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Press release from CNW Group

Reitmans (Canada) Limited announces its results for the three months ended April 30, 2011

Tuesday, May 31, 2011

Reitmans (Canada) Limited announces its results for the three months ended April 30, 201116:59 EDT Tuesday, May 31, 2011MONTREAL, May 31 /CNW Telbec/ - Sales for the first quarter ended April 30, 2011 decreased 7.0% to $219,296,000 as compared with $235,745,000 for the first quarter ended May 1, 2010. Same store sales decreased 8.7%. The first quarter ended April 30, 2011 yielded disappointing sales results primarily due to poor weather which resulted in a difficult retail environment marked by increased promotional activity. Other factors that contributed to the sales decline included the impact of higher gasoline prices reducing consumer disposable income for apparel purchases and a late Easter holiday that traditionally initiates increased sales of spring and summer merchandise. The Company's gross margin decreased from 67.8% to 65.8% for the quarter ended April 30, 2011. An improvement in the gross margin attributable to the strength of the Canadian dollar in the quarter ended April 30, 2011 was offset by a reduction due to increased promotional activity. Earnings before interest, taxes, depreciation and amortization and investment income ("EBITDA") decreased 47.7% to $19,503,000 as compared with $37,278,000 last year. Net earnings decreased 96.0% to $624,000 or $0.01 diluted earnings per share as compared with $15,770,000 or $0.23 diluted earnings per share last year.During the quarter, the Company opened 8 new stores comprised of 2 Reitmans, 2 Smart Set, 1 Thyme Maternity, 1 Cassis and 2 Addition Elle. Eleven stores were closed comprised of 3 Reitmans, 3 Smart Set, 3 Thyme Maternity, 1 Penningtons and 1 Addition Elle. Accordingly, at April 30, 2011, there were 965 stores in operation, consisting of 363 Reitmans, 157 Smart Set, 67 RW & CO., 73 Thyme Maternity, 23 Cassis, 160 Penningtons and 122 Addition Elle, as compared with a total of 982 stores as at May 1, 2010.Sales for the month of May (the four weeks ended May 28, 2011) decreased 8% with same store sales decreasing 8% due to the continuing unseasonable weather conditions.At the Board of Directors meeting held on May 31, 2011, 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 July 28, 2011 to shareholders of record on July 14, 2011.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 have been presented to conform to the new standards adopted. << Non-GAAP Financial Measures --------------------------- >>In addition to discussing earnings in accordance with IFRS, this press release provides EBITDA as a supplementary earnings measure, which is defined as earnings before income taxes, finance income, finance costs and depreciation and amortization. Depreciation and amortization includes the write-off of 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. << 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 unaudited interim condensed financial statements including notes and Management's Discussion and Analysis for the first quarter ended April 30, 2011 are available online at www.sedar.com. << Montreal, May 31, 2011 Jeremy H. Reitman Chairman and Chief Executive Officer Telephone: (514) 385-2630 Corporate Website: www.reitmans.ca >> << CONDENSED STATEMENTS OF EARNINGS (Unaudited) (in thousands of Canadian dollars except per share amounts) --------------------------- For the three months ended April 30, May 1, 2011 2010 --------------------------- Sales $ 219,296 $ 235,745 Cost of goods sold 74,941 75,972 --------------------------- Gross profit 144,355 159,773 Selling and distribution expenses 129,225 126,482 Administrative expenses 10,112 10,466 --------------------------- Results from operating activities 5,018 22,825 Finance income 1,164 810 Finance costs 5,313 1,391 --------------------------- Earnings before income taxes(1) 869 22,244 Income taxes 245 6,474 --------------------------- Net earnings $ 624 $ 15,770 --------------------------- --------------------------- Earnings per share: Basic $ 0.01 $ 0.23 Diluted 0.01 0.23 (1) A reconciliation of earnings before income taxes to earnings before interest, taxes, depreciation and amortization and investment income ("EBITDA") is as follows: >> << Earnings before income taxes $ 869 $ 22,244 Finance income 1,164 810 Finance costs 5,313 1,391 Depreciation and amortization 14,485 14,453 --------------------------- EBITDA $ 19,503 $ 37,278 --------------------------- --------------------------- >> << CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (in thousands of Canadian dollars) --------------------------- For the three months ended April 30, May 1, 2011 2010 --------------------------- Net earnings $ 624 $ 15,770 Other comprehensive income: Net unrealized gain on available-for-sale financial assets arising during the period (net of tax of $60; $89 for the three months ended May 1, 2010) 401 598 --------------------------- Total comprehensive income $ 1,025 $ 16,368 --------------------------- --------------------------- >> << CONDENSED BALANCE SHEETS (Unaudited) (in thousands of Canadian dollars) ----------------------------------------------- April 30, May 1, January 29, January 31, 2011 2010 2011 2010 ----------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 176,871 $ 209,148 $ 230,034 $ 228,577 Marketable securities 70,979 48,783 70,413 48,026 Trade and other receivables 4,214 3,765 2,866 2,926 Income taxes recoverable 10,846 8,540 - - Inventories 99,066 81,858 73,201 63,127 