Birks Group Inc. (the “Company” or “Birks Group”) (NYSE MKT LLC:
BGI), which operates 46 luxury jewelry stores in Canada, Florida
and Georgia, reported financial results on June 23, 2017 for the
fiscal year ended March 25, 2017 (“fiscal 2017”). Net sales
increased by $1.1 million in fiscal 2017 and the Company recorded
net income of $4.9 million. All amounts are in U.S. dollars.
Jean-Christophe Bédos, President and Chief Executive Officer of
Birks Group, commented “Our fiscal 2017 results are reflective of
our resiliency as a Company to adapt in a constantly changing and
very challenging retail environment in North America. Despite
current retail conditions in Canada, our sales grew by $1.1 million
over last year. We posted net earnings of $4.9 million due to a
strong performance in the US, in line with our fiscal 2016 net
earnings of $5.4 million. Our continued successes are attributable
to our dedication to enhancing customer experiences through our new
store designs, our new collections and our creative marketing
campaigns. Management is focused on growing the Birks brand through
a consumer-centric approach involving creative marketing and the
launch of new jewelry collections. We believe that the execution of
our strategies will allow the Company to achieve its objectives in
fiscal 2018.”
Fiscal 2017 Financial Overview:
- Net sales were $286.9 million for
fiscal 2017, an increase of $1.1 million compared to net sales of
$285.8 million in fiscal year ended March 26, 2016 (“fiscal
2016”). Net sales were $3.6 million higher than last year on a
constant currency basis (see “Non-GAAP measures”) after excluding
$2.5 million of lower sales due to the translation of the Company’s
Canadian sales into U.S. dollars with a weaker Canadian
dollar;
- Comparable store sales and comparable
store sales calculated on a constant exchange rate basis (see
“Non-GAAP measures”) both increased by 1% compared to the prior
fiscal year ended March 26, 2016;
- The comparable store sales increase of
1% reflects a 9% comparable store sales increase in the U.S.,
mainly driven by higher timepiece sales reflecting the success of
our strategy to introduce new watch brands while expanding our
offering of select watch and fine jewelry brands, offset by an 8%
decrease in comparable store sales in Canada, primarily driven by
difficult economic conditions in Western Canada and decreased
spending by certain affluent tourists;
- Gross profit was $108.4 million, or
37.8% of net sales, for fiscal 2017, compared to
$109.4 million, or 38.3% of net sales, for fiscal 2016. The
reduction of 50 basis points in gross margin percentage is mainly
due to product sales mix and the impact of foreign exchange;
- Selling, general and administrative
expenses were $94.2 million, or 32.8% of net sales, in fiscal 2017
compared to $91.1 million, or 31.9% of net sales, in fiscal 2016.
The increase is mainly due to additional direct variable costs
driven by higher U.S. sales and due to the increased use of
in-house credit plans that attracted new customers during fiscal
2017, partially offset by the efficiencies that resulted from the
operational restructuring plan that was initiated in fiscal
2015;
- The Company’s fiscal 2017 reported
operating income was $8.3 million, a decrease of $7.2 million
compared to $15.5 million in fiscal 2016. Adjusted operating income
(see “Non-GAAP measures”), which excludes restructuring costs, was
$9.2 million, a decrease of $3.8 million compared to $13.0 million
in fiscal 2016 (excluding restructuring costs and gain on sale of
assets); and
- Net income for fiscal 2017 was
$4.9 million, or $0.27 per share, compared to net income of
$5.4 million, or $0.30 per share in fiscal 2016. Excluding the
impact of $0.8 million of restructuring charges recorded during
fiscal 2017, the Company’s net income for fiscal 2017 was $5.7
million, or $0.32 per share, compared to a net income of
$3.0 million, or $0.17 per share, for fiscal 2016 after
excluding the $0.8 million restructuring charges and the
$3.2 million of gain on sale of assets.
About Birks Group Inc.
Birks Group is a leading operator of luxury jewelry stores in
Canada and Southeastern United States. As of May 31, 2017, the
Company operated 26 stores under the Birks brand in most major
metropolitan markets in Canada, 17 stores in Florida and Georgia
under the Mayors brand, one store under the Rolex brand name and
two retail locations in Calgary and Vancouver under the Brinkhaus
brand. Birks was founded in 1879 and developed over the years into
Canada’s premier retailer and designer of fine jewelry, timepieces
and gifts. Mayors was founded in 1910 and has maintained the
intimacy of a family-owned boutique while becoming renowned for its
fine jewelry, timepieces and service. Additional information can be
found on Birks Group web site, www.birksgroup.com.
NON-GAAP MEASURES
The Company reports information in accordance with U.S.
