REITMANS (CANADA) LTD. $11.98 - Toronto symbol RET.A

REITMANS (CANADA) LTD. $11.98 (Toronto symbol RET.A; TSINetwork Rating: Extra Risk) (514- 384-1140; www.reitmans.com; Shares outstanding: 65.5 million; Market cap: $784.7 million; Dividend yield: 6.7%) owns 918 women’s clothing stores across Canada.

The chain consists of 360 Reitmans, 154 Penningtons, 152 Smart Set, 110 Addition Elle, 74 Thyme Maternity and 68 RW & Co. stores.

In the three months ended July 28, 2012, Reitmans earned $27.4 million, or $0.42 a share. That was down 12.5% from $31.7 million, or $0.48 a share, a year earlier. Revenue was down 2.2%, to $279.5 million from $286.1 million. Same-store sales declined 1.3%.

Fewer shoppers visited Reitmans’ stores in the quarter due to weaker consumer confidence. The company also 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 $230.8 million, or $3.52 a share, and just $8.2 million of long-term debt. Its shares yield a high 6.7%.

Reitmans’ Thyme Maternity chain is Canada’s leading seller of maternity apparel and accessories. In addition to its 74 Canadian stores, it manages Thyme Maternity departments in 18 Babies “R” Us outlets in Canada.

Reitmans now has a partnership deal to open Thyme Maternity departments in 160 Babies “R” Us stores in the U.S. It expects to have the new stores in operation by January 2013.

Reitmans is still a buy.

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