Reitmans (Canada) Limited Reports Strong Second Quarter Results

Quarter highlighted by 3.5% comparable sales growth and 21.9% adjusted EBITDA growth.

MONTREAL, Sept. 19, 2024 /CNW/ - Reitmans (Canada) Limited ("RCL" or the "Company") (TSXV: RET) (TSXV: RET-A), one of Canada's leading specialty apparel retailers, today reported its financial results for its fiscal 2025 second quarter. Unless otherwise indicated, all comparisons of results for the 13 weeks ended August 3, 2024 ("second quarter of 2025") are against results for the 13 weeks ended July 29, 2023 ("second quarter of 2024") and all comparisons of results for the 26 weeks ended August 3, 2024 ("year to date fiscal 2025") are against results for the 26 weeks ended July 29, 2023 ("year to date fiscal 2024"). All dollar amounts are in Canadian currency.

Second Quarter Highlights

• Comparable sales increased 3.5%; net revenues increased 0.4% to $215.5 million
• Adjusted EBITDA increased 21.9% to $23.4 million
• Gross profit margin increased 330 basis points to 59.1%
• Results from operating activities ("ROA") increased 13.8% to $21.5 million
• Net earnings improved 17.2% to $15.7 million

"We had an excellent second quarter and one of our best quarters of the past ten years," said Andrea Limbardi, President and CEO of RCL. "Despite operating 16 fewer stores compared to the same period last year, our net revenues were up slightly, underscoring how strongly our product offering resonated with our customers. Our teams successfully navigated supply chain challenges and avoided late deliveries, which ensured our stores had the right inventory at the right time. We read summer trends well, benefited from favourable weather, and successfully drove higher sales dollars and units per transaction. All of that, in addition to being less promotional during the quarter, contributed to improved gross margins and higher profitability."

"This is an exciting time for our business. We see a lot of opportunity for continued growth, selectively and strategically expanding our footprint in all three retail brands and doubling down on our menswear business. The ongoing modernization of our distribution facility remains on track and will ultimately help support our long-term vision. While the overall retail environment continues to be affected by economic uncertainty and logistics issues, we are well-positioned to drive profitable growth," said Ms. Limbardi.

Select Financial Information

(in millions of dollars, except for gross profit % and earnings per share) (unaudited)	Second quarter			Year to date fiscal
	2025	2024	Change	2025	2024	Change
Net revenues2	$215.5	$214.6	0.4 %	$381.3	$380.3	0.3 %
Gross profit	$127.3	$119.7	6.3 %	$221.3	$208.4	6.2 %
Gross profit %	59.1 %	55.8 %	330 bps	58.0 %	54.8 %	320 bps
Selling, general and        administrative expenses2	$105.8	$100.8	5.0 %	$201.0	$193.1	4.1 %
ROA	$21.5	$18.9	13.8 %	$20.3	$15.3	32.7 %
Net earnings	$15.7	$13.4	17.2 %	$14.2	$9.5	49.5 %
Adjusted EBITDA1	$23.4	$19.2	21.9 %	$24.2	$17.9	35.2 %
Earnings per share:
Basic	$0.32	$0.27	18.5 %	$0.29	$0.20	45.0 %
Diluted	0.32	0.27	18.5 %	0.29	0.19	52.6 %

 

1

This is a Non-GAAP Financial Measure. See "Non-GAAP Financial Measures & Supplementary Financial Measures" for reconciliations of these measures.

2

For the fiscal 2025 second quarter and year to date periods, shipping revenues of $1.4 million and $2.0 million respectively, were reclassified from selling, general and administrative expenses to net revenues. See Note 16 of the unaudited condensed consolidated interim financial statements for the second quarter of 2025. For the fiscal 2024 second quarter and year to date periods, selling, general and administrative expenses were previously captioned selling, distribution and administrative expenses.

 

Balance Sheet Data	As at
(in millions of dollars) (unaudited)	August 3, 2024	July 29, 2023	February 3, 2024
Cash	$ 124.0	$    96.7	$ 116.7
Inventories	137.5	148.8	122.0
Total current assets	289.3	266.7	259.9
Property and equipment and intangible     assets	75.2	63.9	71.2
Right-of-use assets	132.0	90.9	131.5
Total assets	519.3	452.3	490.8
Total current liabilities	120.9	106.7	105.5
Total non-current liabilities	106.8	72.0	106.3
Shareholders' equity	291.6	273.6	279.0

Second Quarter Overview

Net revenues increased by $0.9 million, or 0.4%, to $215.5 million despite operating 16 less stores than in the second quarter a year earlier. Although Canadian consumers continued to tighten discretionary spending, net revenues were maintained mainly through improved sales dollar and units per transaction. Comparable sales¹, which include e-commerce net revenues, increased 3.5% primarily due to increased sales per transaction.

