales attributable to a difficult retail environment marked by increased promotional activity. Other factors included the impact of higher gasoline and food prices reducing consumer disposable income for apparel.  The Company's gross margin for the first quarter ended April 28, 2012 decreased to 64.6% from 65.8% for the first quarter ended April 30, 2011, which was primarily attributable to the fluctuation in the US dollar.  In the first quarter ended April 28, 2012, adjusted EBITDA¹ decreased by $1,829,000 or 12.7% to $12,540,000 as compared with $14,369,000 for the first quarter ended April 30, 2011.  The Company recorded a net loss for the first quarter ended April 28, 2012 of $53,000 ($0.00 diluted loss per share) as compared with net earnings of $624,000 ($0.01 diluted earnings per share) for the first quarter ended April 30, 2011.

During the quarter, the Company opened 16 new stores, comprised of 4 Reitmans, 4 Smart Set, 1 RW & CO., 1 Thyme Maternity, 5 Penningtons and 1 Addition Elle.  The Company closed 33 stores, comprised of 2 Reitmans, 1 Smart Set, 1 RW&CO., 3 Thyme Maternity, 3 Penningtons, 3 Addition Elle and 20 Cassis.  Accordingly, at April 28, 2012, there were 925 stores in operation, consisting of 364 Reitmans, 153 Smart Set, 66 RW & CO., 74 Thyme Maternity, 154 Penningtons and 114 Addition Elle, as compared with a total of 965 stores as at April 30, 2011.

Sales for the month of May (the four weeks ended May 26, 2012) decreased 1.7% with same store sales¹ increasing 0.8%.

At the Board of Directors meeting held on May 29, 2012, 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 26, 2012 to shareholders of record on July 12, 2012.

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 before income taxes, dividend income, interest income, realized gain 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) earnings before income taxes for the three months ended April 28, 2012 and April 30, 2011:

(Unaudited)	For the three months ended
	April 28, 2012	April 30, 2011
(Loss) earnings before income taxes	$ (210,000)	$ 869,000
Dividend income	(874,000)	(880,000)
Interest income	(330,000)	(284,000)
Interest expense	157,000	179,000
Depreciation and amortization	13,797,000	14,485,000
ADJUSTED EBITDA	$ 12,540,000	$ 14,369,000

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 interim financial statements including notes and Management's Discussion and Analysis for the first quarter ended April 28, 2012 are available online at www.sedar.com.

Montreal, May 29, 2012

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  [phone]

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts)
		For the three months ended
		April 28, 2012		April 30, 2011
Sales		$	217,094	$	219,296
Cost of goods sold			76,778		74,941
Gross profit			140,316		144,355
Selling and distribution expenses			129,468		129,225
Administrative expenses			10,958		10,112
Results from operating activities			(110)		5,018
Finance income			1,204		1,164
Finance costs			1,304		5,313
(Loss) earnings before income taxes			(210)		869
Income tax (recovery) expense			(157)		245
Net (loss) earnings		$	(53)	$	624
Earnings per share:
	Basic	$	0.00	$	0.01
	Diluted		0.00		0.01

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
		For the three months ended
		April 28, 2012		April 30, 2011
Net (loss) earnings		$	(53)	$	624
Other comprehensive income:
	Net change in fair value of available-for-sale financial assets (net of tax of $29; 2011 - $60)		(197)		401
Total comprehensive (loss) income		$	(250)	$	1,025

