Reitmans (Canada) Limited announces its results for the nine months ended October 27, 2012

Reitmans (Canada) Limited announces its results for the nine months ended 
October 27, 2012 
MONTREAL, Nov. 28, 2012 /CNW Telbec/ - Results for the third quarter and nine 
months ended October 27, 2012 were adversely impacted by a previously 
announced disruption in the flow of inventory to stores. In June 2012 the 
Company installed a new warehouse management system. As announced on August 
16, 2012, issues associated with the system resulted in a disruption in the 
flow of inventory to stores in the third quarter ending October 27, 2012. 
This resulted in an estimated loss of sales between $7,000,000 and $15,000,000 
and a corresponding decline in gross margin and adjusted EBITDA(1) for both 
the three and nine months ended October 27, 2012. 
Sales for the nine months ended October 27, 2012 decreased 3.5% to 
$732,854,000 as compared with $759,443,000 for the nine months ended October 
29, 2011. Same store sales(1) decreased 2.2%. The decrease in sales was due 
to a reduced number of stores, continued lower store traffic in a challenging 
retail environment and a disruption in the planned flow of inventory to 
stores. The Company's gross margin decreased to 64.1% from 65.7%. Net 
earnings decreased 35.4% to $27,699,000 or $0.42 diluted earnings per share as 
compared with $42,865,000 or $0.65 diluted earnings per share. Adjusted 
EBITDA(1) decreased 25.7% to $77,811,000 as compared with $104,767,000. The 
disruption in the flow of inventory to stores contributed to the significant 
drop in earnings for the year to date fiscal 2013. 
Sales for the third quarter ended October 27, 2012 decreased 7.0% to 
$236,247,000 as compared with $254,072,000 for the third quarter ended October 
29, 2011. Same store sales(1) decreased 4.0%. The Company's gross margin 
decreased to 63.0% from 65.8%. The Company recorded net earnings of $38,000 
($0.00 diluted earnings per share) as compared with $10,561,000 ($0.16 diluted 
earnings per share). Adjusted EBITDA(1) decreased by 55.8% to $14,091,000 as 
compared with $31,845,000. 
During the third quarter, the Company opened 18 new stores, comprised of 5 
Reitmans, 4 RW & CO., 2 Thyme Maternity, 4 Penningtons and 3 Addition Elle. 
Thirteen stores were closed, comprised of 4 Reitmans, 2 Smart Set, 2 Thyme 
Maternity, 3 Penningtons and 2 Addition Elle. At October 27, 2012, there 
were 923 stores in operation, consisting of 361 Reitmans, 150 Smart Set, 72 RW 
& CO., 74 Thyme Maternity, 155 Penningtons and 111 Addition Elle, as compared 
with a total of 975 stores as at October 29, 2011. In addition, there were 
18 Thyme Maternity boutiques ("shop-in-shop") in select Babies"R"Us locations 
in Canada. 
In June 2012, the Company announced a partnership with Babies"R"Us to sell 
Thyme Maternity apparel and accessories in the U.S. As of this date, Thyme 
Maternity products are available in the U.S. in 135 Babies"R"Us stores with 
additional locations to launch in the coming months. 
Sales for the month of November (the four weeks ended November 24, 2012) 
decreased 4.4% with same store sales(1) decreasing 1.2%. 
The Company continues to address the issues related to the warehouse 
management system in order to improve the flow of goods to the stores and 
optimize system performance. The Company believes that all system 
implementation issues have been identified and are being addressed. Although 
progress has been made in addressing the issues that occurred as a result of 
the implementation of the new warehouse management system, the Company 
anticipates that an impact on sales may continue in the fourth quarter ending 
February 2, 2013. 
At the Board of Directors meeting held on November 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 January 31, 2013 to shareholders of record on January 17, 2013. 
As reported in the November 26, 2012 press release, the Company received 
approval from the Toronto Stock Exchange to proceed with a normal course 
issuer bid, under which the Company may purchase up to 2,557,275 Class A 
non-voting shares, representing 5% of the issued and outstanding Class A 
non-voting shares as at November 15, 2012. The bid commenced on November 28, 
2012 and may continue to November 27, 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 earnings (loss) before 
income taxes for the three and nine months ended October 27, 2012 and October 
29, 2011: 


                                                              
                      For the three months
                              ended           For the nine months ended
                    October 27,  October 29,   October 27,   October 29,
                           2012         2011          2012          2011

