Reitmans (Canada) Limited Reports First Quarter Results and Announces its Intention to Launch a Normal Course Issuer Bid

Earnings conference call and webcast on June 19, 2024, at 8:30 a.m. Eastern Time

MONTREAL, June 18, 2024 /CNW/ - Reitmans (Canada) Limited ("RCL" or the "Company") (TSXV: RET) (TSXV: RET-A), one of Canada's leading specialty apparel retailers, today reported its financial results for its fiscal 2025 first quarter and announced its intention to initiate a Normal Course Issuer Bid ("NCIB") to purchase up to approximately 10% of the issued and outstanding Class A non-voting shares of the Company (the "Non-Voting Shares"). Unless otherwise indicated, all comparisons of results for the 13 weeks ended May 4, 2024 ("first quarter of 2025") are against results for the 13 weeks ended April 29, 2023 ("first quarter of 2024"). All dollar amounts are in Canadian currency.

First Quarter Highlights

• Net revenues were $165.7 million, on par with a year ago
• Gross profit margin increased 310 basis points to 56.7%
• Results from operating activities ("ROA") were $(1.2) million, an improvement of $2.4 million
• Net loss was $1.5 million, an improvement of $2.3 million

"We had a good start to fiscal 2025 with stable revenues and improved gross profit margins despite the challenging economic environment that persisted in what is typically our softest quarter of the year," said Andrea Limbardi, President and CEO of RCL. "Particularly notable contributions to the quarter were the Reitmans 'Paris' collection and The Birds Papaya collaboration both contributing to bringing exceptional styles to our customers at accessible price points. We are also pleased with the continued successful menswear business growth at RW&CO giving men great choices for elevated styles. Meanwhile, our teams continued to manage our inventory levels exceptionally well resulting in less promotional activity, which further contributed to improvements in our results from operating activities and our bottom line compared to the same time last year."

"Looking ahead, we have exciting modernization initiatives underway for fiscal 2025. These include continued development of our 3D design capabilities, launching a new point-of-sale system, and an investment of $14 million for streamlined handling equipment in our distribution facility. These initiatives will help support long-term growth for both our in-store and online operations."

Select Financial Information

(in millions of dollars, except for gross profit %)	First Quarter of
	2025	2024	Change
Net revenues^2	$165.7	$165.7	0.0 %
Gross Profit	$93.9	$88.8	5.7 %
Gross Profit %	56.7 %	53.6 %	310 bps
Selling, general and administrative expenses^2	$95.1	$92.4	2.9 %
ROA	$(1.2)	$(3.6)	66.7 %
Net Loss	$(1.5)	$(3.8)	60.5 %
Adjusted EBITDA^1	$0.9	$(1.2)	n/a

^1	This is a Non-GAAP Financial Measure. See "Non-GAAP Financial Measures & Supplementary Financial Measures" for reconciliations of these measures.
^2	For the first quarter of 2024, shipping revenues of $0.7 million were reclassified from selling, general and administrative expenses to net revenues. See Note 17 of the unaudited condensed consolidated interim financial statements for the first quarter of 2025. For the first quarter of 2024, selling, general and administrative expenses were previously captioned selling, distribution and administrative expenses.

Balance Sheet Data	As at
(in millions of dollars)	May 4, 2024	February 3, 2024
Cash	$    98.9	$ 116.7
Inventories	127.6	122.0
Total current assets	253.1	259.9
Property and equipment and intangible      assets	71.3	71.2
Right-of-use assets	130.6	131.5
Total assets	483.4	490.8
Total current liabilities	99.7	105.5
Total non-current liabilities	105.7	106.3
Shareholders' equity	278.0	279.0

First Quarter Overview

Net revenues of $165.7 million were comparable to the first quarter of 2024 despite 14 less stores. Although Canadian consumers continued to tighten discretionary spending, net revenues were maintained mainly through improved sales dollar per transaction. Comparable sales¹, which include e-commerce net revenues, decreased 4.6% during the first quarter of 2025, primarily due to lower online traffic.