REITMANS (CANADA) LIMITED CONDENSED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			April 28, 2012		April 30, 2011		January 28, 2012
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	138,187	$	176,871	$	196,835
	Marketable securities			71,321		70,979		71,442
	Trade and other receivables			3,783		4,214		3,033
	Derivative financial asset			74		-		751
	Income taxes recoverable			15,507		10,846		4,735
	Inventories			102,625		99,066		78,285
	Prepaid expenses			12,330		12,715		11,902
		Total Current Assets		343,827		374,691		366,983
NON-CURRENT ASSETS
	Property and equipment			191,577		189,487		184,221
	Intangible assets			17,329		14,012		17,057
	Goodwill			42,426		42,426		42,426
	Deferred income taxes			23,198		19,438		23,174
		Total Non-Current Assets		274,530		265,363		266,878
TOTAL ASSETS			$	618,357	$	640,054	$	633,861
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	71,616	$	67,940	$	63,875
	Derivative financial liability			914		-		1,505
	Deferred revenue			13,557		13,870		22,278
	Current portion of long-term debt			1,497		1,406		1,474
		Total Current Liabilities		87,584		83,216		89,132
NON-CURRENT LIABILITIES
	Other payables			11,095		10,393		11,110
	Deferred revenue			-		2,395		-
	Deferred lease credits			16,768		18,112		17,317
	Long-term debt			8,191		9,688		8,573
	Pension liability			15,044		13,876		14,877
		Total Non-Current Liabilities		51,098		54,464		51,877
SHAREHOLDERS' EQUITY
	Share capital			39,890		31,426		39,890
	Contributed surplus			5,348		6,291		5,158
	Retained earnings			425,897		456,113		439,067
	Accumulated other comprehensive income			8,540		8,544		8,737
		Total Shareholders' Equity		479,675		502,374		492,852
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	618,357	$	640,054	$	633,861

REITMANS (CANADA) LIMITED CONDENSED 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 January 29, 2012		$	39,890	$	5,158	$	439,067	$	8,737	$	492,852
Share-based compensation costs			-		190		-		-		190
Net loss			-		-		(53)		-		(53)
Dividends			-		-		(13,117)		-		(13,117)
Net change in fair value of available-for-sale financial assets (net of tax of $29)			-		-		-		(197)		(197)
Balance as at April 28, 2012		$	39,890	$	5,348	$	425,897	$	8,540	$	479,675
Balance as at January 30, 2011		$	29,614	$	6,266	$	468,777	$	8,143	$	512,800
Cash consideration on exercise of share options			1,443		-		-		-		1,443
Ascribed value credited to share capital from exercise of share options			369		(369)		-		-		-
Share-based compensation costs			-		394		-		-		394
Net earnings			-		-		624		-		624
Dividends			-		-		(13,288)		-		(13,288)
Net change in fair value of available-for-sale financial assets (net of tax of $60)			-		-		-		401		401
Balance as at April 30, 2011		$	31,426	$	6,291	$	456,113	$	8,544	$	502,374

REITMANS (CANADA) LIMITED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the three months ended
			April 28, 2012		April 30, 2011
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
	Net (loss) earnings		$	(53)	$	624
	Adjustments for:
		Depreciation and amortization		13,797		14,485
		Share-based compensation costs		190		394
		Amortization of deferred lease credits		(1,194)		(1,214)
		Deferred lease credits		645		315
		Pension contribution		(163)		(129)
		Pension expense		330		379
		Net change in fair value of derivatives		86		-
		Foreign exchange loss		623		2,931
		Interest and dividend income, net		(1,047)		(985)
		Interest paid		(157)		(179)
		Interest received		368		322
		Dividends received		868		862
		Income tax (recovery) expense		(157)		245
			14,136			18,050
	Changes in:
		Trade and other receivables		(782)		(1,368)
		Inventories		(24,340)		(25,865)
		Prepaid expenses		(428)		(224)
		Trade and other payables		6,546		6,143
		Deferred revenue		(8,721)		(5,953)
	Cash used in operating activities			(13,589)		(9,217)
	Income taxes paid			(10,610)		(15,566)
	Net cash flows used in operating activities			(24,199)		(24,783)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			(105)		(105)
	Additions to property and equipment and intangible assets			(20,245)		(13,162)
	Cash flows used in investing activities			(20,350)		(13,267)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
	Dividends paid			(13,117)		(13,288)
	Repayment of long-term debt			(359)		(337)
	Proceeds from exercise of share options			-		1,443
	Cash flows used in financing activities			(13,476)		(12,182)
FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN CURRENCY				(623)		(2,931)
NET DECREASE IN CASH AND CASH EQUIVALENTS				(58,648)		(53,163)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				196,835		230,034
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	138,187	$	176,871

 

 

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  [phone]