Reitmans (Canada) Limited Announces Year-End Results

MONTREAL, March 30, 2016 /CNW Telbec/ -

Year ended January 30, 2016

Sales for the year ended January 30, 2016 were $937.2 million as compared with $939.4 million for the year ended January 31, 2015, a decrease of 0.2%, despite a net reduction of 56 stores primarily attributable to the closure of Smart Set stores. Same store sales increased 5.1% with stores increasing 2.5% and e-commerce increasing 69.1%.

The Company's gross margin for the year ended January 30, 2016 decreased to 56.2% compared with 60.4% for the year ended January 31, 2015. Gross profit for the year ended January 30, 2016 decreased $40.2 million or 7.1% to $527.1 million as compared with $567.3 million for the year ended January 31, 2015, with the weakness of the Canadian dollar vis-à-vis the U.S. dollar negatively impacting gross profit by approximately $36.4 million.

Results from operating activities for the year ended January 30, 2016 was a loss of $17.7 million as compared with income of $12.5 million for the year ended January 31, 2015, a decrease of $30.2 million.  In addition to the impact of the weakness of the Canadian dollar was a goodwill impairment expense of $4.2 million.

Net loss for the year ended January 30, 2016 was $24.7 million ($0.39 basic and diluted loss per share) as compared with net earnings of $13.4 million ($0.21 basic and diluted earnings per share) for the year ended January 31, 2015.  Included in net loss is a $16.1 million loss due to a net change in fair value of marketable securities ($3.4 million net gain for the year ended January 31, 2015). For the year ended January 30, 2016, adjusted EBITDA¹ was $36.8 million as compared with $64.8 million in the year ended January 31, 2015, a decrease of $28.0 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 as noted above.

Three months ended January 30, 2016

Sales for the three months ended January 30, 2016 were $242.2 million as compared with $236.3 million for the three months ended January 31, 2015, an increase of 2.5%, despite a net reduction of 56 stores primarily attributable to the closure of Smart Set stores.  Same store sales increased 9.0% with stores increasing 6.3% and e-commerce increasing 54.0%.

The Company's gross margin for the three months ended January 30, 2016 decreased to 53.6% from 61.0% for the three months ended January 31, 2015. Gross profit for the three months ended January 30, 2016 decreased $14.3 million or 9.9% to $129.8 million as compared with $144.1 million for three months ended January 31, 2015, with the weakness of the Canadian dollar vis-à-vis the US dollar negatively impacting gross profit by approximately $14.7 million.

Results from operating activities for the three months ended January 30, 2016 was a loss of $13.2 million as compared with income of $4.1 million for the three months ended January 31, 2015, a decrease of $17.3 million.  In addition to the impact of the weakness of the Canadian dollar was a goodwill impairment expense of $4.2 million.

Net loss for the three months ended January 30, 2016 was $16.5 million ($0.26 basic and diluted loss per share) as compared with net earnings of $4.4 million ($0.07 basic and diluted earnings per share) for the three months ended January 31, 2015. Included in net loss is a $5.4 million loss due to a net change in fair value of marketable securities ($3.2 million net gain for the three months ended January 31, 2015). Adjusted EBITDA¹ for the three months ended January 30, 2016 was $2.0 million as compared with $14.2 million for the three months ended January 31, 2015, a decrease of $12.2 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 as noted above.

Dividends

At the Board of Directors meeting held on March 30, 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 April 28, 2016 to shareholders of record on April 14, 2016.

