Reitmans (Canada) Limited announces its results for the three months ended May 2, 2015

MONTREAL, June 2, 2015 /CNW Telbec/ - Sales for the three months ended May 2, 2015 were $201.7 million as compared with $206.5 million for the three months ended May 3, 2014, a decrease of 2.3%, with 52 fewer stores in operation.  Same store sales¹ increased by 3.0% with mall and power centre stores increasing 0.3% and e-commerce sales increasing 97.7%.

Gross margin for the three months ended May 2, 2015 increased to 59.5% from 58.0% for the three months ended May 3, 2014, largely due to improved margins in the plus-size banners and e-commerce.  The Company's gross profit includes changes in fair value on foreign exchange contracts not eligible for hedge accounting previously reported in finance income or finance costs.  For the three months ended May 2, 2015 a loss of $2.3 million on these contracts is included in gross profit (loss of $3.0 million for the three months ended May 3, 2014).

Net loss for the three months ended May 2, 2015 was $7.7 million ($0.12 diluted loss per share) as compared with a net loss of $13.4 million ($0.21 diluted loss per share) for the three months ended May 3, 2014. Adjusted EBITDA¹ for the three months ended May 2, 2015 was $2.3 million as compared with an adjusted EBITDA¹ loss of $4.1 million for the three months ended May 3, 2014, an increase of $6.4 million.  The reduction of the net loss and the improvement of the adjusted EBITDA¹ was primarily attributable to improved gross margins and reduced operating costs both at store level and head office in the first quarter ended May 2, 2015.

Dividend
At the Board of Directors meeting held on June 2, 2015, 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 30, 2015 to shareholders of record on July 16, 2015.

Sales for the four weeks ended May 30, 2015
Sales for the month of May (the four weeks ended May 30, 2015) decreased 2.3% with same store sales¹ increasing 1.5%, mall and power centre stores decreasing 0.4% and e-commerce sales increasing 70.9%.

About Reitmans (Canada) Limited
The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 810 stores consisting of 337 Reitmans, 138 Penningtons, 107 Addition Elle, 78 RW & CO., 68 Thyme Maternity and 82 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
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, realized gains or losses on disposal of available-for-sale financial assets, interest expense, depreciation, amortization and net impairment losses.  The following table reconciles the most comparable GAAP measure, net earnings, 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 and interest income eliminates the impact of revenue 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 May 2, 2015 and May 3, 2014:

(in millions of Canadian dollars) (unaudited)	May 2, 2015		May 3, 2014
Net loss	$	(7.7)	$	(13.4)
Depreciation, amortization and net impairment losses		11.9		13.5
Dividend income		(0.7)		(0.7)
Interest income		(0.2)		(0.2)
Net change in fair value of marketable securities		1.2		-
Interest expense		0.1		0.1
Income tax recovery		(2.3)		(3.4)
ADJUSTED EBITDA	$	2.3	$	(4.1)
ADJUSTED EBITDA as % of Sales		1.1%		(2.0%)

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, including those described in the Operating Risk Management and Financial Risk Management sections of the Company's Management Discussion and Analysis.  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.  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.  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 first quarter ended May 2, 2015 are available on the SEDAR website at www.sedar.com.

Montreal, June 2, 2015

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
		May 2, 2015		May 3, 2014
Sales		$	201,731	$	206,478
Cost of goods sold			81,636		86,708
Gross profit			120,095		119,770
Selling and distribution expenses			118,881		125,261
Administrative expenses			11,378		11,138
Results from operating activities			(10,164)		(16,629)
Finance income			1,477		830
Finance costs			1,250		1,041
Loss before income taxes			(9,937)		(16,840)
Income tax recovery			2,266		3,425
Net loss		$	(7,671)	$	(13,415)
Loss per share:
	Basic	$	(0.12)	$	(0.21)
	Diluted		(0.12)		(0.21)

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
			For the three months ended
			May 2, 2015		May 3, 2014
Net loss			$	(7,671)	$	(13,415)
Other comprehensive (loss) income
	Items that are or may be reclassified subsequently to net earnings:
		Net change in fair value of available for sale financial assets (net of tax of $313 for 2014)		-		2,050
		Net loss on derivatives designated as cash flow hedges (net of tax of $1,506; 2014 - nil)		(4,169)		-
		Foreign currency translation differences		182		(173)
Total other comprehensive (loss) income				(3,987)		1,877
Total comprehensive loss			$	(11,658)	$	(11,538)