Gross profit increased $5.1 million year-over-year to $93.9 million. Gross profit as a percentage of net sales increased to 56.7% from 53.6% a year earlier. The increase in gross profit and in gross profit as a percentage of sales is primarily attributable to lower promotional activity and changes in product mix sold during the first quarter of 2025 as compared to the first quarter of 2024.

ROA improved by $2.4 million, or 66.7%, to $(1.2) million as compared with $(3.6) million for the first quarter of 2024. The improvement was primarily attributable to the increase in gross profit, partially offset by an increase in operating costs.

Net loss was $1.5 million ($0.03 basic and diluted loss per share) as compared with a net loss of $3.8 million ($0.08 basic and diluted loss per share) for the first quarter of 2024. The improvement of $2.3 million is primarily attributable to the improved ROA. 

Adjusted EBITDA was $0.9 million as compared to $(1.2) million for the first quarter of 2024. The improvement of $2.1 million was primarily attributable to the increase in gross profits, partially offset by an increase in operating costs.

Normal Course Issuer Bid

The Company intends to make a NCIB through the facilities of the TSX Venture Exchange to purchase up to 3,278,582 Non-Voting Shares, which would represent approximately 10% of the issued and outstanding Non-Voting Shares. The NCIB will be conducted through BMO Nesbitt Burns Inc. and is expected to take place over a period of 12 months. The extent to which the Company repurchases its shares and the timing of such purchases will depend upon market conditions and other corporate considerations. The NCIB is subject to regulatory approval.

Conference Call

The Company will conduct a conference call to discuss information included in this news release, company performance, and related matters at 8:30 a.m. Eastern Time on June 19, 2024. All interested parties may join the conference call by dialing 1-844-763-8274 or 647-484-8814 approximately 15 minutes prior to the call to secure a line. The conference call will be available simultaneously and in its entirety to all interested investors and the news media through a webcast at https://www.reitmanscanadalimited.com/events-presentations.aspx?lang=en and will be available for replay at this website for 12 months.

Annual General Meeting

The Company will hold its Annual General Meeting of Shareholders on Wednesday, June 19, 2024, at 11:00 a.m. Eastern Time at 5555 Henri-Bourassa Blvd. West, St-Laurent, Québec H4R 3E6.

About Reitmans (Canada) Limited

Reitmans (Canada) Limited ("RCL") is one of Canada's leading specialty apparel retailers for women and men, with retail outlets throughout the country. The Company operates 392 stores under three distinct banners consisting of 227 Reitmans, 85 PENN.Penningtons, and 80 RW&CO.

For more information, visit www.reitmanscanadalimited.com.

For further information, please contact:

¹NON-GAAP Financial Measures & Supplementary Financial Measures

This press announcement makes reference to certain non-GAAP measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for the Company's analysis of its financial information reported under IFRS.

NON-GAAP Financial Measures

This press announcement discusses the following non-GAAP financial measures: adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). This press announcement also indicates Adjusted EBITDA as a percentage of net revenues and is considered a non-GAAP financial ratio. Net revenues represent the sale of merchandise less discounts and returns ("net sales") and includes shipping fees charged to customers on e-commerce orders. The intent of presenting Adjusted EBITDA is to provide additional useful information to investors and analysts. Adjusted EBITDA is currently defined as net earnings before income tax expense/recovery, interest income, interest expense, loss on foreign currency translation differences reclassified to net earnings, depreciation, amortization, net impairment of non-financial assets, adjusted for the impact of certain items, including a deduction of interest expense and depreciation relating to leases accounted for under IFRS 16, Leases. 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 this metric for this purpose. Management believes that Adjusted EBITDA as a percentage of net revenues indicates how much liquidity is generated for each dollar of net revenues. The exclusion of interest income and expenses, other than interest expense related to lease liabilities as explained hereafter, eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation, amortization and net impairment charges, other than depreciation related to right-of-use assets as explained hereafter, eliminates the non-cash impact, and the exclusion of the loss on foreign currency translation differences reclassified to net earnings/loss presents the results of the on-going business. Under IFRS 16, Leases, the characteristics of some leases result in lease payments being recognized in net earnings in the period in which the performance or use occurs while other leases are recorded as right-of-use assets with a corresponding lease liability recognized, which results in depreciation of those assets and interest expense from those liabilities. Management is presenting its Adjusted EBITDA to reflect the payments of its store and equipment lease obligations on a consistent basis. As such, the initial add-back of depreciation of right-of-use assets and interest on lease obligations are removed from the calculation of Adjusted EDITDA, as this better reflects the operational cash flow impact of its leases.