About Reitmans (Canada) Limited

The Company is a leading ladieswear specialty apparel retailer with retail outlets throughout Canada.  The Company operates 767 stores consisting of 329 Reitmans, 134 Penningtons, 107 Addition Elle, 83 RW & CO., 68 Thyme Maternity, 17 Hyba and 29 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, realized gains or losses on disposal 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, net change in fair value of marketable securities and realized gains or losses on disposal 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) earnings to adjusted EBITDA for the three and twelve months ended January 30, 2016 and January 31, 2015:

(in millions of Canadian dollars) (unaudited)	For the three months ended				For the years ended
	January 30, 2016		January 31, 2015		January 30, 2016		January 31, 2015
Net (loss) earnings	$	(16.5)	$	4.4	$	(24.7)	$	13.4
Depreciation, amortization and net impairment losses	9.8		12.3		45.5		54.0
Dividend income	(0.6)		(0.4)		(2.6)		(2.3)
Interest income	(0.2)		(0.4)		(0.6)		(1.0)
Realized gains on disposal of available-for-sale financial assets	-		(4.0)		-		(4.8)
Impairment of goodwill	4.2		-		4.2		-
Net change in fair value of marketable securities	5.4		-		16.1		-
Impairment losses on available-for-sale financial assets	-		0.4		-		1.0
Interest expense	0.1		0.1		0.3		0.4
Income tax (recovery) expense	(0.2)		1.8		(1.4)		4.1
ADJUSTED EBITDA	$	2.0	$	14.2	$	36.8	$	64.8
ADJUSTED EBITDA as % of Sales	0.83%		5.99%		3.93%		6.90%

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 Risk Management" and "Financial Risk Management" sections 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 year ended January 30, 2016 are available online at www.sedar.com.

Montreal, March 30, 2016

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

REITMANS (CANADA) LIMITED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts)
		For the three months ended				For the years ended
		January 30, 2016		January 31, 2015		January 30, 2016		January 31, 2015
Sales		$	242,156	$	236,277	$	937,155	$	939,376
Cost of goods sold		112,328		92,173		410,035		372,033
Gross profit		129,828		144,104		527,120		567,343
Selling and distribution expenses		130,466		127,303		497,854		506,156
Administrative expenses		12,562		12,658		46,950		48,691
Results from operating activities		(13,200)		4,143		(17,684)		12,496
Finance income		1,926		4,831		7,998		8,112
Finance costs		5,469		2,738		16,443		3,081
(Loss) earnings before income taxes		(16,743)		6,236		(26,129)		17,527
Income tax recovery (expense)		202		(1,829)		1,426		(4,112)
Net (loss) earnings		$	(16,541)	$	4,407	$	(24,703)	$	13,415
(Loss) earnings per share:
	Basic	$	(0.26)	$	0.07	$	(0.39)	$	0.21
	Diluted	(0.26)		0.07		(0.39)		0.21

REITMANS (CANADA) LIMITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars)
			For the three months ended				For the years ended
			January 30, 2016		January 31, 2015		January 30, 2016		January 31, 2015
Net (loss) earnings			$	(16,541)	$	4,407	$	(24,703)	$	13,415
Other comprehensive income (loss)
	Items that are or may be reclassified subsequently to net earnings:
		Available-for-sale financial assets (net of tax of $1,168 for the three months and $1,069 for the twelve months ended January 31, 2015)	-		(7,636)		-		(6,987)
		Cash flow hedges (net of tax of $1,469 for the three months and $564 for the twelve months ended January 30, 2016; $2,177 for the three months and for the twelve months ended January 31, 2015)	3,974		6,026		1,488		6,026
		Foreign currency translation differences	(276)		(491)		(395)		(754)
			3,698		(2,101)		1,093		(1,715)
	Items that will not be reclassified to net earnings:
		Actuarial gain (loss) on defined benefit plan (net of tax of $837 for the three months and twelve months ended January 30, 2016; $692 for the three and twelve months ended January 31, 2015)	2,355		(1,917)		2,355		(1,917)
Total other comprehensive income (loss)			6,053		(4,018)		3,448		(3,632)
Total comprehensive (loss) income			$	(10,488)	$	389	$	(21,255)	$	9,783

