Reitmans (Canada) Limited announces its results for the three months ended April 30, 2016

MONTREAL, May 31, 2016 /CNW Telbec/ - Sales for the three months ended April 30, 2016 were $203.5 million as compared with $201.7 million for the three months ended May 2, 2015, an increase of 0.9%, with a net reduction of 60 stores primarily attributable to the closure of Smart Set stores. Same store sales¹ increased 8.8% with stores increasing 6.3% and e-commerce increasing 52.5%.

The Company's gross margin for the three months ended April 30, 2016 decreased to 55.8% from 59.5% for the three months ended May 2, 2015. Gross profit for the three months ended April 30, 2016 decreased $6.6 million or 5.5% to $113.5 million as compared with $120.1 million for three months ended May 2, 2015, with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross profit by approximately $3.5 million, while also being impacted by increased markdowns.

Results from operating activities for the three months ended April 30, 2016 was a loss of $12.5 million as compared with a loss of $10.2 million for the three months ended May 2, 2015, an increase of $2.3 million.

Net loss for the three months ended April 30, 2016 was $6.0 million ($0.09 basic and diluted loss per share) as compared with net loss of $7.7 million ($0.12 basic and diluted loss per share) for the three months ended May 2, 2015.

Adjusted EBITDA¹ for the three months ended April 30, 2016 was a loss of $4.3 million as compared with earnings of $2.3 million for the three months ended May 2, 2015, a decrease of $6.6 million.  The reduction in adjusted EBITDA was primarily attributable to lower gross profit as a result of the impact of the weakness of the Canadian dollar vis-à-vis the U.S. dollar and increased markdowns.

The Company operates three stores in Fort McMurray (two Reitmans and one Penningtons), which were impacted by the wildfires.  In response to the Fort McMurray disaster, the Company moved quickly to support our employees and their families.  Additionally, the displaced residents of the community were offered, for a specified period, clothing at any of the Company's stores located across Canada at a 75% discount and the Company was delighted that many people affected by the fires were able to take advantage of this offer.  The Company looks forward to re-opening its stores in Fort McMurray and continuing to support and serve the community.

Dividends
At the Board of Directors meeting held on May 31, 2016, 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 July 28, 2016 to shareholders of record on July 14, 2016.

Sales for the four weeks ended May 28, 2016
Sales for the month of May (the four weeks ended May 28, 2016) increased 1.1%. Same store sales¹ increased 7.9% with stores increasing 4.9% and e-commerce sales increasing 66.9%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 750 stores consisting of 327 Reitmans, 130 Penningtons, 104 Addition Elle, 83 RW & CO., 66 Thyme Maternity, 17 Hyba and 23 Smart Set. The Company also operates 21 Thyme Maternity shop-in-shop boutiques in select Babies"R"Us locations in Canada.

¹Non-GAAP Financial Measures
The Company has identified several key operating performance measures and non-GAAP financial measures which management believes are useful in assessing the performance of the Company; however, readers are cautioned that some of these measures may not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other companies.

In addition to discussing earnings in accordance with IFRS, this press announcement provides adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA") as a non-GAAP financial measure.  Adjusted EBITDA is defined as net earnings before income tax expense, other income, dividend income, interest income, net change in fair value of marketable securities, interest expense, impairment of goodwill, depreciation, amortization and net impairment losses.  The following table reconciles the most comparable GAAP measure, net earnings or loss, to adjusted EBITDA.  Management believes that adjusted EBITDA is an important indicator of the Company's ability to generate liquidity through operating cash flow to fund working capital needs and fund capital expenditures and uses the metric for this purpose.  The exclusion of dividend, interest income and net change in fair value of marketable securities eliminates the impact on earnings derived from non-operational activities.  The exclusion of depreciation, amortization and impairment charges eliminates the non-cash impact.  The intent of adjusted EBITDA is to provide additional useful information to investors and analysts and the measure does not have any standardized meaning under IFRS.  Adjusted EBITDA should therefore not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.  Other companies may calculate adjusted EBITDA differently. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. The exclusion of certain items does not imply that they are non-recurring.