Reconciliation of NON-IFRS Measures

The tables below provide a reconciliation of net loss to Adjusted EBITDA:

	For the first quarter of
	2025	2024
Net loss	$      (1.5)	$    (3.8)
Depreciation, amortization and net impairment losses on property and    equipment, and intangible assets	4.1	3.6
Depreciation on right-of-use assets	9.3	7.8
Interest income	(1.1)	(0.9)
Interest expense on lease liabilities	2.5	1.6
Loss on foreign currency translation differences reclassified to net loss	-	1.0
Income tax recovery	(0.6)	(1.1)
Rent impact from IFRS 16, Leases^1	(11.8)	(9.4)
Adjusted EBITDA	$        0.9	$    (1.2)
Adjusted EBITDA as % of Net revenues	0.5 %	(0.7) %

¹ Rent Impact from IFRS 16, Leases is comprised as follows;

	For the first quarter of
	2025	2024
Depreciation on right-of use assets	$       9.3	$      7.8
Interest expense on lease liabilities	2.5	1.6
Rent impact from IFRS 16, Leases	$     11.8	$      9.4

Supplementary Financial Measures

The Company uses a key performance indicator ("KPI"), comparable sales, to assess store performance and sales growth. The Company engages in an omnichannel approach in connecting with its customers by appealing to their shopping habits through either online or store channels.  This approach allows customers to shop online for home delivery or to pick up in store, purchase in any of our store locations or ship to home from another store when the products are unavailable in a particular store.  Due to customer cross-channel behavior, the Company reports a single comparable sales metric, inclusive of store and e-commerce channels. Comparable sales are defined as net sales generated by stores that have been continuously open during both of the periods being compared and include e-commerce net sales. The comparable sales metric compares the same calendar days for each period. Although this KPI is expressed as a ratio, it is a supplementary 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 comparable sales in evaluating the performance of stores and online net sales and considers it useful in helping to determine what portion of new net sales has come from sales growth and what portion can be attributed to the opening of new stores. Comparable sales is a measure widely used amongst retailers and is considered useful information for both investors and analysts. Comparable sales should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

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, including statements on the Company's financial position and operations, and are based on several assumptions which give rise to the possibility that actual results could differ materially from the Company's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved.  Consequently, the Company cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits the Company will derive from them. Forward-looking statements are provided in this press announcement for the purpose of giving information about management's current expectations and plans as of the date of this press announcement and allowing investors and others to get a better understanding of the Company's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose. 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 contains forward-looking statements about the Company's objectives, plans, goals, expectations, aspirations, strategies, financial condition, results of operations, cash flows, performance, prospects, opportunities and the risks related to the NCIB, including regulatory approval and other 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 belief in its strategies and its brands and their capacity to generate long-term profitable growth, 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 Management Discussion & Analysis ("MD&A") including those listed in the "Operating and Financial Risk Management" section of the 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 MD&A for the first quarter of 2025.

This is not an exhaustive list of the factors that may affect the Company's forward-looking statements. 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 first quarter of fiscal 2025 are available online at www.sedarplus.ca. 

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Reitmans (Canada) Ltd

For further information, please contact: Alexandra Cohen, VP, Corporate Communications, Reitmans (Canada) Limited, Telephone: [phone] ext 23737, Email: [email protected]; Richard Wait, Executive Vice-President and Chief Financial Officer, Reitmans (Canada) Limited, Telephone: [phone] ext 23050, Email: [email protected]