The focus of Reitmans’ newest chain of clothing stores helped raise sales in the latest quarter. That’s despite the high U.S. dollar and its impact on earnings.
REITMANS (CANADA) LTD. (Toronto symbol RET.A; www.reitmans.com) owns 750 women’s clothing stores across Canada.
Those outlets are divided among several brands: Reitmans (327 stores), Penningtons (130), Addition Elle (104), RW & Co. (83), Thyme Maternity (68), Smart Set (23) and Hyba (17). The company also has 21 Thyme Maternity boutiques in Canadian Babies “R” Us stores.
On October 8, 2015, the company opened its 17 new Hyba women’s activewear stores across Canada. Activewear is one of the country’s fastest growing clothing categories.
In the three months ended April 30, 2016, Reitmans’ sales rose 0.9%, to $203.5 million from $201.7 million a year earlier. Revenue increased despite the closure of 60 stores (mostly Smart Set locations) over the last year. Same-store sales gained 8.8%.
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In the quarter, the retailer lost $6.0 million, or $0.09 a share, compared to its loss of $7.7 million, or $0.12 a share, a year earlier. The high U.S. dollar was a major factor in the loss. It hurt profit margins because the company buys its merchandise from China, priced in U.S. dollars. That offset its cost-cutting measures, including layoffs at its head office.
Reitmans’ balance sheet remains strong: it holds cash of $125.0 million, or $1.97 a share, and its long-term debt is just $1.2 million. The stock yields 4.7%.
The company’s willingness to close unprofitable stores is good for its long-term success. However, competition in the clothing market makes its sales outlook uncertain.
One advantage that traditional retailers have over online is the ability to try on clothes before buying them. I’ve been disappointed with some internet clothes, and it takes forever to ship them back and get a refund.
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One advantage that traditional retailers have over online is the ability to try on clothes before buying them. I’ve been disappointed with some internet clothes, and it takes forever to ship them back and get a refund.