MONTREAL, June 8, 2020 /CNW Telbec/ -
Results*
For the year ended January 31, 2020, the Company's revenues decreased by $22,305,000 to $720,169,000 compared to $742,474,000 recorded for the year ended January 31, 2019, a 3% decrease. Net earnings for the year ended January 31, 2020 amounted to $36,034,000 compared to $45,165,000 recorded for the corresponding 2019 period. Basic net earnings per share amounted to $1,05 compared to $1.29 recorded in the corresponding 2019 period.
The effect of the cost of options had no impact on basic net earnings per share for the years ended January 31, 2020 and 2019.
For the year ended January 31, 2020, the share repurchase program contributed to an increase in basic net earnings of $0.02 per share, whereas during the corresponding 2019 period it contributed to an increase of $0,06 on basic net earnings per share.
During the year ended January 31, 2019, the Company sold its Repentigny store for an amount of $9,000,000 resulting in an after-tax gain of $4,522,000 or $0.13 per basic share.
During the year ended January 31, 2020, the Company proceeded with the sale of the Kirkland store for an amount of $4,915,000 resulting in an after-tax gain of $1,048,000 or $0.03 per basic share.
Excluding all these effects, the variation in adjusted net earnings would have been ($5,518,000) or $0.16 per basic share for the year ended January 31, 2020.
The ($5,518,000) variation in adjusted net earnings is as follows:
|
|
|
| ($ in thousands) |
|
|
|
| Jan. 31, 2020 |
|
| Jan. 31, 2019 |
Net earnings |
|
|
| 36 034 |
|
| 45 165 |
Gain on disposal of fixed assets (after-tax) | (1 048) |
|
| (4 522) |
Variation in cost of options (after-tax) |
| (87) |
|
| (226) |
Adjusted net earnings |
|
| 34 899 |
|
| 40 417 |
Minus: Adjusted net earnings for 2019 |
| 40 417 |
|
|
|
Variation |
|
|
| (5 518) |
|
|
|
|
* As of February 1, 2019, the Company has applied IFRS 16 retrospectively, without restating comparative information as permitted by the standard. |
This variation in adjusted after-tax income is allocated throughout the quarters as follows:
| ($ in thousands) |
|
|
| Increase (decrease) in
retail operating earnings | Increase (decrease)
in investment income | Increase (decrease) in
adjusted operating earnings |
1st quarter | (5 586) | 1 924 | (3 662) |
2nd quarter | (1 681) | (1 772) | (3 453) |
3rd quarter | (3 249) | 2 333 | (916) |
4th quarter | 230 | 2 283 | 2 513 |
Total | (10 286) | 4 768 | (5 518) |
The decrease in gross profit is due to the decline in revenues and accounts for 84% of the decrease in retail operating earnings of the Company.
The retail operating earnings have also been affected by the considerable increase in delivery costs, as well as the costs associated with store openings, modifications and renovations of the banners within the Company.
Annual financial information |
($ in thousands, except for per share amounts) |
|
|
| January 31, 2020 | January 31, 2019 |
Revenue |
| 720 169 | 742 474 |
Net earnings |
| 36 034 | 45 165 |
Total assets |
| 382 040 | 367 624 |
Net earnings per share |
|
|
|
Basic | 1,05 | 1,29 |
Diluted | 1,05 | 1,29 |
Dividends per share |
| 0,28 | 0,28 |
Financial position and dividends
Cash, net of the bank overdraft, and investments increased by $17,197,000 during the year ended January 31, 2020. Investments consist of bank notes, government and corporate bonds, preferred and common shares, which at the end of the year had a market value of $123,985,000 (including cash net of bank overdraft).
As at January 31, 2020, the working capital showed a deficit of $19,467,000, an increase of $17,358,000 compared to the year ended January 31, 2019. The Company's shareholders' equity decreased from $244,742,000 as at January 31, 2019, to $216,624,000 as at January 31, 2020. As at January 31, 2020, the book value per share stood at $6.35, compared to $7.09 as at January 31, 2019.
Pursuant to the normal course issuer-bid put in place on April 13, 2018, and renewed on April 15, 2019, accordingly, 452,000 common shares were repurchased and cancelled by the Company. As a result of this change, the Company had as at January 31, 2020, 34,088,000 common shares issued and outstanding.