Generally Accepted Accounting Principles (“U.S. GAAP”). The
Company’s performance is monitored and evaluated using various
sales and earnings measures that are adjusted to include or exclude
amounts from the most directly comparable GAAP measure (“non-GAAP
measures”). The Company presents such non-GAAP measures in
reporting its financial results to investors and other external
stakeholders to provide them with useful complimentary information
which will allow them to evaluate the Company’s operating results
using the same financial measures and metrics used by the Company
in evaluating performance. The Company does not, nor does it
suggest that investors and other external stakeholders should,
consider non-GAAP measures in isolation from, or as a substitute
for, financial information prepared in accordance with U.S. GAAP.
These non-GAAP measures may not be comparable to similarly-titled
measures presented by other companies.
Constant currency basis
The Company evaluates its sales performance using non-GAAP
measures which eliminates the foreign exchange effects of
translating net sales, comparable store sales and gross profit made
in Canadian dollars to U.S. dollars (constant currency basis or
constant exchange rate basis). Net sales, comparable store sales
and gross profit on a constant exchange rate basis are calculated
by taking the current period’s sales and gross profit in local
currency and translating them into U.S. dollars using the prior
period’s foreign exchange rates. The Company believes that such
measures provide useful supplemental information with which to
assess the Company’s performance relative to the corresponding
period in the prior year. The following tables reconcile the net
sales, comparable store sales and gross profit increases
(decreases) from GAAP to non-GAAP versus the previous fiscal
year:
Constant Exchange RateBasis
Reconciliation
Fiscal 2017 vs. Fiscal 2016 Fiscal 2016 vs.
Fiscal 2015 GAAP
TranslationEffect
ConstantExchange
RateBasis
GAAP TranslationEffect
ConstantExchange
RateBasis
Net Sales (in $ 000's) Net sales
- Retail 1,867 (2,619) 4,486 (11,206) (19,606) 8,400 Net sales -
Other (772) 146 (918) (4,605)
(556) (4,049) Total Net Sales 1,095 (2,473) 3,568 (15,811)
(20,162) 4,351
Gross Profit (in $ 000's)
Total Gross Profit (953) (383) (570)
(8,418) (8,349) (69)
Constant Exchange RateBasis
Reconciliation
Fiscal 2017 vs. Fiscal 2016
ComparableStore Sales
TranslationEffect
ComparableStore Sales on
aConstant Exchange RateBasis
Comparable Store
Sales (in %)
Canada -8% 0% -8% U.S 9% 0% 9% Total 1%
0% 1%
Fiscal
2016 vs. Fiscal 2015
ComparableStore Sales
TranslationEffect
ComparableStore Sales on
aConstantExchange RateBasis
Comparable Store
Sales (in %)
Canada -8% -14% 6% U.S 1% 0% 1% Total
-4% -7% 3%
Fiscal 2015 vs. Fiscal 2014
ComparableStore Sales
TranslationEffect
ComparableStore Sales on
aConstantExchange RateBasis
Comparable Store
Sales (in %)
Canada -8% -20% 12% U.S 19% 0% 19%
Total 1% -15% 16%
Adjusted operating expenses and adjusted operating
income
The Company evaluates its operating performance using financial
measures which exclude expenses associated with operational
restructuring plans, a non-recurring gain on disposal of the
corporate sales division and impairment losses. The Company
believes that such measures provide useful supplemental information
with which to assess the Company’s results relative to the
corresponding period in the prior year and can result in a more
meaningful comparison of the Company’s performance between the
periods presented. The table below provides a reconciliation of the
non-GAAP measures presented to the most directly comparable
financial measures calculated with GAAP.
Reconciliation of
non-GAAPmeasures
Year ended March 25, 2017
($'000) GAAP Restructuringcosts (a)
One-timegain (b)
Impairmentloss (c)
Non-GAAP
Operating expenses 100,102 (842) - - 99,260 as a % of net
sales 34.9%
34.6% Operating income 8,332 842 - - 9,174 as a % of net
sales 2.9%
3.2%
Reconciliation of
non-GAAPmeasures
Year ended March 26, 2016
($'000) GAAP Restructuringcosts
(a) One-timegain (b)
Impairmentloss (c)
Non-GAAP
Operating expenses 93,879 (754) 3,229 - 96,354 as a % of net
sales 32.8%
33.7% Operating income 15,508 754 (3,229) - 13,033 as
a % of net sales 5.4%
4.6%
Reconciliation of
non-GAAPmeasures
Year ended March 28, 2015 ($'000)
GAAP Restructuringcosts (a)
One-timegain (b)
Impairmentloss (c)
Non-GAAP
Operating expenses 112,509 (2,604) - (238) 109,667 as a % of
net sales 37.3%
36.4% Operating income 5,296 2,604 - 238 8,138
as a % of net sales 1.8%
2.7%
(a) Expenses associated with the Company’s operational
restructuring plan(b) Non-recurring gain on disposal of assets
resulting from the Company’s sale of its corporate sales division
in fiscal 2016(c) Non-recurring loss associated with the decision
to abandon a software project and a Birks retail shop-in-shop in
fiscal 2015
The Company did not present such non-GAAP measures in prior
years.
