Reitmans (Canada) Limited Announces Year-End Results

MONTREAL, March 28, 2012 /CNW Telbec/ - Sales for the year ended January 28, 2012 ("fiscal 2012") decreased 3.7% to $1,019,397,000 as compared with $1,059,000,000 for the year ended January 29, 2011 ("fiscal 2011"). Same store sales decreased 4.3%.  Sales continued to be challenging for fiscal 2012 as consumer spending on apparel was impacted by reduced discretionary consumer income.  The Company's gross margin decreased from 66.9% in fiscal 2011 to 64.4% in fiscal 2012.  Improvement in the gross margin attributable to the strength of the Canadian dollar in fiscal 2012 was offset by increased promotional activity.  For fiscal 2012, adjusted EBITDA¹ decreased to $126,788,000 as compared with $184,369,000 for fiscal 2011. Net earnings decreased 46.6% to $47,539,000 or $0.72 diluted earnings per share as compared with $88,985,000 or $1.32 diluted earnings per share last year.

Sales for the fourth quarter of fiscal 2012 decreased 3.3% to $259,954,000 as compared with $268,714,000 for the fourth quarter of fiscal 2011.  Same store sales for the fourth quarter decreased 1.7%.  The Company's gross margin decreased from 64.6% for the fourth quarter of fiscal 2011 to 60.4% for the fourth quarter of fiscal 2012.  Increased promotional activity in the fourth quarter of fiscal 2012 was the major contributor to lower margins.  In the fourth quarter of fiscal 2012, adjusted EBITDA¹ decreased to $22,021,000 as compared with $35,394,000 for the fourth quarter of fiscal 2011. Net earnings for the fourth quarter of fiscal 2012 decreased 66.2% to $4,674,000 or $0.07 diluted earnings per share as compared with $13,817,000 or $0.21 diluted earnings per share for the fourth quarter of fiscal 2011.

On October 19, 2011 the Company announced the closure of its 25 Cassis stores of which approximately 12 stores will be converted to other banners.  In fiscal 2012, the Company has recorded costs associated with Cassis store conversions and closures, primarily related to fixed asset impairment losses and employee severance costs, of approximately $4,400,000 after tax.

During the year, the Company opened 30 new stores and closed 56. Accordingly, at January 28, 2012, there were 942 stores in operation, consisting of 362 Reitmans, 150 Smart Set, 66 RW & CO., 76 Thyme Maternity, 152 Penningtons, 116 Addition Elle, and 20 Cassis as compared with a total of 968 stores as at January 29, 2011.

At the Board of Directors meeting held on March 28, 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 April 26, 2012 to shareholders of record on April 13, 2012.

Effective for the first quarter ended April 30, 2011, Reitmans began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"), including comparative information. Previously reported financial results prepared in accordance with Canadian generally accepted accounting principles ("GAAP") have been presented to conform to the new standards adopted.

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 earnings before income taxes for the twelve and three months ended January 28, 2012 and January 29, 2011:

(Unaudited)	For the twelve months ended				For the three months ended
(in thousands)	January 28, 2012		January 29, 2011		January 28, 2012		January 29, 2011
Earnings before income taxes	$	65,872	$	127,802	$	6,700	$	20,618
Dividend income		(3,462)		(2,640)		(864)		(699)
Interest income		(1,367)		(1,225)		(419)		(492)
Realized gain on disposal of available-for-sale financial assets		-		(167)		-		(167)
Impairment losses on available-for-sale financial assets		73		78		-		78
Interest expense		682		767		162		184
Depreciation, amortization and net impairment losses related to property and equipment		64,990		59,754		16,442		15,872
ADJUSTED EBITDA	$	126,788	$	184,369	$	22,021	$	35,394

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 complete financial statements including notes and Management's Discussion and Analysis for the year ended January 28, 2012 are available online at www.sedar.com.