During the year ended January 31, 2020, no options were granted or exercised. As at January 31, 2020, options for 197,100 common shares, representing 0.58% of the Company's outstanding shares, remain issued. These issued and outstanding options could be exercised at a price of $17.85 per common share. As at April 1st, 2020, options regarding 197,100 Common Shares expired and were radiated without being exercised as they were underwater. As at April 1st, 2020, the closing price of the Common Shares on the Toronto Stock Exchange was $5.97. The Company may still grant pursuant to the Plan a total of 5,710,864 options, representing 16,75% of the issued and outstanding shares of the Company.
During the fiscal year ended January 31, 2020, the Company paid eligible dividends totalling $0.28 per common share to holders.
Quarterly results * |
($ in thousands, except for per share amounts) |
|
|
| April 30, 2019 | April 30, 2018 | July 31, 2019 | July 31, 2018 |
Revenue |
| 150 310 | 162 754 | 215 067 | 220 368 |
Net earnings |
| (3 455) | 4 806 | 13 480 | 16 933 |
Net earnings per share |
|
|
|
|
Basic | (0,10) | 0,13 | 0,39 | 0,48 |
Diluted | (0,10) | 0,13 | 0,39 | 0,48 |
|
|
|
|
|
|
| October 31,
2019 | October 31,
2018 | January 31,
2020 | January 31,
2019 |
Revenue |
| 183 312 | 184 718 | 171 480 | 174 634 |
Net earnings |
| 10 649 | 11 613 | 15 360 | 11 813 |
Net earnings per share |
|
|
|
|
Basic | 0,31 | 0,34 | 0,45 | 0,34 |
Diluted | 0,31 | 0,34 | 0,45 | 0,34 |
|
*Comparative data relating to revenue have been restated following a change in presentation. |
For the three-month period ended January 31, 2020, the Company's revenues decreased by $3,154,000 to $171,480,000, compared to $174,634,000 recorded for the corresponding period, a 2 % decrease. Net earnings for the three-month period ended January 31, 2020, amounted to $15,360,000 compared to $11,813,000 recorded for the corresponding 2019 period. Basic net earnings per share decreased to $0.45 compared to $0.34 for the corresponding 2019 period.
The effect of the cost of options had no impact on basic net earnings per share for the three-month periods ended January 31, 2020 and 2019.
For the three-month period ended January 31, 2020, the share repurchase program contributed to an increase in basic net earnings per share of $0.01.
During the quarter ended January 31, 2020, the Company proceeded with the sale of the Kirkland store for an amount of $4,915,000 resulting in an after-tax gain of $1,048,000 or $0.03 per basic share.
Excluding all these effects, the variation to the adjusted net earnings would have been $2,513,000 or $0.07 per basic share for the quarter ended January 31, 2020.
The $2,513,000 variation in adjusted net earnings is as follows:
|
|
| ($ in thousands) |
|
|
|
|
|
|
| Jan. 31, 2020 |
| Jan. 31, 2019 |
Net earnings |
|
| 15 360 |
| 11 813 |
Gain on disposal of land (after-tax) |
| (1 048) |
| - |
Variation of cost of options (after-tax) | - |
| (14) |
Adjusted net earnings |
|
| 14 312 |
| 11 799 |
Minus: Adjusted net earnings for 2019 | 11 799 |
|
|
|
|
|
|
|
|
Variation |
|
| 2 513 |
|
|
Operations
BMTC Inc.
The Company continues to restructure all of its websites and the first phase of the implementation of a distinct e-commerce platform for its banners Brault & Martineau and EconoMax is now completed and operational. The process of implementation will continue throughout 2020 for the following phases as well as the restructuring for all the other banners of the Company. The Company also reviewed its IT systems in to order standardize them throughout the banners, as well as to allow them to be more aligned with its e-commerce strategies. Following this review, the Company decided to invest and to modify its existing IT systems, the integration and implementation which will continue for a 3 to 5 year period.
Brault & Martineau Division
The new Brault & Martineau St-Rose store opened on June 12, 2019. This store represents the new prototype for the Brault & Martineau banner. During the quarter, the old Brault & Martineau was closed and converted into an EconoMax, which replaced the EconoMax on Boulevard des Laurentides in Laval.