The Company uses a key performance indicator ("KPI"), same store sales, to assess store performance (including each banner's e-commerce store) and sales growth.  Same store sales are defined as sales generated by stores that have been continuously open during both of the periods being compared and include e-commerce sales.  The same store sales metric compares the same calendar days for each period.  Although this KPI is expressed as a ratio, it is a non-GAAP financial measure that does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies.  Management uses same store sales in evaluating the performance of stores and considers it useful in helping to determine what portion of new sales has come from sales growth and what portion can be attributed to the opening of new stores.  Same store sales is a measure widely used amongst retailers and is considered useful information for both investors and analysts.  Same store sales should therefore not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

The following table reconciles net loss to adjusted EBITDA for the three months ended April 30, 2016 and May 2, 2015:

(in millions of Canadian dollars)	For the three months ended
(Unaudited)	April 30, 2016		May 2, 2015
Net loss	$	(6.0)	$	(7.7)
Depreciation, amortization and net impairment losses		10.3		11.9
Dividend income		(0.6)		(0.7)
Interest income		(0.1)		(0.2)
Net change in fair value of marketable securities		(4.1)		1.2
Interest expense		0.1		0.1
Income tax recovery		(3.9)		(2.3)
ADJUSTED EBITDA	$	(4.3)	$	2.3
ADJUSTED EBITDA as % of Sales		(2.1%)		1.1%

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.  Consequently, actual future results may differ materially from the anticipated results expressed in forward-looking statements, which reflect the Company's expectations only as of the date of this Press Announcement.  Forward-looking statements are based upon the Company's current estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and currently expected future developments, as well as other factors it believes are appropriate in the circumstances.  This Press Announcement, for the Company contains forward-looking statements about the Company's objectives, plans, goals, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking statements in this Press Announcement include, but are not limited to, statements with respect to the Company's anticipated future results and events, future liquidity, planned capital expenditures, amount of pension plan contributions, status and impact of systems implementation, the ability of the Company to successfully implement its strategic initiatives and cost reduction and productivity improvement initiatives as well as the impact of such initiatives.  These specific forward-looking statements are contained throughout the Company's MD&A including those listed in the "Operating and Financial Risk Management" section of the Company's MD&A. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may" and "should" and similar expressions, as they relate to the Company and its management.

Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements.  Please refer to the "Forward-Looking Statements" section of the Company's Management Discussion & Analysis for the year ended January 30, 2016.

Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time. The reader should not place undue reliance on any 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 complete financial statements including notes and Management's Discussion and Analysis for the three months ended April 30, 2016 are available online at www.sedar.com.

Montreal, May 31, 2016

Jeremy H. Reitman
Chairman and Chief Executive Officer
Telephone: [phone]
Corporate Website: www.reitmanscanadalimited.com

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts)
		For the three months ended
		April 30, 2016		May 2, 2015
Sales		$	203,487	$		201,731
Cost of goods sold			89,993			81,636
Gross profit			113,494			120,095
Selling and distribution expenses			115,193			118,881
Administrative expenses			10,775			11,378
Results from operating activities			(12,474)			(10,164)
Finance income			4,826			1,477
Finance costs			2,237			1,250
Loss before income taxes			(9,885)			(9,937)
Income tax recovery			3,903			2,266
Net loss		$	(5,982)	$		(7,671)
Loss per share:
	Basic	$	(0.09)	$		(0.12)
	Diluted		(0.09)			(0.12)

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
			For the three months ended
			April 30, 2016		May 2, 2015
Net loss			$	(5,982)	$		(7,671)
Other comprehensive (loss) income
	Items that are or may be reclassified subsequently to net earnings:
		Cash flow hedges (net of tax of $7,716; 2015 - $1,506)		(21,117)			(4,169)
		Foreign currency translation differences		479			182
Total other comprehensive loss				(20,638)			(3,987)
Total comprehensive loss			$	(26,620)	$		(11,658)

