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Press release from CNW Group

Reitmans (Canada) Limited announces its results for the three months ended May 4, 2013

Tuesday, June 04, 2013

Reitmans (Canada) Limited announces its results for the three months ended May 4, 2013

17:13 EDT Tuesday, June 04, 2013

MONTREAL, June 4, 2013 /CNW Telbec/ - Sales for the first quarter ended May 4, 2013 were $216,861,000 as compared with $217,094,000 for the first quarter ended April 28, 2012, a decrease of 0.1%.  Same store sales1 decreased 3.5%, compared to the comparable 13 weeks ended May 5, 2012, impacted by our customers' preference to focus their expenditures on non-discretionary purchases, as well as unseasonable weather conditions that were prevalent during the period.  Sales through the various banners' e-commerce channels showed significant gains, with a 96% increase in sales for the first quarter ended May 4, 2013 as compared to the first quarter ended April 28, 2012.  The Company's gross margin remained unchanged at 64.6% for the first quarter ended May 4, 2013 as compared to the first quarter ended April 28, 2012.  The Company recorded a net loss of $2,586,000 ($0.04 diluted loss per share) for the first quarter ended May 4, 2013 as compared with a net loss of $119,000 ($0.00 diluted loss per share) for the first quarter ended April 28, 2012.  In the first quarter ended May 4, 2013, adjusted EBITDA1 was $10,683,000 as compared with $12,451,000 for the first quarter ended April 28, 2012, a decrease of 14.2%.

Early in 2013, management began a corporate initiative to analyze and review its processes, expenditures and complement of employees throughout the Company. The purpose of this initiative is to develop and implement a plan targeted at improving efficiencies and costs at the Company. We have made progress during the first quarter ended May 4, 2013 on this initiative and identified areas within our business that will enable us to realize considerable savings without adversely affecting our business.  This initiative included a reduction in the number of our employees and resulted in severance costs of approximately $1,000,000 in the first quarter ended May 4, 2013. These terminations are projected to result in annualized savings of approximately $3,000,000.

During the first quarter, the Company opened 13 new stores, comprised of 2 Reitmans, 1 Smart Set, 9 Penningtons and 1 Addition Elle.  Fifteen stores were closed, comprised of 4 Reitmans, 2 Smart Set, 5 Penningtons and 4 Addition Elle.  At May 4, 2013, there were 909 stores in operation, consisting of 359 Reitmans, 145 Smart Set, 73 RW & CO., 72 Thyme Maternity, 157 Penningtons and 103 Addition Elle, as compared with a total of 925 stores as at April 28, 2012.  In addition, there were 20 Thyme Maternity boutiques in select Babies"R"Us locations in Canada and 154 boutiques in Babies"R"Us stores in the United States.

Sales for the month of May (the four weeks ended June 1, 2013) decreased 4.7% with same store sales1 decreasing 5.5%.

At the Board of Directors meeting held on June 4, 2013, 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 25, 2013 to shareholders of record on July 11, 2013.

1 Non-GAAP Financial Measures

In addition to discussing earnings in accordance with IFRS, this press release provides adjusted EBITDA as a supplementary earnings measure, which is defined as earnings (loss) before income taxes, dividend income, interest income, realized gains or losses 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 loss before income taxes for the three months ended May 4, 2013 and April 28, 2012:

   
(unaudited) For the three months ended
  May 4, 2013   April 28, 20122
Loss before income taxes $ (3,495,000)   $ (299,000)
Dividend income   (868,000)     (874,000)
Interest income   (134,000)     (330,000)
Impairment losses on available-for-sale financial assets   50,000     -
Interest expense   134,000     157,000
Depreciation, amortization and net impairment losses   14,996,000     13,797,000
ADJUSTED EBITDA $ 10,683,000   $ 12,451,000

2 Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found  in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.


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 condensed consolidated interim financial statements including notes and Management's Discussion and Analysis for the first quarter ended May 4, 2013 are available online at www.sedar.com.

Montreal, June 4, 2013

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  (514) 385-2630
Corporate Website: www.reitmans.ca


REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands of Canadian dollars except per share amounts)

           
  For the three months ended
  May 4, 2013   April 28, 20122
           
Sales $ 216,861   $ 217,094
Cost of goods sold   76,687     76,778
Gross profit   140,174     140,316
Selling and distribution expenses   132,376     129,468
Administrative expenses   11,871     11,047
Results from operating activities   (4,073)     (199)
           
Finance income   2,361     1,204
Finance costs   1,783     1,304
Loss before income taxes   (3,495)     (299)
           
Income tax recovery   909     180
           
Net loss $ (2,586)   $ (119)
           
Earnings per share:          
  Basic $ (0.04)   $ 0.00
  Diluted   (0.04)     0.00

2 Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.



REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands of Canadian dollars)

   
  For the three months ended
  May 4, 2013   April 28, 2012
           
Net loss $ (2,586)   $ (119)
Other comprehensive income (loss)          
  Items that are or may be reclassified subsequently to net earnings:          
    Reclassification of impairment loss on available-for-sale financial
assets to net earnings (net of tax of $8)
  42     -
    Net change in fair value of available-for-sale financial assets
(net of tax of $101; 2012 - $29)
  663     (197)
           
Total other comprehensive income (loss)   705     (197)
           
Total comprehensive loss $ (1,881)   $ (316)



REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of Canadian dollars)