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			May 2, 2015		May 3, 2014		January 31, 2015
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	67,658	$	67,848	$	139,913
	Marketable securities			58,933		54,996		57,364
	Trade and other receivables			6,095		7,131		4,599
	Derivative financial asset			5,458		4,627		20,635
	Income taxes recoverable			2,992		9,069		1,977
	Inventories			134,977		120,742		106,440
	Prepaid expenses			24,396		25,762		12,148
		Total Current Assets		300,509		290,175		343,076
NON-CURRENT ASSETS
	Property and equipment			147,461		170,445		152,349
	Intangible assets			20,997		17,440		20,077
	Goodwill			42,426		42,426		42,426
	Deferred income taxes			30,397		30,471		26,463
		Total Non-Current Assets		241,281		260,782		241,315
TOTAL ASSETS			$	541,790	$	550,957	$	584,391
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	70,442	$	72,590	$	91,719
	Derivative financial liability			132		2,946		96
	Deferred revenue			16,115		15,527		21,073
	Current portion of long-term debt			1,808		1,698		1,780
		Total Current Liabilities		88,497		92,761		114,668
NON-CURRENT LIABILITIES
	Other payables			9,491		11,323		9,903
	Deferred lease credits			12,120		14,774		13,178
	Long-term debt			3,088		4,898		3,551
	Pension liability			22,218		18,464		21,968
		Total Non-Current Liabilities		46,917		49,459		48,600
SHAREHOLDERS' EQUITY
	Share capital			39,229		39,227		39,227
	Contributed surplus			8,152		7,261		8,014
	Retained earnings			357,681		353,016		368,241
	Accumulated other comprehensive income			1,314		9,233		5,641
		Total Shareholders' Equity		406,376		408,737		421,123
TOTAL LIABILITIES AND
	SHAREHOLDERS' EQUITY		$	541,790	$	550,957	$	584,391

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 1, 2015		$	39,227	$	8,014	$	368,241	$	5,641	$	421,123
IFRS 9 (2014) adoption adjustment							340		(340)		-
Adjusted balance as at February 1, 2015			39,227		8,014		368,581		5,301		421,123
Total comprehensive loss for the period
	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)
Contributions by (distributions to) owners of the Company
	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
Balance as at February 2, 2014		$	39,227	$	7,188	$	369,660	$	7,356	$	423,431
Total comprehensive loss for the period
	Net loss						(13,415)				(13,415)
	Total other comprehensive income								1,877		1,877
Total comprehensive loss for the period			-		-		(13,415)		1,877		(11,538)
Contributions by (distributions to) owners of the Company
	Share-based compensation costs				73						73
	Dividends						(3,229)				(3,229)
Total contributions by (distributions to) owners of the Company			-		73		(3,229)		-		(3,156)
Balance as at May 3, 2014		$	39,227	$	7,261	$	353,016	$	9,233	$	408,737

REITMANS (CANADA) LIMITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the three months ended
			May 2, 2015		May 3, 2014
CASH FLOWS USED IN OPERATING ACTIVITIES
	Net loss		$	(7,671)	$	(13,415)
	Adjustments for:
		Depreciation, amortization and net impairment losses		11,880		13,467
		Share-based compensation costs		138		73
		Amortization of deferred lease credits		(1,443)		(1,029)
		Deferred lease credits		385		196
		Pension contribution		(275)		(287)
		Pension expense		525		492
		Realized loss on sale of marketable securities		-		24
		Impairment loss on available-for-sale financial assets		-		10
		Net change in fair value of marketable securities		1,168		-
		Net change in fair value of derivatives		9,536		7,029
		Foreign exchange gain on cash and cash equivalents		(946)		(680)
		Interest and dividend income, net		(785)		(698)
		Interest paid		(82)		(108)
		Interest received		252		198
		Dividends received		613		810
		Income tax recovery		(2,266)		(3,425)
				11,029		2,657
	Changes in:
		Trade and other receivables		(1,494)		(916)
		Inventories		(28,537)		(11,141)
		Prepaid expenses		(12,248)		(13,250)
		Trade and other payables		(19,469)		(18,128)
		Deferred revenue		(4,958)		(4,471)
	Cash used in operating activities			(55,677)		(45,249)
	Income taxes received			2		-
	Income taxes paid			(1,178)		(2,195)
	Net cash flows used in operating activities			(56,853)		(47,444)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities			(2,736)		(105)
	Proceeds on sale of marketable securities			-		2,500
	Proceeds on sale of trademarks			-		29
	Additions to property and equipment and intangible assets			(10,132)		(6,335)
	Cash flows used in investing activities			(12,868)		(3,911)
CASH FLOWS USED IN FINANCING ACTIVITIES
	Dividends paid			(3,229)		(3,229)
	Repayment of long-term debt			(435)		(407)
	Proceeds from issue of share capital			2		-
	Cash flows used in financing activities			(3,662)		(3,636)
FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN CURRENCY				1,128		484
NET DECREASE IN CASH AND CASH EQUIVALENTS				(72,255)		(54,507)
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				139,913		122,355
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	67,658	$	67,848

SOURCE Reitmans (Canada) Limited

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