Gross profit grew by $7.6 million to $127.3 million and gross profit as a percentage of net revenues improved 330 basis points to 59.1%. The increase in gross profit and in gross profit as a percentage of net revenues is primarily attributable to lower promotional activity compared to the second quarter of last year.

ROA increased by $2.6 million, or 13.8%, to $21.5 million with the increase being primarily attributable to the increase in gross profit, partially offset by an increase in selling, general and administrative expenses.

Net earnings grew by $2.3 million, or 17.2%, to $15.7 million ($0.32 basic and diluted earnings per share). The increase in net earnings was primarily attributable to the increase in ROA.   

Adjusted EBITDA¹ increased by $4.2 million, or 21.9%, to $23.4 million. The improvement was due to the increase in gross profit, partially offset by the increase in selling, general and administrative expenses.

Conference Call

The Company will conduct a conference call to discuss information included in this news release, company performance, and related matters at 8:30 a.m. Eastern Time on September 20, 2024. All interested parties may join the conference call by dialing 1-844-763-8274 or 647-484-8814 approximately 15 minutes prior to the call to secure a line.

A live audio webcast of the call will be available at https://www.reitmanscanadalimited.com/events-presentations.aspx?lang=en and will be available for replay at this website for 12 months.

Granting of Options to Management

On September 19, 2024, the Company granted an aggregate of 75,000 options to purchase Class A non-voting shares of the Company (the "Options") to a member of management pursuant to its second amended and restated share option plan dated April 19, 2021, as amended. The Options have an exercise price of $2.40 and are subject to time-based vesting terms and have an expiry date of October 19, 2027. The grant of the Options is made pursuant to the Company's Long-Term Incentive Plan which is designed to incentivize members of management in the achievement of long-term financial targets.

About Reitmans (Canada) Limited

Reitmans (Canada) Limited ("RCL") is one of Canada's leading specialty apparel retailers for women and men, with retail outlets throughout the country. The Company operates 389 stores under three distinct banners consisting of 224 Reitmans, 85 PENN. Penningtons, and 80 RW&CO.

For more information, visit www.reitmanscanadalimited.com.

For further information, please contact:

Alexandra Cohen VP, Corporate Communications Reitmans (Canada) Limited Telephone: [phone] ext 23737 Email: [e-mail]

Richard Wait Executive Vice-President and Chief Financial Officer Reitmans (Canada) Limited Telephone: [phone] ext 23050 Email: [e-mail]

¹NON-GAAP Financial Measures & Supplementary Financial Measures

This press release makes reference to certain non-GAAP measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for the Company's analysis of its financial information reported under IFRS.

NON-GAAP Financial Measures

This press release discusses the following non-GAAP financial measures: adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"). This press release also indicates Adjusted EBITDA as a percentage of net revenues and is considered a non-GAAP financial ratio. Net revenues represent the sale of merchandise less discounts and returns ("net sales") and include shipping fees charged to customers on e-commerce orders. The intent of presenting Adjusted EBITDA is to provide additional useful information to investors and analysts. Adjusted EBITDA is currently defined as net earnings before income tax expense/recovery, interest income, interest expense, pension curtailment gain, loss on foreign currency translation differences reclassified to net earnings, depreciation, amortization, net impairment of non-financial assets, adjusted for the impact of certain items, including a deduction of interest expense and depreciation relating to leases accounted for under IFRS 16, Leases. Management believes that Adjusted EBITDA is an important indicator of the Company's ability to generate liquidity through operating cash flow to fund working capital needs and fund capital expenditures and uses this metric for this purpose. Management believes that Adjusted EBITDA as a percentage of net revenues indicates how much liquidity is generated for each dollar of net revenues. The exclusion of interest income and expenses, other than interest expense related to lease liabilities as explained hereafter, eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation, amortization and net impairment charges, other than depreciation related to right-of-use assets as explained hereafter, eliminates the non-cash impact, and the exclusion of the loss on foreign currency translation differences reclassified to net earnings/loss presents the results of the on-going business. Under IFRS 16, Leases, the characteristics of some leases result in lease payments being recognized in net earnings in the period in which the performance or use occurs while other leases are recorded as right-of-use assets with a corresponding lease liability recognized, which results in depreciation of those assets and interest expense from those liabilities. Management is presenting its Adjusted EBITDA to reflect the payments of its store and equipment lease obligations on a consistent basis. As such, the initial add-back of depreciation of right-of-use assets and interest on lease obligations are removed from the calculation of Adjusted EBITDA, as this better reflects the operational cash flow impact of its leases.