Prepaid expenses 12,715 11,631 12,491 11,010 ----------------------------------------------- Total Current Assets 374,691 363,725 389,005 353,666 ----------------------------------------------- NON-CURRENT ASSETS Property and equipment 189,487 207,594 193,064 208,362 Intangibles 14,012 8,455 13,841 9,964 Goodwill 42,426 42,426 42,426 42,426 Deferred income taxes 19,438 19,445 21,021 18,313 ----------------------------------------------- Total Non-Current Assets 265,363 277,920 270,352 279,065 ----------------------------------------------- TOTAL ASSETS $ 640,054 $ 641,645 $ 659,357 $ 632,731 ----------------------------------------------- ----------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade and other payables $ 67,940 $ 66,068 $ 64,093 $ 54,684 Deferred revenue 13,870 14,789 19,834 18,122 Income taxes payable - - 5,998 4,677 Current portion of long-term debt 1,406 1,320 1,384 1,300 ----------------------------------------------- Total Current Liabilities 83,216 82,177 91,309 78,783 ----------------------------------------------- NON-CURRENT LIABILITIES Other payables 10,393 9,306 10,180 9,105 Deferred revenue 2,395 2,575 2,384 2,686 Deferred lease credits 18,112 20,245 19,011 20,609 Long-term debt 9,688 11,093 10,047 11,431 Pension liability 13,876 12,048 13,626 11,865 ----------------------------------------------- Total Non-Current Liabilities 54,464 55,267 55,248 55,696 ----------------------------------------------- SHAREHOLDERS' EQUITY Share capital 31,426 27,524 29,614 25,888 Contributed surplus 6,291 5,296 6,266 5,164 Retained earnings 456,890 465,428 469,554 461,845 Accumulated other comprehensive income 7,767 5,953 7,366 5,355 ----------------------------------------------- Total Shareholders' Equity 502,374 504,201 512,800 498,252 ----------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 640,054 $ 641,645 $ 659,357 $ 632,731 ----------------------------------------------- ----------------------------------------------- >> << CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) (in thousands of Canadian dollars) --------------------------- For the three months ended April 30, May 1, 2011 2010 --------------------------- SHARE CAPITAL Balance, beginning of the period $ 29,614 $ 25,888 Cash consideration on exercise of share options 1,443 1,314 Ascribed value credited to share capital from exercise of share options 369 322 --------------------------- Balance, end of the period 31,426 27,524 --------------------------- CONTRIBUTED SURPLUS Balance, beginning of the period 6,266 5,164 Share-based compensation costs 394 454 Ascribed value credited to share capital from exercise of share options (369) (322) --------------------------- Balance, end of the period 6,291 5,296 --------------------------- RETAINED EARNINGS Balance, beginning of the period 469,554 461,845 Net earnings 624 15,770 Dividends (13,288) (12,187) --------------------------- Balance, end of the period 456,890 465,428 --------------------------- ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of the period 7,366 5,355 Net unrealized gain on available-for-sale financial assets arising during the period (net of tax of $60; $89 for the three months ended May 1, 2010) 401 598 --------------------------- Balance, end of the period 7,767 5,953 --------------------------- Total Shareholders' Equity $ 502,374 $ 504,201 --------------------------- --------------------------- >> << CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands of Canadian dollars) --------------------------- For the three months ended April 30, May 1, 2011 2010 --------------------------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net earnings $ 624 $ 15,770 Adjustments for: Depreciation and amortization 14,485 14,453 Share-based compensation costs 394 454 Amortization of deferred lease credits (1,214) (1,269) Deferred lease credits 315 905 Pension contribution (129) (155) Pension expense 379 338 Foreign exchange loss 2,931 490 Interest and dividend income, net (985) (611) Interest paid (179) (199) Interest received 322 86 Dividends received 862 797 Income taxes 245 6,474 --------------------------- 18,050 37,533 Changes in: Trade and other receivables (1,368) (912) Inventories (25,865) (18,731) Prepaid expenses (224) (621) Trade and other payables 6,143 13,263 Deferred revenue (5,953) (4,207) --------------------------- Cash (used in) generated from operating activities (9,217) 26,325 Income taxes paid (15,566) (20,912) --------------------------- Net cash flows (used in) from operating activities (24,783) 5,413 CASH FLOWS USED IN INVESTING ACTIVITIES Purchases of marketable securities (105) (70) Additions to property and equipment and intangibles (13,162) (13,091) --------------------------- Cash flows used in investing activities (13,267) (13,161) CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES Dividends paid (13,288) (12,187) Repayment of long-term debt (337) (318) Proceeds from exercise of share options 1,443 1,314 --------------------------- Cash flows used in financing activities (12,182) (11,191) FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN CURRENCY (2,931) (490) --------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS (53,163) (19,429) CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 230,034 228,577 --------------------------- CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 176,871 $ 209,148 --------------------------- --------------------------- >>For further information: Jeremy H. Reitman, Chairman and Chief Executive Officer, (514) 385-2630, Corporate Website: www.reitmans.ca