The cost incurred with the opening of the new St-Rose store was $1,459,000, while the cost incurred for the conversion of the old Brault & Martineau store into an EconoMax in St-Thérèse was of $1,246,000.
On November 6, 2019, the Company proceeded with the sale of the Kirkland store. During this same transaction, the Company purchased land along the Autoroute 40 in the city of Kirkland in order to build a new Brault & Martineau store of approximately 80,000 square feet which will replace the actual Kirkland store. On this same land, the Company is building an EconoMax store of approximately 50,000 square feet which will replace the EconoMax store on Côte-Vertu. The construction of these two stores has already begun, and their openings are scheduled for fall 2020. The transfer of operations of these two existing stores will be done following the completion of these new stores.
The Company continues the evaluation process for different sites as well as its existing stores to modify them or in certain cases proceed with the reconstruction of a new store based on its new prototype. The new Kirkland store will be the second of the banner to be modified. The Company anticipates that in the next few years it will incur costs related to the modification and improvement of its actual network is to be considered.
Management discussion and outlook for the future of the Company
According to Statistics Canada, retail sales in Quebec have dropped 1.5% from June to December 2019. British Columbia, Alberta and Saskatchewan have also recorded a slowdown, while the other Canadian provinces have remained flat. As for the Company its revenues decreased approximately by 2% during this same period.
Despite the small increase recorded in retail business during the last few months, more than 500 retail stores across Canada were closing or had just announced their imminent closing according to Retail Insider. For example, the American retail hardware store Lowe's is in the process of closing 34 stores across Canada, including 26 RONA stores in the province of Quebec.
Furthermore, we are seeing a growing number of retail space available for rent in shopping centers across Quebec. The high cost of rental space and the growing competition of online retailers who have no brick and mortar in Quebec has resulted in the closure of many retailers. In addition, the increase of the cost of living paired with the slow growth of salaries as well as the high level of Quebecers who are indebted are all factors which explain the slight increase in consumer spending.
From the beginning January to mid-March 2020, retail sales increased by 0.3% which were primarily boosted by car sales and related car parts. Excluding car sales and car parts, the increase in retail sales would have been 0.2%. According to the Agency, for the first time since October 2018, retail sales have recorded a 3-month consecutive positive growth rate. The Company's revenues increase by approximately 1.7% during this same period.
On March 11th, 2020, the World Health Organization declared COVID-19 a global pandemic. The financial impact of COVID-19 began to manifest itself by a decrease in store traffic and consequently store revenues in the early weeks of March 2020. Following the rapid rise of COVID-19 cases in the province of Quebec, our priority during this difficult period remains at all times the health and safety of our employees and clients. In order to protect the Quebec population and to prevent the spread of COVID-19 by encouraging social distancing initiatives recommended by both levels of government, the Company decided on March 18th, 2020, to temporarily close its retail sales network, namely our Ameublements Tanguay banner in the Quebec City area and the Brault & Martineau and EconoMax banners in the Montreal area. On March 23rd, 2020, the Quebec government announced, for the same reason, the closure of all non-essential retail stores across the province.
In order to address the devastating effects of COVID-19 and to assure its short and long-term financial health, the Company decided to maintain its operations at a strict minimum level while preserving its presence in our market and controlling its working capital position. The following actions were undertaken by the Company during these last weeks in order to support its operating and working capital objectives:
- Following the closure of our retail sales network on March 18th, 2020, the Company temporarily laid off approximately 75% of its personnel, the vast majority stemming from our retail stores.
- Our online and delivery services remained operational across Quebec to ensure the population in confinement the ability to rely on essential goods while respecting government-mandated security protocols. We modified our services to offer contactless home delivery.
- During this period, the Company introduced several measures and protocols in preparation for the reopening of our stores across our sales network to ensure and protect the health and security of our employees and our clients. These new measures and protocols will be in effect until the end of the COVID-19 pandemic.
- The Company has also made technological and operational improvements to its sales network. These modifications will allow us to reduce our fixed costs and will contribute to our initiatives of effective cost controls.
- The Company applied for the Canada Emergency Wage Subsidy given the 30% or more decrease in revenues during the prescribed period.
During the closure of our retail stores, from March 19th to May 3rd, 2020, online sales increase significantly. Despite this significant increase, the online sales only partially compensated for in-store sales for the 2019 corresponding period.