Earnings (loss)
before income
taxes              $  (103,000) $ 14,456,000 $  36,585,000 $  59,172,000

Dividend income       (874,000)    (850,000)   (2,615,000)   (2,598,000)

Interest income       (198,000)    (336,000)     (859,000)     (948,000)

Impairment losses
on
available-for-sale
financial assets              -       73,000       106,000        73,000

Interest expense        145,000      168,000       453,000       520,000

Depreciation,
amortization and
net impairment
losses               15,121,000   18,334,000    44,141,000    48,548,000

ADJUSTED EBITDA    $ 14,091,000 $ 31,845,000 $  77,811,000 $ 104,767,000

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 interim condensed consolidated financial statements 
including notes and Management's Discussion and Analysis for the third quarter 
ended October 27, 2012 are available online at www.sedar.com.

Montreal, November 28, 2012

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 nine months ended  For the three months ended
                October 27,   October 29, October 27,
                       2012          2011        2012 October 29, 2011
                                                                      

Sales           $   732,854 $     759,443 $   236,247 $        254,072

Cost of goods
sold                262,803       260,374      87,417           86,982

Gross profit        470,051       499,069     148,830          167,090

Selling and
distribution
expenses            402,769       408,947     138,276          144,125

Administrative
expenses             33,819        33,527      11,447           12,356

Results from
operating
activities           33,463        56,595       (893)           10,609
                                                                      

Finance income        4,332         3,546       1,464            4,088

Finance costs         1,210           969         674              241

Earnings (loss)
before income
taxes                36,585        59,172       (103)           14,456
                                                                      

Income tax
expense
(recovery)            8,886        16,307       (141)            3,895
                                                                      

Net earnings    $    27,699 $      42,865 $        38 $         10,561
                                                                      

Earnings per
share:                                                                

  Basic         $      0.42 $        0.65 $      0.00 $           0.16

  Diluted              0.42          0.65        0.00             0.16


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


                                                                      
                                                 For the three months
                     For the nine months ended           ended
                     October 27,   October 29, October 27, October 29,
                            2012          2011        2012        2011
                                                                      

Net earnings         $    27,699 $      42,865 $        38 $    10,561

Other comprehensive
income:                                                               

  Net change in fair
  value of
  available-for-sale
  financial assets
  arising
  during the period
  (net of tax of
  $100 for the nine
  months and $29 for
  the three months
  ended October 27,
  2012; $121 for the
  nine months
  and $246 for the
  three months ended
  October 29, 2011)        (704)         (808)         184     (1,647)

  Reclassification
  of impairment loss
  on
  available-for-sale
  financial
  assets (net of tax
  of $14 for the
  nine months ended
  October 27, 2012;
  $9 for the nine
  and three months
  ended October 29,
  2011)                       92            64           -          64
                                                                      

Total comprehensive
income               $    27,087 $      42,121 $       222 $     8,978


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


                        October 27, 2012 October 29, 2011 January 28, 2012

ASSETS                                                                 

CURRENT ASSETS                                                         

  Cash and cash
  equivalents        $        108,935 $        159,309 $        196,835

  Marketable
  securities                   70,954           69,799           71,442

  Trade and other
  receivables                   4,004            3,516            3,033

  Derivative
  financial asset                 527                -              751

  Income taxes
  recoverable                   8,283            7,396            4,735

  Inventories                 106,757          107,591           78,285

  Prepaid expenses             11,789           13,964           11,902
    Total Current
    Assets                    311,249          361,575          366,983
                                                                       

NON-CURRENT ASSETS                                                     

  Property and
  equipment                   203,401          184,666          184,221

  Intangible assets            18,652           15,962           17,057

  Goodwill                     42,426           42,426           42,426

  Deferred income
  taxes                        26,129           22,492           23,174
    Total
    Non-Current
    Assets                    290,608          265,546          266,878
                                                                       

TOTAL ASSETS         $        601,857 $        627,121 $        633,861
                                                                       

LIABILITIES AND
SHAREHOLDERS' EQUITY                                                   

CURRENT LIABILITIES                                                    

  Trade and other
  payables           $         70,480 $         65,830 $         63,875

  Derivative
  financial
  liability                       423                -            1,505

  Deferred revenue              8,153            9,279           22,278

  Current portion of
  long-term debt                1,545            1,451            1,474
    Total Current
    Liabilities                80,601           76,560           89,132
                                                                       

