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Press release from CNW Group

Reitmans (Canada) Limited announces its results for the six months ended July 30, 2011

Tuesday, August 30, 2011

Reitmans (Canada) Limited announces its results for the six months ended July 30, 201117:26 EDT Tuesday, August 30, 2011MONTREAL, Aug. 30, 2011 /CNW Telbec/ - Sales for the six months ended July 30, 2011 decreased 4.2% to $505,371,000 as compared with $527,771,000 for the six months ended July 31, 2010. Same store sales1 decreased 4.8%.  Despite the first quarter yielding disappointing sales results due to poor weather, more seasonable weather conditions contributed to improved sales in the second quarter of fiscal 2012 over the first quarter of fiscal 2012.  The Company's gross margin decreased from 68.4% to 65.7% for the six months ended July 30, 2011.  An improvement in the gross margin attributable to the strength of the Canadian dollar in the six months ended July 30, 2011 was offset by increased promotional activity.  The average rate for a US dollar in the first six months of fiscal 2012 was $0.97 Canadian as compared to $1.03 Canadian in the first six months of fiscal 2011.  EBITDA1 decreased 30.9% to $72,922,000 as compared with $105,564,000 last year.  Net earnings decreased 40.7% to $32,304,000 or $0.48 diluted earnings per share as compared with $54,476,000 or $0.80 diluted earnings per share last year.Sales for the second quarter ended July 30, 2011 decreased 2.0% to $286,075,000 as compared with $292,026,000 for the second quarter ended July 31, 2010.  Same store sales decreased by 1.8%.  EBITDA for the period decreased by $10,925,000 or 15.7% to $58,553,000 as compared with $69,478,000 last year.  The Company's gross margin decreased from 68.9% to 65.6% for the three months ended July 30, 2011. An improvement in the gross margin attributable to the strength of the Canadian dollar in the three months ended July 30, 2011 was offset by increased promotional activity.  The average rate for a US dollar in the second quarter ended July 30, 2011 was $0.97 Canadian as compared to $1.04 Canadian in the second quarter ended July 31, 2010. Net earnings decreased 18.2% to $31,680,000 or $0.48 diluted earnings per share as compared to $38,706,000 or $0.57 diluted earnings per share for the same period last year.During the second quarter, the Company opened seven new stores, comprised of 1 Reitmans, 3 Thyme Maternity, 1 Cassis and 2 Penningtons.  Seven stores were closed, comprised of 1 Reitmans, 2 Thyme Maternity, 3 Penningtons and 1 Addition Elle.  At July 30, 2011, there were 965 stores in operation, consisting of 363 Reitmans, 157 Smart Set, 67 RW & CO., 74 Thyme Maternity, 24 Cassis, 159 Penningtons and 121 Addition Elle, as compared with a total of 977 stores as at July 31, 2010.Sales for the month of August (the four weeks ended August 27, 2011) decreased 3.2% with same store sales decreasing 3.7%.At the Board of Directors meeting held on August 30, 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 October 27, 2011 to shareholders of record on October 13, 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.1Non-GAAP Financial MeasuresIn 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, dividend income, interest income, interest expense and depreciation, amortization and 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.Forward-Looking StatementsAll 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 second quarter ended July 30, 2011 are available online at www.sedar.com.Montreal, August 30, 2011 Jeremy H. ReitmanChairman and Chief Executive Officer Telephone:  (514) 385-2630Corporate Website: www.reitmans.caREITMANS (CANADA) LIMITEDCONDENSED STATEMENTS OF EARNINGS (Unaudited)(in thousands of Canadian dollars except per share amounts)   For