REITMANS (CANADA) LIMITED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars)
						As at January 30, 2016		As at January 31, 2015
ASSETS
CURRENT ASSETS
	Cash and cash equivalents					$	118,595	$	139,913
	Marketable securities					45,189		57,364
	Trade and other receivables					4,103		4,599
	Derivative financial asset					14,405		20,635
	Income taxes recoverable					3,301		1,977
	Inventories					124,848		106,440
	Prepaid expenses					8,921		12,148
			Total Current Assets			319,362		343,076
NON-CURRENT ASSETS
		Property and equipment				134,363		152,349
		Intangible assets				24,347		20,077
		Goodwill				38,183		42,426
		Deferred income taxes				25,828		26,463
			Total Non-Current Assets			222,721		241,315
TOTAL ASSETS						$	542,083	$	584,391
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
		Trade and other payables				$	98,135	$	91,719
		Derivative financial liability				1,816		96
		Deferred revenue				19,325		21,073
		Current portion of long-term debt				1,896		1,780
				Total Current Liabilities		121,172		114,668
NON-CURRENT LIABILITIES
		Other payables				8,112		9,903
		Deferred lease credits				10,640		13,178
		Long-term debt				1,655		3,551
		Pension liability				19,336		21,968
				Total Non-Current Liabilities		39,743		48,600
SHAREHOLDERS' EQUITY
		Share capital				38,397		39,227
		Contributed surplus				9,007		8,014
		Retained earnings				327,370		368,241
		Accumulated other comprehensive income				6,394		5,641
				Total Shareholders' Equity		381,168		421,123
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY						$	542,083	$	584,391

REITMANS (CANADA) LIMITED 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 October 31, 2015	$	38,687	$	8,809	$	346,189	$	2,696	$	396,381
Net loss	-		-		(16,541)		-		(16,541)
Total other comprehensive loss	-		-		2,355		3,698		6,053
Total comprehensive (loss) income for the period	-		-		(14,186)		3,698		(10,488)
Cancellation of shares pursuant to share repurchase program	(290)		-		-		-		(290)
Share-based compensation costs	-		198		-		-		198
Dividends	-		-		(3,166)		-		(3,166)
Premium on repurchase of Class A non-voting shares	-		-		(1,467)		-		(1,467)
Total (distributions to) contributions by owners of the Company	(290)		198		(4,633)		-		(4,725)
Balance as at January 30, 2016	$	38,397	$	9,007	$	327,370	$	6,394	$	381,168
Balance as at February 1, 2015	$	39,227	$	8,014	$	368,241	$	5,641	$	421,123
Impact of adopting IFRS 9 (2014)	-		-		340		(340)		-
Adjusted balance as at February 1, 2015	39,227		8,014		368,581		5,301		421,123
Net loss	-		-		(24,703)		-		(24,703)
Total other comprehensive income	-		-		2,355		1,093		3,448
Total comprehensive (loss) income for the year	-		-		(22,348)		1,093		(21,255)
Cash consideration on exercise of share options	2		-		-		-		2
Cancellation of shares pursuant to share repurchase program	(832)		-		-		-		(832)
Share-based compensation costs	-		993		-		-		993
Dividends	-		-		(12,782)		-		(12,782)
Premium on repurchase of Class A non-voting shares	-		-		(6,081)		-		(6,081)
Total (distributions to) contributions by owners of the Company	(830)		993		(18,863)		-		(18,700)
Balance as at January 30, 2016	$	38,397	$	9,007	$	327,370	$	6,394	$	381,168

REITMANS (CANADA) LIMITED 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 November 2, 2014	$	39,227	$	7,847	$	368,980	$	7,742	$	423,796
Net earnings	-		-		4,407		-		4,407
Total other comprehensive loss	-		-		(1,917)		(2,101)		(4,018)
Total comprehensive income for the period	-		-		2,490		(2,101)		389
Share-based compensation costs	-		167		-		-		167
Dividends	-		-		(3,229)		-		(3,229)
Total contributions by (distributions to) owners of the Company	-		167		(3,229)		-		(3,062)
Balance as at January 31, 2015	$	39,227	$	8,014	$	368,241	$	5,641	$	421,123
Balance as at February 2, 2014	$	39,227	$	7,188	$	369,660	$	7,356	$	423,431
Net earnings	-		-		13,415		-		13,415
Total other comprehensive loss	-		-		(1,917)		(1,715)		(3,632)
Total comprehensive income for the year	-		-		11,498		(1,715)		9,783
Share-based compensation costs	-		826		-		-		826
Dividends	-		-		(12,917)		-		(12,917)
Total contributions by (distributions to) owners of the Company	-		826		(12,917)		-		(12,091)
Balance as at January 31, 2015	$	39,227	$	8,014	$	368,241	$	5,641	$	421,123