NON-CURRENT
LIABILITIES                                                            

  Other payables               11,541           11,022           11,110

  Deferred revenue                  -            2,323                -

  Deferred lease
  credits                      17,719           18,513           17,317

  Long-term debt                7,406            8,951            8,573

  Pension liability            15,596           13,948           14,877
    Total
    Non-Current
    Liabilities                52,262           54,757           51,877
                                                                       

SHAREHOLDERS' EQUITY                                                   

  Share capital                39,227           31,512           39,890

  Contributed
  surplus                       5,979            6,462            5,158

  Retained earnings           415,663          450,431          439,067

  Accumulated other
  comprehensive
  income                        8,125            7,399            8,737
    Total
    Shareholders'
    Equity                    468,994          495,804          492,852
                                                                       

TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY               $        601,857 $        627,121 $        633,861


REITMANS (CANADA) LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY 
(Unaudited)
(in thousands of Canadian dollars) 


                                                    Accumulated
                                                      Other         Total
                            Contributed            Comprehensive Shareholders'
                    Share               Retained
                   Capital    Surplus    Earnings     Income        Equity
                                                                              

Balance as at
January 29, 2012   $ 39,890 $     5,158 $  439,067 $       8,737 $     492,852
                                                                              

Cancellation of
shares pursuant to
share repurchase
program               (663)           -          -             -         (663)

Share-based
compensation costs        -         821          -             -           821

Net earnings              -           -     27,699             -        27,699

Dividends                 -           -   (39,151)             -      (39,151)

Premium on
repurchases of
Class A non-voting
shares                    -           -   (11,952)             -      (11,952)

Net change in fair
value of
available-for-sale
financial assets
(net of tax of
$100)                     -           -          -         (704)         (704)

Reclassification
of impairment loss
on
available-for-sale
financial assets
to net earnings
(net of tax of
$14)                      -           -          -            92            92
                                                                              

Balance as at
October 27, 2012   $ 39,227 $     5,979 $  415,663 $       8,125 $     468,994
                                                                              

Balance as at July
29, 2012           $ 39,890 $     5,694 $  440,494 $       7,941 $     494,019
                                                                              

Cancellation of
shares pursuant to
share repurchase
program               (663)           -          -             -         (663)

Share-based
compensation costs        -         285          -             -           285

Net earnings              -           -         38             -            38

Dividends                 -           -   (12,917)             -      (12,917)

Premium on
repurchases of
Class A non-voting
shares                    -           -   (11,952)             -      (11,952)

Net change in fair
value of
available-for-sale
financial assets
(net of tax of
$29)                      -           -          -           184           184
                                                                              

Balance as at
October 27, 2012   $ 39,227 $     5,979 $  415,663 $       8,125 $     468,994
                                                                              

Balance as at
January 30, 2011   $ 29,614 $     6,266 $  468,777 $       8,143 $     512,800
                                                                              

Cash consideration
on exercise of
share options         2,133           -          -             -         2,133

Ascribed value
credited to share
capital from
exercise of share
options                 545       (545)          -             -             -

Cancellation of
shares pursuant to
share repurchase
program               (780)           -          -             -         (780)

Share-based
compensation costs        -         741          -             -           741

Net earnings              -           -     42,865             -        42,865

Dividends                 -           -   (39,581)             -      (39,581)

Premium on
repurchases of
Class A non-voting
shares                    -           -   (21,630)             -      (21,630)

Net change in fair
value of
available-for-sale
financial assets
(net of tax of
$121)                     -           -          -         (808)         (808)

Reclassification
of impairment loss
on
available-for-sale
financial assets
to net earnings
(net of tax of $9)        -           -          -            64            64
                                                                              

Balance as at
October 29, 2011   $ 31,512 $     6,462 $  450,431 $       7,399 $     495,804
                                                                              

Balance as at July
31, 2011           $ 31,518 $     6,772 $  474,507 $       8,982 $     521,779
                                                                              

Cash consideration
on exercise of
share options           617           -          -             -           617

Ascribed value
credited to share
capital from
exercise of share
options                 157       (157)          -             -             -

Cancellation of
shares pursuant to
share repurchase
program               (780)           -          -             -         (780)

Share-based
compensation costs        -       (153)          -             -         (153)

Net earnings              -           -     10,561             -        10,561

Dividends                 -           -   (13,007)             -      (13,007)

Premium on
repurchases of
Class A non-voting
shares                    -           -   (21,630)             -      (21,630)

