Reitmans posts $2.57M loss, lower sales in Q4, as it reduces costs at banners

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MONTREAL – Clothing retailer Reitmans (Canada) Ltd. (TSX:RET.A) reported a net loss of $2.57 million in its fourth quarter, as it continues to work at reducing costs and improving efficiencies across all its banners.

That amounted to a loss of 4 cents per dilluted share, compared with a loss of $1.14 million, or 2 cents, in the same period a year earlier.

Sales were $240.68 million for the three-month period ended Feb. 1, versus $267.66 million a year ago, when the quarter included an extra week due to the timing of the company’s year-end.

The operator of mainly women’s clothing chains such as Reitmans, RW & Co., Smart Set, Penningtons and others said same-store sales, an important metric in the retail industry, contracted 2.3 per cent in the quarter.

It reported after markets closed Wednesday, that sales at Smart Set, and its Thyme Maternity shops in the U.S. were particularly disappointing.

For the year, Reitmans saw its net income drop 59 per cent to $10.79 million or 17 cents per dilluted share, compared with $26.36 million or 40 cents per dilluted share in fiscal 2013. Yearly sales were $960.4 million versus $1 billion for 2013. Same-store sales fell by 2.8 per cent.

Reitmans said it has made several changes to stay competitive in the retail space, including slashing its pricing and offering promotional sales across most of its banners. It’s also started a rebranding at Reitmans, Addition Elle and Penningtons, which it said has been met with positive feedback.

The company has also launched a review of its head office, resulting in layoffs that accounted for severance costs of approximately $1.7 million, which will have an impact on its fiscal 2014 results. Once the layoffs are finished, Reitmans projects annualized savings of $6 million by January 31, 2015.

In 2013, Reitmans said it opened 25 new stores and closed 58.

At the end of the quarter, it had 878 stores in operation — 349 Reitmans, 129 Smart Set, 77 RW & CO., 70 Thyme Maternity, 152 Penningtons, and 101 Addition Elle — down from 911 stores a year earlier. The company also operates 23 Thyme Maternity stores in select Babies R Us locations in Canada and 169 in the United States.

Reitmans declared a quarterly cash dividend of 5 cents per share on all outstanding Class A non-voting and Common shares in the company on Wednesday, payable April 24 to all shareholders of record on April 10, 2014.

In December, the company’s stock received a bump after Fairfax Financial Holdings Ltd. (TSX:FFH) announced it had increased its stake in the retailer, to 13.8 per cent from just under 10 per cent.

At the time, Fairfax did not give a reason for acquiring shares in the company, whose stock has fallen steadily since hitting almost $20 in 2010, saying only that it “continually reviews its investment alternatives and may purchase additional shares of Reitmans from time to time in accordance with applicable laws.”

Reitmans shares closed up 20 cents, or 3.47 per cent, at $5.96 Wednesday on the Toronto Stock Exchange.

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