REITMANS (CANADA) LIMITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars)
					For the three months ended				For the years ended
					January 30, 2016		January 31, 2015		January 30, 2016		January 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
	Net (loss) earnings				$	(16,541)	$	4,407	$	(24,703)	$	13,415
	Adjustments for:
		Depreciation, amortization and net impairment losses			9,835		12,265		45,534		54,038
		Impairment of goodwill			4,243		-		4,243		-
		Share-based compensation costs			198		167		993		826
		Amortization of deferred lease credits			(742)		(994)		(4,365)		(3,935)
		Deferred lease credits			(25)		(122)		1,827		1,506
		Pension contribution			(343)		(166)		(1,531)		(875)
		Pension expense			516		499		2,091		1,975
		Realized gain on sale of marketable securities			-		(4,045)		-		(4,820)
		Impairment loss on marketable securities			-		384		-		958
		Net change in fair value of marketable securities			5,408		-		16,157		-
		Net change in fair value of derivatives			-		(8,650)		12,335		(3,625)
		Foreign exchange loss (gain)			3,122		(532)		(4,687)		(2,120)
		Interest and dividend income, net			(765)		(698)		(2,860)		(2,898)
		Interest paid			(61)		(88)		(286)		(394)
		Interest received			158		341		650		904
		Dividends received			631		564		2,515		2,473
		Income tax (recovery) expense			(202)		1,829		(1,426)		4,112
					5,432		5,161		46,487		61,540
	Changes in:
				Trade and other receivables	341		877		(223)		713
				Inventories	17,769		17,884		(18,408)		3,161
				Prepaid expenses	1,035		672		3,227		364
				Trade and other payables	4,543		9,128		6,099		(3,007)
				Deferred revenue	8,048		8,651		(1,748)		1,075
	Cash from operating activities				37,168		42,373		35,434		63,846
	Income taxes received				53		876		1,914		6,009
	Income taxes paid				(643)		(871)		(2,578)		(4,743)
	Net cash flows from operating activities				36,578		42,378		34,770		65,112
CASH FLOWS USED IN INVESTING ACTIVITIES
	Purchases of marketable securities				-		(39,719)		(5,660)		(39,904)
	Proceeds on sale of marketable securities				-		25,586		1,678		33,408
	Proceeds on sale of trademarks				1,038		941		1,038		1,025
	Additions to property and equipment and intangible assets				(5,835)		(6,769)		(33,354)		(28,960)
	Proceeds on disposal of property and equipment and intangibles				63		101		63		101
	Cash flows used in investing activities				(4,734)		(19,860)		(36,235)		(34,330)
CASH FLOWS USED IN FINANCING ACTIVITIES
	Dividends paid				(3,166)		(3,229)		(12,782)		(12,917)
	Purchase of Class A non-voting shares for cancellation				(1,757)		-		(6,913)		-
	Repayment of long-term debt				(457)		(429)		(1,780)		(1,672)
	Proceeds from issue of share capital				-		-		2		-
	Cash flows used in financing activities				(5,380)		(3,658)		(21,473)		(14,589)
FOREIGN EXCHANGE (LOSS) GAIN ON CASH HELD IN FOREIGN CURRENCY					(5,061)		39		1,620		1,365
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS					21,403		18,899		(21,318)		17,558
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD					97,192		121,014		139,913		122,355
CASH AND CASH EQUIVALENTS, END OF THE PERIOD					$	118,595	$	139,913	$	118,595	$	139,913

SOURCE Reitmans (Canada) Limited

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