Montreal, March 28, 2012
Jeremy H. Reitman Chairman and Chief Executive Officer
Telephone:	[phone]
Corporate Website:	www.reitmans.ca

REITMANS (CANADA) LIMITED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts)
		For the years ended				For the three months ended
		January 28, 2012		January 29, 2011		January 28, 2012		January 29, 2011
Sales		$	1,019,397	$	1,059,000	$	259,954	$	268,714
Cost of goods sold			363,333		350,671		102,959		95,213
Gross profit			656,064		708,329		156,995		173,501
Selling and distribution expenses			547,367		528,676		138,420		137,637
Administrative expenses			46,878		55,511		13,351		15,978
Results from operating activities			61,819		124,142		5,224		19,886
Finance income			5,562		4,505		2,392		1,358
Finance costs			1,509		845		916		626
Earnings before income taxes			65,872		127,802		6,700		20,618
Income taxes			18,333		38,817		2,026		6,801
Net earnings		$	47,539	$	88,985	$	4,674	$	13,817
Earnings per share:
	Basic	$	0.72	$	1.33	$	0.07	$	0.21
	Diluted		0.72		1.32		0.07		0.21

REITMANS (CANADA) LIMITED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
		For the years ended				For the three months ended
		January 28, 2012		January 29, 2011		January 28, 2012		January 29, 2011
Net earnings		$	47,539	$	88,985	$	4,674	$	13,817
Other comprehensive income:
	Net change in fair value of available-for-sale financial assets (net of tax of $79 for the year ended and $200 for the three months ended January 28, 2012; $427 for the year ended and $33 for the three months ended January 29, 2011)		530		2,866		1,338		223
	Reclassification of realized gains on available-for-sale financial assets to net earnings (net of tax of $22)		-		(145)		-		(145)
	Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $9 for the year ended January 28, 2012; $11 for the year and three months ended January 29, 2011)		64		67		-		67
	Defined benefit actuarial losses (net of tax of $1,041 for the year and three months ended January 28, 2012; $272 for the year and three months ended January 29, 2011)		(2,965)		(777)		(2,965)		(777)
	Total comprehensive income	$	45,168	$	90,996	$	3,047	$	13,185

REITMANS (CANADA) LIMITED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
			January 28, 2012		January 29, 2011		January 31, 2010
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	196,835	$	230,034	$	228,577
	Marketable securities			71,442		70,413		48,026
	Trade and other receivables			3,033		2,866		2,926
	Derivative financial asset			751		-		-
	Income taxes recoverable			4,735		-		-
	Inventories			78,285		73,201		63,127
	Prepaid expenses			11,902		12,491		11,010
		Total Current Assets		366,983		389,005		353,666
NON-CURRENT ASSETS
	Property and equipment			184,221		193,064		208,362
	Intangible assets			17,057		13,841		9,964
	Goodwill			42,426		42,426		42,426
	Deferred income taxes			23,174		21,021		18,313
		Total Non-Current Assets		266,878		270,352		279,065
TOTAL ASSETS			$	633,861	$	659,357	$	632,731
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Trade and other payables		$	63,875	$	64,093	$	54,684
	Derivative financial liability			1,505		-		-
	Deferred revenue			22,278		19,834		18,122
	Income taxes payable			-		5,998		4,677
	Current portion of long-term debt			1,474		1,384		1,300
		Total Current Liabilities		89,132		91,309		78,783
NON-CURRENT LIABILITIES
	Other payables			11,110		10,180		9,105
	Deferred revenue			-		2,384		2,686
	Deferred lease credits			17,317		19,011		20,609
	Long-term debt			8,573		10,047		11,431
	Pension liability			14,877		13,626		11,865
		Total Non-Current Liabilities		51,877		55,248		55,696
SHAREHOLDERS' EQUITY
	Share capital			39,890		29,614		25,888
	Contributed surplus			5,158		6,266		5,164
	Retained earnings			439,067		468,777		461,845
	Accumulated other comprehensive income			8,737		8,143		5,355
		Total Shareholders' Equity		492,852		512,800		498,252
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			$	633,861	$	659,357	$	632,731