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			April 30, 2016		May 2, 2015		January 30, 2016
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	75,749	$	67,658	$	118,595
	Marketable securities			49,259		58,933		45,189
	Trade and other receivables			5,729		6,095		4,103
	Derivative financial asset			-		5,458		14,405
	Income taxes recoverable			5,413		2,992		3,301
	Inventories			139,550		134,977		124,848
	Prepaid expenses			9,467		24,396		8,921
		Total Current Assets		285,167		300,509		319,362
NON-CURRENT ASSETS
	Property and equipment			131,165		147,461		134,363
	Intangible assets			24,459		20,997		24,347
	Goodwill			38,183		42,426		38,183
	Deferred income taxes			35,764		30,397		25,828
		Total Non-Current Assets		229,571		241,281		222,721
TOTAL ASSETS			$	514,738	$	541,790	$	542,083
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	84,789	$	70,442	$	98,135
	Derivative financial liability			19,549		132		1,816
	Deferred revenue			18,476		16,115		19,325
	Current portion of long-term debt			1,926		1,808		1,896
		Total Current Liabilities		124,740		88,497		121,172
NON-CURRENT LIABILITIES
	Other payables			7,699		9,491		8,112
	Deferred lease credits			9,977		12,120		10,640
	Long-term debt			1,162		3,088		1,655
	Pension liability			19,578		22,218		19,336
		Total Non-Current Liabilities		38,416		46,917		39,743
SHAREHOLDERS' EQUITY
	Share capital			38,397		39,229		38,397
	Contributed surplus			9,208		8,152		9,007
	Retained earnings			318,221		357,681		327,370
	Accumulated other comprehensive income			(14,244)		1,314		6,394
		Total Shareholders' Equity		351,582		406,376		381,168
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	514,738	$	541,790	$	542,083

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 January 31, 2016	$	38,397	$	9,007	$	327,370	$	6,394	$	381,168
Net loss		-		-		(5,982)		-		(5,982)
Total other comprehensive loss		-		-		-		(20,638)		(20,638)
Total comprehensive loss for the period		-		-		(5,982)		(20,638)		(26,620)
Share-based compensation costs		-		201		-		-		201
Dividends		-		-		(3,167)		-		(3,167)
Total contributions by (distributions to) owners of the Company		-		201		(3,167)		-		(2,966)
Balance as at April 30, 2016	$	38,397	$	9,208	$	318,221	$	(14,244)	$	351,582
Balance as at February 1, 2015	$	39,227	$	8,014	$	368,581	$	5,301	$	421,123
Net loss		-		-		(7,671)		-		(7,671)
Total other comprehensive loss		-		-		-		(3,987)		(3,987)
Total comprehensive loss for the period		-		-		(7,671)		(3,987)		(11,658)
Cash consideration on exercise of share options		2		-		-		-		2
Share-based compensation costs		-		138		-		-		138
Dividends		-		-		(3,229)		-		(3,229)
Total contributions by (distributions to) owners of the Company		2		138		(3,229)		-		(3,089)
Balance as at May 2, 2015	$	39,229	$	8,152	$	357,681	$	1,314	$	406,376

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the three months ended
			April 30, 2016		May 2, 2015
CASH FLOWS USED IN OPERATING ACTIVITIES
	Net loss		$	(5,982)	$	(7,671)
	Adjustments for:
		Depreciation, amortization and net impairment losses		10,347		11,880
		Share-based compensation costs		201		138
		Amortization of deferred lease credits		(795)		(1,443)
		Deferred lease credits		132		385
		Pension contribution		(368)		(275)
		Pension expense		610		525
		Net change in fair value of marketable securities		(4,070)		1,168
		Net change in fair value of derivatives		-		9,536
		Foreign exchange loss (gain)		3,634		(946)
		Interest and dividend income, net		(702)		(785)
		Interest paid		(54)		(82)
		Interest received		161		252
		Dividends received		560		613
		Income tax recovery		(3,903)		(2,266)
				(229)	11,029
	Changes in:
		Trade and other receivables		(1,591)		(1,494)
		Inventories		(14,702)		(28,537)
		Prepaid expenses		(546)		(12,248)
		Trade and other payables		(13,218)		(19,469)
		Deferred revenue		(849)		(4,958)
	Cash used in operating activities			(31,135)		(55,677)
	Income taxes received			-		2
	Income taxes paid			(430)		(1,178)
	Net cash flows used in operating activities			(31,565)		(56,853)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			-		(2,736)
	Additions to property and equipment and intangible assets			(8,218)		(10,132)
	Proceeds on disposal of property and equipment and intangibles			416		-
	Cash flows used in investing activities			(7,802)		(12,868)
CASH FLOWS USED IN FINANCING ACTIVITIES
	Dividends paid			(3,167)		(3,229)
	Repayment of long-term debt			(463)		(435)
	Proceeds from issue of share capital			-		2
	Cash flows used in financing activities			(3,630)		(3,662)
FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY				151	1,128
NET DECREASE IN CASH AND CASH EQUIVALENTS				(42,846)	(72,255)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				118,595	139,913
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	75,749	$	67,658

SOURCE Reitmans (Canada) Limited

Jeremy H. Reitman, Chairman and Chief Executive Officer, Telephone: [phone], Corporate Website: www.reitmanscanadalimited.com