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File photo of a Reitman's retail location in Toronto.

Moe Doiron/The Globe and Mail

Reitmans (Canada) Ltd. continues to feel the impact of a difficult retail climate, high costs and tough competition.

The Montreal-based women's clothing retailer posted a net fourth-quarter loss of $1.1-million or 1 cent per diluted share, compared with a profit of $4.7-million or 7 cents per share in the year-earlier period.

Revenue in the quarter was $267.65-million, up from $260-million.

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For the year, which is 53 weeks instead of the usual 52, net profit fell 44 per cent to $26.6-million, or 41 cents per share, from $47.54-million or 72 cents.

Sales slipped 1.9 per cent to $1-billion from $1.02-billion.

The company said in a news release Friday that fourth-quarter sales were hurt by a "difficult retail environment."

Reitmans' gross margin in the fourth quarter fell to 59.2 per cent from 60.4 per cent.

The fourth-quarter loss reflects operational losses of about $1.2-million, including startup expenses related to the new Thyme Maternity boutiques in Babies "R" Us stores in the United States, the company said.

"Management is disappointed with the results for fiscal 2013 and has taken action in the merchandising and marketing efforts of each of its banners to improve sales and profitability," it said in the news release.

Efforts are also being made to boost efficiencies and improve systems performance, said the company.

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Problems with a new warehouse management system set up in June of last year disrupted the flow of merchandise and hurt sales and gross margins, it said.

The issues have been addressed and the flow of goods is improving, according to Reitmans.

Same-store sales were off by 1.5 per cent in the fourth quarter. Same-store sales compares sales at stores open for at least one year.

RBC Dominion Securities analyst Tal Woolley said in a research note Thursday that same-store sales have been declining for six years and that a major restructuring is needed.

The arrival of U.S. giant Target Corp. on the Canadian retail scene puts even more pressure on Reitmans, according to some observers.

But Reitmans' chief executive officer Jeremy Reitman has said he isn't worried about a new competitor, pointing out that the company met the challenge of previous entrants, including Wal-Mart Canada Corp. and Gap Inc.

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Such big players help drive traffic to the malls where Reitmans' stores under various banners are located, he said.

During the fiscal year, Reitmans said it opened 54 new stores and closed 85. As of Feb. 2, 2013, it operated 911 stores under the Reitmans, Smart Set, RW & Co., Thyme Maternity, Penningtons and Addition Elle banners, versus 942 stores at the beginning of 2012.

Reitmans is Canada's largest publicly traded apparel retailer.

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