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Press release from CNW Group

Reitmans (Canada) Limited Announces Year-End Results

Wednesday, March 28, 2012

Reitmans (Canada) Limited Announces Year-End Results17:13 EDT Wednesday, March 28, 2012MONTREAL, 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 MeasuresIn 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 endedFor the three months ended(in thousands)January 28, 2012January 29, 2011January 28, 2012January 29, 2011Earnings before income taxes$65,872$127,802$ 6,700$ 20,618Dividend 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 - 78Interest expense 682 767 162 184Depreciation, amortization and net impairment losses related to property and equipment 64,990 59,754 16,442 15,872ADJUSTED EBITDA$126,788$184,369$22,021$35,394Forward-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 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, 2012Jeremy H. ReitmanChairman and Chief Executive OfficerTelephone:  (514) 385-2630Corporate Website: www.reitmans.ca  REITMANS (CANADA) LIMITEDSTATEMENTS OF EARNINGS (Unaudited)(in thousands of Canadian dollars except per share amounts)   For the years endedFor 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$268,714Cost of goods sold 363,333 350,671 102,959 95,213Gross profit 656,064 708,329 156,995 173,501Selling and distribution expenses 547,367 528,676 138,420 137,637Administrative expenses  46,878 55,511 13,351 15,978Results from operating activities 61,819 124,142 5,224 19,886         Finance income  5,562 4,505  2,392 1,358Finance costs 1,509 845 916 626Earnings 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) LIMITEDSTATEMENTS OF COMPREHENSIVE INCOME (Unaudited)(in thousands of Canadian dollars)    For the years endedFor the three months ended January 28, 2012January 29, 2011January 28, 2012January 29, 2011         Net earnings$47,539$88,985$4,674$13,817Other 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$13,185          REITMANS (CANADA) LIMITEDBALANCE SHEETS (Unaudited)(in thousands of Canadian dollars)         January28, 2012January 29, 2011January 31, 2010ASSETS      CURRENT ASSETS       Cash and cash equivalents$ 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) LIMITEDSTATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)(in thousands of Canadian dollars)   For the years ended January 28, 2012January 29, 2011SHARE 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 67Balance, end of the year 8,737 8,143     Total Shareholders' Equity$492,852$512,800     REITMANS (CANADA) LIMITEDSTATEMENTS OF CASH FLOWS (Unaudited)(in thousands of Canadian dollars)      For the years endedFor the three months ended January 28, 2012January 29, 2011January 28, 2012January 29, 2011CASH 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  For further information: Jeremy H. Reitman Chairman and Chief Executive Officer Telephone:  (514) 385-2630 Corporate Website: www.reitmans.ca