REITMANS (CANADA) LIMITED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (in thousands of Canadian dollars)
		For the years ended
		January 28, 2012		January 29, 2011
SHARE CAPITAL
Balance, beginning of the year		$	29,614	$	25,888
	Cash consideration on exercise of share options		8,828		3,569
	Ascribed value credited to share capital from exercise of share options		2,228		888
	Cancellation of shares pursuant to share repurchase program		(780)		(731)
Balance, end of the year			39,890		29,614
CONTRIBUTED SURPLUS
Balance, beginning of the year			6,266		5,164
	Share-based compensation costs		1,120		1,990
	Ascribed value credited to share capital from exercise of share options		(2,228)		(888)
Balance, end of the year			5,158		6,266
RETAINED EARNINGS
Balance, beginning of the year			468,777		461,845
	Net earnings		47,539		88,985
	Dividends		(52,654)		(51,895)
	Premium on repurchase of Class A non-voting shares		(21,630)		(29,381)
	Defined benefit actuarial losses (net of tax of $1,041 for the year ended January 28, 2012; $272 for the year ended January 29, 2011)		(2,965)		(777)
Balance, end of the year			439,067		468,777
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance, beginning of the year			8,143		5,355
	Net change in fair value of available-for-sale financial assets (net of tax of $79 for the year ended January 28, 2012; $427 for the year ended January 29, 2011)		530		2,866
	Reclassification of realized gains on available-for-sale financial assets to net earnings (net of tax of $22)		-		(145)
	Reclassification of impairment loss on available-for-sale financial assets to net earnings (net of tax of $9 for the year ended January 28, 2012; $11 for the year ended January 29, 2011)		64		67
Balance, end of the year			8,737		8,143
Total Shareholders' Equity		$	492,852	$	512,800

REITMANS (CANADA) LIMITED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
			For the years ended				For the three months ended
			January 28, 2012		January 29, 2011		January 28, 2012		January 29, 2011
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
	Net earnings		$	47,539	$	88,985	$	4,674	$	13,817
	Adjustments for:
		Depreciation, amortization and impairment losses		64,990		59,754		16,442		15,872
		Share-based compensation costs		1,120		1,990		379		465
		Amortization of deferred lease credits		(4,635)		(4,956)		(1,167)		(1,225)
		Deferred lease credits		2,941		3,358		(29)		645
		Pension contribution		(4,245)		(629)		(3,429)		(164)
		Pension expense		1,490		1,341		352		327
		Realized gain on sale of marketable securities		-		(167)		-		(167)
		Impairment loss on available-for-sale financial assets		73		78		-		78
		Net change in fair value of derivatives		754		-		754		-
		Foreign exchange loss (gain)		2,942		(31)		149		(389)
		Interest and dividend income, net		(4,147)		(3,068)		(1,123)		(977)
		Interest paid		(682)		(797)		(160)		(214)
		Interest received		1,316		1,273		347		503
		Dividends received		3,460		2,546		868		729
		Income taxes		18,333		38,817		2,026		6,801
				131,249		188,494		20,083		36,101
	Changes in:
		Trade and other receivables		(114)		106		551		715
		Inventories		(5,084)		(10,074)		29,306		20,877
		Prepaid expenses		589		(1,481)		2,062		604
		Trade and other payables		504		9,073		(3,027)		(4,294)
		Deferred revenue		60		1,410		10,676		2,601
	Cash generated from operating activities			127,204		187,528		59,651		56,604
	Income taxes received			793		6,040		793		170
	Income taxes paid			(31,060)		(46,388)		-		(8,518)
	Net cash flows from operating activities			96,937		147,180		60,444		48,256
CASH FLOWS (USED IN) FROM INVESTING ACTIVITIES
	Purchases of marketable securities			(420)		(20,803)		(105)		(20,521)
	Proceeds on sale of marketable securities			-		1,709		-		1,709
	Additions to property and equipment and intangible assets			(59,154)		(46,922)		(15,931)		(6,465)
	Cash flows used in investing activities			(59,574)		(66,016)		(16,036)		(25,277)
CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES
	Dividends paid			(52,654)		(51,895)		(13,073)		(13,240)
	Purchase of Class A non-voting shares for cancellation			(22,410)		(30,112)		-		-
	Repayment of long-term debt			(1,384)		(1,300)		(355)		(334)
	Proceeds from exercise of share options			8,828		3,569		6,695		1,296
	Cash flows used in financing activities			(67,620)		(79,738)		(6,733)		(12,278)
FOREIGN EXCHANGE (LOSS) GAIN ON CASH HELD IN FOREIGN CURRENCY				(2,942)		31		(149)		389
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS				(33,199)		1,457		37,526		11,090
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD				230,034		228,577		159,309		218,944
CASH AND CASH EQUIVALENTS, END OF THE PERIOD			$	196,835	$	230,034	$	196,835	$	230,034

 

 

Jeremy H. Reitman
Chairman and Chief Executive Officer

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