   
  May 4, 2013   April 28, 20122   February 2, 20132
                 
ASSETS                
CURRENT ASSETS                
  Cash and cash equivalents $ 66,729   $ 138,187   $ 97,626
  Marketable securities   72,499     71,321     71,630
  Trade and other receivables   5,194     3,783     3,600
  Derivative financial asset   903     74     548
  Income taxes recoverable   10,174     15,507     8,709
  Inventories   112,253     112,785     93,317
  Prepaid expenses   25,791     12,330     25,944
    Total Current Assets   293,543     353,987     301,374
                 
NON-CURRENT ASSETS                
  Property and equipment   200,953     191,577     205,131
  Intangible assets   18,892     17,329     19,224
  Goodwill   42,426     42,426     42,426
  Deferred income taxes   27,439     23,287     26,444
    Total Non-Current Assets   289,710     274,619     293,225
                 
TOTAL ASSETS $ 583,253   $ 628,606   $ 594,599
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
CURRENT LIABILITIES                
  Trade and other payables $ 75,158   $ 81,776   $ 68,781
  Derivative financial liability   2,220     914     266
  Deferred revenue   11,126     13,557     16,297
  Current portion of long-term debt   1,595     1,497     1,570
    Total Current Liabilities   90,099     97,744     86,914
                 
NON-CURRENT LIABILITIES                
  Other payables   11,415     11,095     11,425
  Deferred lease credits   16,797     16,768     16,805
  Long-term debt   6,596     8,191     7,003
  Pension liability   17,977     15,386     17,559
    Total Non-Current Liabilities   52,785     51,440     52,792
                 
SHAREHOLDERS' EQUITY                
  Share capital   39,227     39,890     39,227
  Contributed surplus   6,795     5,348     6,521
  Retained earnings   384,977     425,644     400,480
  Accumulated other comprehensive income   9,370     8,540     8,665
    Total Shareholders' Equity   440,369     479,422     454,893
                 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 583,253   $ 628,606   $ 594,599

2 Adjusted to reflect the impact from the implementation of the amendments to IAS 19, Employee Benefits, which can be found in Note 3 of the May 4, 2013 unaudited condensed consolidated interim financial statements.



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 February 3, 2013 $ 39,227   $ 6,521   $ 400,480   $ 8,665   $ 454,893
                             
Total comprehensive loss for the period                            
  Net loss               (2,586)           (2,586)
  Total other comprehensive income                     705     705
Total comprehensive loss for the period   -     -     (2,586)     705     (1,881)
                             
Contributions by and distributions to owners of the Company                            
  Share-based compensation costs         274                 274
  Dividends               (12,917)           (12,917)
Total contributions by and distributions to owners of the Company   -     274     (12,917)     -     (12,643)
                             
Balance as at May 4, 2013 $ 39,227   $ 6,795   $ 384,977   $ 9,370   $ 440,369
                             
                             
Balance as at January 29, 2012 $ 39,890   $ 5,158   $ 438,880   $ 8,737   $ 492,665
                             
Total comprehensive loss for the period                            
  Net loss               (119)           (119)
  Total other comprehensive loss                     (197)     (197)
Total comprehensive loss for the period   -     -     (119)     (197)     (316)
                             
Contributions by and distributions to owners of the Company                            
  Share-based compensation costs         190                 190
  Dividends               (13,117)           (13,117)
Total contributions by and distributions to owners of the Company   -     190     (13,117)     -     (12,927)
                             
Balance as at April 28, 2012 $ 39,890   $ 5,348   $ 425,644   $ 8,540   $ 479,422



REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of Canadian dollars)

           
  For the three months ended
  May 4, 2013   April 28, 2012
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES          
  Net loss $ (2,586)   $ (119)
  Adjustments for:          
    Depreciation, amortization and impairment losses   14,996     13,797
    Share-based compensation costs   274     190
    Amortization of deferred lease credits   (1,176)     (1,194)
    Deferred lease credits   1,168     645
    Pension contribution   (32)     (163)
    Pension expense   450     418
    Impairment loss on available-for-sale financial assets   50     -
    Net change in fair value of derivatives   1,599     86
    Foreign exchange loss on cash and cash equivalents   41     623
    Interest and dividend income, net   (868)     (1,047)
    Interest paid   (134)     (157)
    Interest received   138     368
    Dividends received   867     868
    Income tax recovery   (909)     (180)
    13,878     14,135
  Changes in:          
    Trade and other receivables   (1,598)     (782)
    Inventories   (18,936)     (19,597)
    Prepaid expenses   153     (428)
    Trade and other payables   5,987     1,804
    Deferred revenue   (5,171)     (8,721)
  Cash from operating activities   (5,687)     (13,589)
  Income taxes received   647     -
  Income taxes paid   (2,306)     (10,610)
  Net cash flows from operating activities   (7,346)     (24,199)
           
CASH FLOWS USED IN INVESTING ACTIVITIES          
  Purchases of marketable securities   (105)     (105)
  Additions to property and equipment and intangible assets   (10,106)     (20,245)
  Cash flows used in investing activities   (10,211)     (20,350)
           
CASH FLOWS USED IN FINANCING ACTIVITIES          
  Dividends paid   (12,917)     (13,117)
  Repayment of long-term debt   (382)     (359)
  Cash flows used in financing activities   (13,299)     (13,476)
           
FOREIGN EXCHANGE LOSS ON CASH HELD IN FOREIGN CURRENCY   (41)     (623)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (30,897)     (58,648)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD   97,626     196,835
           
CASH AND CASH EQUIVALENTS, END OF THE PERIOD $ 66,729   $ 138,187

 

 

SOURCE: Reitmans (Canada) Limited

For further information:

Jeremy H. Reitman
Chairman and Chief Executive Officer

Telephone:  (514) 385-2630
Corporate Website: www.reitmans.ca

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