REITMANS (CANADA) LTD. $11.97 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514-384-1140; www.reitmans.com; Shares outstanding: 65.5 million; Market cap: $784.0 million; Dividend yield: 6.7%) owns 925 women’s clothing stores across Canada.
The chain consists of 364 Reitmans, 154 Penningtons, 153 Smart Set, 114 Addition Elle, 74 Thyme Maternity and 66 RW & Co. stores.
In the three months ended April 28, 2012, Reitmans lost $53,000, or nil per share, compared to a profit of $624,000, or $0.01 a share, a year earlier. The company’s sales were down 1.0%, to $217.1 million from $219.3 million. Same-store sales declined 0.7%.
Fewer shoppers visited Reitmans’ stores in the quarter due to weaker consumer confidence. As well, the company spent more on promotions to fend off rising competition. However, Reitmans’ strong brands should help its earnings rebound as consumer spending continues to recover.
The retailer’s balance sheet remains strong: it holds cash of $209.5 million, or $3.20 a share, and just $8.2 million of long-term debt. Its shares yield a high 6.7%.
Reitmans recently signed a partnership deal with Babies “R” Us to sell its Thyme Maternity clothing and accessories in the U.S.
The company’s Thyme Maternity chain is Canada’s leading retailer of maternity apparel. It operates 74 stores in Canada, as well as Thyme Maternity departments in 18 Canadian Babies “R” Us outlets. Under the deal, Babies “R” Us will start selling Thyme Maternity products in 160 U.S stores later this year.
Reitmans is still a buy.