the six months endedFor the three months ended July 30, 2011July 31, 2010July 30, 2011July 31, 2010 Sales $505,371 $527,771$286,075$292,026Cost of goods sold 173,392  166,743 98,451 90,771Gross profit 331,979  361,028 187,624 201,255Selling and distribution expenses 264,822  258,317 135,597 131,835Administrative expenses 21,171  26,275 11,059 15,809Results from operating activities 45,986  76,436 40,968 53,611 Finance income 2,360  1,644 3,052 1,898Finance costs 3,630  522 173 195Earnings before income taxes1 44,716  77,558 43,847 55,314 Income taxes 12,412  23,082 12,167 16,608 Net earnings$32,304 $54,476$31,680$38,706 Earnings per share: Basic$0.49 $0.81$0.48$0.58 Diluted 0.48  0.80 0.48 0.57  1 A reconciliation of earnings before income taxes to earnings before income taxes, dividend income, interest income, interest expense and depreciation, amortization and impairment losses ("EBITDA") is as follows:Earnings before income taxes$44,716 $77,558$43,847$55,314Dividend income 1,748  1,286 868 615Interest income 612  358 328 219Interest expense 352  394 173 195Depreciation, amortization and impairment losses 30,214  29,256 15,729 14,803     EBITDA$72,922 $105,564$58,553$69,478           REITMANS (CANADA) LIMITEDCONDENSED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)(in thousands of Canadian dollars)   For the six months endedFor the three months ended July 30, 2011July 31, 2010July 30, 2011July 31, 2010     Net earnings$32,304 $54,476$31,680$38,706Other comprehensive income: Net unrealized gain on available-for-sale financial assets arisingduring the period (net of tax of $125 for the six months and $65for the three months ended July 30, 2011; $144 for the six monthsand $55 for the three months ended July 31, 2010) 839  969 438 371 Total comprehensive income  $33,143 $55,445$32,118$39,077                  REITMANS (CANADA) LIMITEDCONDENSED BALANCE SHEETS (Unaudited)(in thousands of Canadian dollars)    July 30, 2011 July 31, 2010January 29, 2011ASSETSCURRENT ASSETS Cash and cash equivalents $207,492 $213,536 $230,034 Marketable securities  71,587  49,316  70,413 Trade and other receivables  2,723  2,582  2,866 Income taxes recoverable  9,377  -  - Inventories  81,477  68,429  73,201 Prepaid expenses  14,264  14,216  12,491  Total Current Assets   386,920  348,079    389,005           NON-CURRENT ASSETS Property and equipment   184,905  202,750  193,064 Intangibles  14,705  9,939  13,841 Goodwill  42,426  42,426  42,426 Deferred income taxes  20,624  20,886  21,021  Total Non-Current Assets  262,660  276,001  270,352           TOTAL ASSETS $649,580 $624,080 $659,357           LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES Trade and other payables $58,111 $52,055 $64,093 Deferred revenue  14,364  14,535  19,834 Income taxes payable  -  1,147  5,998 Current portion of long-term debt   1,428  1,341  1,384  Total Current Liabilities  73,903  69,078  91,309           NON-CURRENT LIABILITIES Other payables  10,729  9,507  10,180 Deferred revenue  2,304  2,636  2,384 Deferred lease credits  17,515  19,279  19,011 Long-term debt  9,323  10,751  10,047 Pension liability  14,027  12,231  13,626  Total Non-Current Liabilities  53,898  54,404  55,248           SHAREHOLDERS' EQUITY Share capital  31,518  26,930  29,614 Contributed surplus  6,772  5,818  6,266 Retained earnings  475,284  461,526  469,554 Accumulated other comprehensive income  8,205  6,324  7,366  Total Shareholders' Equity  521,779  500,598  512,800 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $649,580 $624,080 $659,357           REITMANS (CANADA) LIMITEDCONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)(in thousands of Canadian dollars)     For the six months ended July 30,2011July 31, 2010 SHARE CAPITALBalance, beginning of the period$29,614 $25,888 Cash consideration on