Reconciliation of NON-IFRS Measures

The tables below provide a reconciliation of net earnings to Adjusted EBITDA:

(in millions of dollars)	For the second quarter of		Year to date fiscal
(unaudited)	2025	2024	2025	2024
Net earnings	$         15.7	$          13.4	$         14.2	$          9.5
Depreciation, amortization and net     impairment losses on property and     equipment, and intangible assets	3.5	3.4	7.6	7.0
Depreciation on right-of-use assets	9.8	8.1	19.1	15.9
Interest income	(1.6)	(1.3)	(2.7)	(2.2)
Interest expense on lease liabilities	2.5	1.7	5.0	3.3
Loss on foreign currency translation     differences reclassified to net earnings	-	-	-	1.0
Income tax expense	5.8	4.6	5.1	3.5
Rent impact from IFRS 16, Leases1	(12.3)	(9.8)	(24.1)	(19.2)
Pension curtailment gain	-	(0.9)	-	(0.9)
Adjusted EBITDA	$         23.4	$          19.2	$         24.2	$        17.9
Adjusted EBITDA as % of net revenues	10.9 %	8.9 %	6.3 %	4.7 %

 

1	Rent Impact from IFRS 16, Leases is comprised as follows;

 

	For the second quarter of		Year to date fiscal
	2025	2024	2025	2024
Depreciation on right-of-use assets	$           9.8	$           8.1	$         19.1	$            15.9
Interest expense on lease liabilities	2.5	1.7	5.0	3.3
Rent impact from IFRS 16, Leases	$         12.3	$           9.8	$         24.1	$            19.2

Supplementary Financial Measures

The Company uses a key performance indicator ("KPI"), comparable sales, to assess store performance and sales growth. The Company engages in an omnichannel approach in connecting with its customers by appealing to their shopping habits through either online or store channels.  This approach allows customers to shop online for home delivery or to pick up in store, purchase in any of our store locations or ship to home from another store when the products are unavailable in a particular store.  Due to customer cross-channel behavior, the Company reports a single comparable sales metric, inclusive of store and e-commerce channels. Comparable sales are defined as net sales generated by stores that have been continuously open during both of the periods being compared and include e-commerce net sales. The comparable sales metric compares the same calendar days for each period. Although this KPI is expressed as a ratio, it is a supplementary financial measure that does not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures used by other companies. Management uses comparable sales in evaluating the performance of stores and online net sales and considers it useful in helping to determine what portion of new net sales has come from sales growth and what portion can be attributed to the opening of new stores. Comparable sales is a measure widely used amongst retailers and is considered useful information for both investors and analysts. Comparable sales should not be considered in isolation or used in substitute for measures of performance prepared in accordance with IFRS.

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, including statements on the Company's financial position and operations, and are based on several assumptions which give rise to the possibility that actual results could differ materially from the Company's expectations expressed in or implied by such forward-looking statements and that the objectives, plans, strategic priorities and business outlook may not be achieved.  Consequently, the Company cannot guarantee that any forward-looking statement will materialize, or if any of them do, what benefits the Company will derive from them. Forward-looking statements are provided in this press release for the purpose of giving information about management's current expectations and plans as of the date of this press release and allowing investors and others to get a better understanding of the Company's operating environment. However, readers are cautioned that it may not be appropriate to use such forward-looking statements for any other purpose. Forward-looking statements are based upon the Company's current estimates, beliefs and assumptions, which are based on management's perception of historical trends, current conditions and currently expected future developments, as well as other factors it believes, are appropriate in the circumstances.

This press release contains forward-looking statements about the Company's objectives, plans, goals, expectations, aspirations, strategies, financial condition, results of operations, cash flows, performance, and prospects. Specific forward-looking statements in this press release include, but are not limited to, statements with respect to the Company's belief in its strategies and its brands and their capacity to generate long-term profitable growth, future liquidity, planned capital expenditures, amount of pension plan contributions, status and impact of systems implementation, the ability of the Company to successfully implement its strategic initiatives and cost reduction and productivity improvement initiatives as well as the impact of such initiatives.  These specific forward-looking statements are contained throughout the Company's Management Discussion & Analysis ("MD&A") including those listed in the "Operating and Financial Risk Management" section of the MD&A. Forward-looking statements are typically identified by words such as "expect", "anticipate", "believe", "foresee", "could", "estimate", "goal", "intend", "plan", "seek", "strive", "will", "may" and "should" and similar expressions, as they relate to the Company and its management.

Numerous risks and uncertainties could cause the Company's actual results to differ materially from those expressed, implied or projected in the forward-looking statements. Please refer to the "Forward-Looking Statements" section of the Company's MD&A for the second quarter of 2025.

This is not an exhaustive list of the factors that may affect the Company's forward-looking statements. Other risks and uncertainties not presently known to the Company or that the Company presently believes are not material could also cause actual results or events to differ materially from those expressed in its forward-looking statements. Additional risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time. The reader should not place undue reliance on any 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 second quarter of fiscal 2025 are available online at www.sedarplus.ca.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Reitmans (Canada) Ltd

Copyright 2024 Canada NewsWire