On May 4th, 2020, the Quebec government authorized the reopening of non-essential businesses situated outside of the Greater Montreal Area. The Ameublements Tanguay banner was able to reopen all retail locations, except for one. The EconoMax banner was able to reopen the Drummondville, Joliette and Granby stores, while the Brault & Martineau banner reopened the Sherbrooke and Gatineau stores. As at May 4th, 2020, the Company had 16 of 32 stores operational. In the days following the reopening on May 4th, in-store sales increased between 45% and 65% compared to the same period in 2019. This increase, however, has slowed down in recent weeks to stabilize to comparable results to the 2019 period. In addition, online sales continued to increase significantly during this period compared to the corresponding period of 2019.
On May 25th, 2020, the Quebec government authorized the reopening of non-essential businesses situated in the Greater Montreal Area. This allowed the Company to reopen a total of 31 of 32 stores across the province of Quebec. Finally on June 1st, 2020 the Quebec government authorised the reopening of commercial centers, therefore Ameublements Tanguay was able to reopen its 11th store. As at June 1st, 2020, all of the 32 stores were fully operational. In-store sales in the Greater Montreal Area increased by 83% in the days following their reopening on May 25th, 2020. However, the in-store sales has slowed down in recent weeks to stabilize to comparable results to the 2019 period. During the month of May 2020, the Company's online sales continued to grow despite the gradual reopening of its stores.
The rehiring of temporarily laid-off employees is in progress and proceeding as the situation evolves. The Company has actively worked to promote a call-back of its employees as soon as possible and according to operational needs.
Cost associated with the COVID-19, the new measures the Company had to implement in its stores and distribution centers and the effects of the closures and re-openings of our stores will have a significant impact on the Company's financial results in the first and second quarter of 2020.
As at January 31st, 2020, cash and investments had a market value of $123,985,000. The Company's financial position will allow it to weather through this period of uncertainty with more ease. Also, the Company owns nearly all of its stores and distribution centers, which reduces pressure on cash flow requirements.
Management is confident that the Company's operational efficiency during this crisis, its market leadership and solid financial position will allow us to emerge a stronger organization even in these difficult market conditions.
We would like to take this opportunity to thank all our fellow citizens who are relentlessly working day and night with extreme dedication to reduce spread of COVID-19 and who to caring for those who have been infected. Our thoughts are also with all those who have in any way been affected by the virus.
Caution regarding forward-looking statements
This press release contains certain forward-looking statements with respect to the Company. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "estimate", expect", "intend", "may", "plan", "predict", "project", "will", "would", as well as the opposites of these terms and similar terminology, including references to assumptions.
Forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, which the Company has identified in the 2020 Annual Information Form under "Narrative Description of the Business - Risk Factors", and other risks detailed from time to time in the Company's continuous disclosure documents.
The reader is cautioned that the factors we refer above are not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to put undue reliance on forward-looking statements.
The Company made a number of assumptions in making forward-looking statements in this press release. The Company considers the assumptions on which these forward-looking statements are based to be reasonable.
These statements reflect current expectations regarding future events and operating performance and speak only as of the date of release of this Annual Management Report, and represent the Company's expectations as of that date. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law.
Non International Financial Reporting Standards (IFRS) financial measures
The Company discloses adjusted net earnings, which includes or excludes certain amounts that are not considered representative of the performance measures and financial recurrence of the Company. Management believes that this measure is useful in understanding and analyzing the operational performance of the Company and that it can provide additional information.
Adjusted net earnings as well as same store revenues are not an earnings measure recognized by IFRS and do not have a standardized meanings prescribed by IFRS. Therefore, adjusted net earnings and same store revenues as discussed in this Annual Management Report may not be compared to similar measures presented by other issuers. These measures of performance should not be considered as alternatives to indicators of performance calculated according to IFRS, but rather as a source of additional information.
The Company discloses in this press release under the section "Results" a reconciliation between net earnings and adjusted net earnings.
BMTC Group Inc.'s Common Shares are listed on the Toronto Stock Exchange and through its subsidiary Ameublements Tanguay Inc., and its two divisions, Brault & Martineau and EconoMax, the Company is a major retailer of furniture, electronic goods and household appliances operating in the province of Quebec.
SOURCE BMTC Group Inc.
© Canada Newswire, source Canada Newswire English
BMTC GROUP INC. 