Forward Looking
Statements
This press release contains certain “forward-looking” statements
concerning the Company’s performance and strategies, including that
the execution of its strategies will allow the Company to continue
to produce positive results in fiscal 2018 and that it’s Non-GAAP
measures provide useful supplemental information with which to
assess the Company’s performance relative to the corresponding
period in the prior year. Because such statements include various
risks and uncertainties, actual results might differ materially
from those projected in the forward-looking statements and no
assurance can be given that we will meet the results projected in
the forward-looking statements. These risks and uncertainties
include, but are not limited to the following: (i) economic,
political and market conditions, including the economies of the
U.S. and Canada, which could adversely affect our business,
operating results or financial condition, including our revenue and
profitability, through the impact of changes in the real estate
markets (especially in the state of Florida), changes in the equity
markets and decreases in consumer confidence and the related
changes in consumer spending patterns, the impact on store traffic,
tourism and sales; (ii) the impact of fluctuations in foreign
exchange rates, increases in commodity prices and borrowing costs
and their related impact on the Company’s costs and expenses; (iii)
the Company’s ability to maintain and obtain sufficient sources of
liquidity to fund its operations, to achieve planned sales, gross
margin and net income, to keep costs low, to implement its business
strategy, maintain relationships with its primary vendors, to
mitigate fluctuations in the availability and prices of the
Company’s merchandise, to compete with other jewelers, to succeed
in its marketing initiatives, and to have a successful customer
service program. Information concerning factors that could cause
actual results to differ materially are set forth under the
captions “Risk Factors” and “Operating and Financial Review and
Prospects” and elsewhere in our Annual Report on Form 20-F filed
with the Securities and Exchange Commission on June 23, 2017 and
subsequent filings with the Securities and Exchange Commission. The
Company undertakes no obligation to update or release any revisions
to these forward-looking statements to reflect events or
circumstances after the date of this statement or to reflect the
occurrence of unanticipated events, except as required by law.
BIRKS GROUP INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED(In
thousands, except per share amounts)
Fiscal YearEndedMarch
25,2017
Fiscal YearEndedMarch
26,2016
Net sales $ 286,921 $ 285,826 Cost of sales 178,487
176,439 Gross profit 108,434 109,387 Selling, general
and administrative expenses 94,226 91,125 Restructuring charges 842
754 Depreciation and amortization 5,034 5,229 Gain on sale of
assets - (3,229) Total operating expenses
100,102 93,879 Operating income 8,332 15,508 Interest
and other financing costs 8,681 10,020 Debt extinguishment charges
- - Income (loss) before income taxes (349) 5,488
Income tax expense (5,277) 50 Net income $ 4,928 $
5,438 Weighted average shares outstanding: Basic 17,961
17,961 Diluted 18,418 17,961 Net income (loss) per share:
Basic $ 0.27 $ 0.30 Diluted $ 0.27 $ 0.30
BIRKS GROUP INC.CONDENSED
CONSOLIDATED BALANCE SHEETS – UNAUDITED(In
thousands)
March 25, 2017 March 26,
2016 Assets Current assets: Cash and cash
equivalents $ 1,944 $ 2,344 Accounts receivable 13,561
10,293 Inventories 132,069 137,839 Prepaids and other current
assets 2,191 1,793 Total current assets 149,765
152,269 Property and equipment 22,990 29,419 Intangible
assets 690 792 Other assets 190 493 Deferred income taxes
5,303 - Total non-current assets 29,173 30,704
Total assets $ 178,938 $ 182,973
Liabilities and
Stockholders’ Equity Current liabilities: Bank indebtedness $
70,434 $ 62,431 Accounts payable 46,657 46,730 Accrued liabilities
8,386 9,040 Current portion of long-term debt 2,810
5,634 Total current liabilities 128,287 123,835 Long-term
debt 30,525 46,651 Other long-term liabilities 7,330
4,783 Total long-term liabilities 37,855 51,434
Stockholders’ equity: Common stock 69,601 69,601 Additional paid-in
capital 16,372 16,216 Accumulated deficit (73,921) (78,849)
Accumulated other comprehensive income 744 736 Total
stockholders’ equity 12,796 7,704 Total liabilities
and stockholders’ equity $ 178,938 $ 182,973
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170623005084/en/
Birks Group Inc.Financial:Pat Di Lillo,
1-514-397-2592Vice President, Chief Financial & Administrative
Officerpdilillo@birksgroup.comorMedia:Eva Hartling,
1-514-397-2496Vice President, Birks Brand & Chief Marketing
Officerehartling@birksgroup.com
Birks (AMEX:BGI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Birks (AMEX:BGI)
Historical Stock Chart
From Apr 2023 to Apr 2024