exercise of share options 1,516  1,424 Ascribed value credited to share capital from exerciseof share options 388  349 Cancellation of shares pursuant to share repurchaseprogram-  (731)Balance, end of the period 31,518  26,930 CONTRIBUTED SURPLUSBalance, beginning of the period 6,266  5,164 Share-based compensation costs 894  1,003 Ascribed value credited to share capital from exerciseof share options (388)  (349)Balance, end of the period 6,772  5,818      RETAINED EARNINGS     Balance, beginning of the period 469,554  461,845 Net earnings 32,304  54,476 Dividends (26,574)  (25,414) Premium on repurchase of Class A non-voting shares -  (29,381)Balance, end of the period 475,284  461,526      ACCUMULATED OTHER COMPREHENSIVE INCOMEBalance, beginning of the period 7,366  5,355 Net unrealized gain on available-for-sale financial assets arisingduring the period (net of tax of $125; $144 for the six months ended July 31, 2010) 839  969Balance, end of the period 8,205  6,324      Total Shareholders' Equity$521,779 $500,598REITMANS (CANADA) LIMITEDCONDENSED STATEMENTS OF CASH FLOWS (Unaudited)(in thousands of Canadian dollars)   For the six months ended For the three months ended July 30, 2011July 31, 2010 July 30, 2011July 31, 2010CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES     Net earnings$32,304 $54,476  $31,680 $38,706 Adjustments for:      Depreciation, amortization and impairment losses 30,214  29,256  15,729  14,803  Share-based compensation costs 894  1,003   500  549  Amortization of deferred lease credits (2,320)  (2,495)   (1,106)  (1,226)  Deferred lease credits 824  1,164   509  259  Pension contribution (357)  (310)   (228)  (155)  Pension expense 758  676   379  338  Foreign exchange loss (gain) 2,451  160   (480)  (330)  Interest and dividend income, net (2,008)  (1,250)   (1,023)  (639)  Interest paid (352)  (394)   (173)  (195)  Interest received 633  426   311  340  Dividends received 1,726  1,166   864  369  Income taxes 12,412  23,082   12,167  16,608  77,179  106,960   59,129 69,427 Changes in:              Trade and other receivables 144  396   1,512  1,308  Inventories (8,276)  (5,302)   17,589  13,429  Prepaid expenses (1,773)  (3,206)   (1,549)  (2,585)  Trade and other payables (3,734)  (1,904)   (9,877)  (15,167)  Deferred revenue (5,550)  (3,637)   403  570 Cash generated from operating activities 57,990  93,307   67,207  66,982 Income taxes received -  14   -  14 Income taxes paid (27,514)  (29,341)   (11,948)  (8,429) Net cash flows from operating activities 30,476  63,980   55,259  58,567             CASH FLOWS USED IN INVESTING ACTIVITIES             Purchases of marketable securities (210)  (177)   (105)  (107) Additions to property and equipment and intangibles (24,619)  (23,943)   (11,457)  (10,852) Cash flows used in investing activities (24,829)  (24,120)   (11,562)  (10,959)             CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES             Dividends paid (26,574)  (25,414)   (13,286)  (13,227) Purchase of Class A non-voting shares for cancellation -  (30,112)   -  (30,112) Repayment of long-term debt (680)  (639)   (343)  (321) Proceeds from exercise of share options 1,516  1,424   73  110 Cash flows used in financing activities (25,738)  (54,741)   (13,556)  (43,550)             FOREIGN EXCHANGE (LOSS) GAIN ON CASH HELD INFOREIGN CURRENCY (2,451)  (160)   480  330            NET (DECREASE) INCREASE IN CASH ANDCASH EQUIVALENTS (22,542)  (15,041)   30,621  4,388             CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD 230,034  228,577   176,871  209,148             CASH AND CASH EQUIVALENTS, END OF THE PERIOD$207,492 $213,536  $207,492 $213,536    For further information: Jeremy H. Reitman Chairman and Chief Executive Officer   Telephone:   (514) 385-2630 Corporate Website:  www.reitmans.ca