Net change in fair
value of
available-for-sale
financial assets
(net of tax of
$246)                     -           -          -       (1,647)       (1,647)

Reclassification
of impairment loss
on
available-for-sale
financial assets
to net earnings
(net of tax of $9)        -           -          -            64            64
                                                                              

Balance as at
October 29, 2011   $ 31,512 $     6,462 $  450,431 $       7,399 $     495,804


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


                        
                          For the nine months    For the three months
                                 ended                   ended
                       October 27, October 29, October 27, October 29,
                              2012        2011        2012        2011

CASH FLOWS FROM (USED
IN) OPERATING
ACTIVITIES                                                            

  Net earnings         $    27,699 $    42,865 $        38 $    10,561

  Adjustments for:                                                    
    Depreciation,
    amortization and
    impairment losses       44,141      48,548      15,121      18,334
    Share-based
    compensation costs         821         741         285       (153)
    Amortization of
    deferred lease
    credits                (3,381)     (3,468)     (1,123)     (1,148)
    Deferred lease
    credits                  3,783       2,970       2,243       2,146
    Pension
    contribution             (271)       (816)        (32)       (459)
    Pension expense            990       1,138         330         380
    Impairment loss on
    available-for-sale
    financial assets           106          73           -          73
    Net change in fair
    value of
    derivatives              (858)           -       (392)           -
    Foreign exchange
    loss (gain)                203       2,793       (651)         342
    Interest and
    dividend income,
    net                    (3,021)     (3,024)       (927)     (1,016)
    Interest paid            (453)       (522)       (145)       (170)
    Interest received          977         969         250         336
    Dividends received       2,610       2,592         872         866
    Income tax expense
    (recovery)               8,886      16,307       (141)       3,895
                            82,232     111,166      15,728      33,987

  Changes in:                                                         
    Trade and other
    receivables            (1,085)       (665)     (1,127)       (809)
    Inventories           (28,472)    (34,390)    (26,386)    (26,114)
    Prepaid expenses           113     (1,473)       3,483         300
    Trade and other
    payables                 7,862       3,531      10,843       7,265
    Deferred revenue      (14,125)    (10,616)     (1,806)     (5,066)

  Cash from operating
  activities                46,525      67,553         735       9,563

  Income taxes
  received                   4,497           -          22           -

  Income taxes paid       (19,800)    (31,060)     (2,354)     (3,546)

  Net cash flows from
  (used in) operating
  activities                31,222      36,493     (1,597)       6,017
                                                                      

CASH FLOWS USED IN
INVESTING ACTIVITIES                                                  

  Purchases of
  marketable
  securities                 (315)       (315)       (105)       (105)

  Additions to
  property and
  equipment and
  intangible assets       (65,742)    (43,223)    (24,243)    (18,604)

  Cash flows used in
  investing activities    (66,057)    (43,538)    (24,348)    (18,709)
                                                                      

CASH FLOWS (USED IN)
FROM FINANCING
ACTIVITIES                                                            

  Dividends paid          (39,151)    (39,581)    (12,917)    (13,007)

  Purchase of Class A
  non-voting shares
  for cancellation        (12,615)    (22,410)    (12,615)    (22,410)

  Repayment of
  long-term debt           (1,096)     (1,029)       (371)       (349)

  Proceeds from
  exercise of share
  options                        -       2,133           -         617

  Cash flows used in
  financing activities    (52,862)    (60,887)    (25,903)    (35,149)
                                                                      

FOREIGN EXCHANGE
(LOSS) GAIN ON CASH
HELD IN FOREIGN
CURRENCY                     (203)     (2,793)         651       (342)

NET DECREASE IN CASH
AND CASH EQUIVALENTS      (87,900)    (70,725)    (51,197)    (48,183)

CASH AND CASH
EQUIVALENTS, BEGINNING
OF THE PERIOD              196,835     230,034     160,132     207,492
                                                                      

CASH AND CASH
EQUIVALENTS, END OF
THE PERIOD             $   108,935 $   159,309 $   108,935 $   159,309



Jeremy H. Reitman Chairman and Chief Executive Officer

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

SOURCE: Reitmans (Canada) Limited

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/November2012/28/c4123.html

CO: Reitmans (Canada) Limited
ST: Quebec
NI: CLO RET TEX ERN 

-0- Nov/28/2012 22:20 GMT


 
Press spacebar to pause and continue. Press esc to stop.