MONTREAL, June 23, 2017 /CNW Telbec/ - 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
Rate
Basis
Reconciliation
|
Fiscal 2017 vs.
Fiscal 2016
|
Fiscal 2016 vs.
Fiscal 2015
|
|
GAAP
|
Translation
Effect
|
Constant
Exchange
Rate Basis
|
GAAP
|
Translation
Effect
|
Constant
Exchange
Rate Basis
|
|
|
|
|
|
|
|
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
Rate
Basis
Reconciliation
|
Fiscal 2017 vs.
Fiscal 2016
|
|
Comparable
Store Sales
|
Translation
Effect
|
Comparable
Store Sales on a
Constant
Exchange Rate
Basis
|
Comparable Store
Sales (in %)
|
|
|
|
|
|
|
|
Canada
|
-8%
|
0%
|
-8%
|
U.S
|
9%
|
0%
|
9%
|
Total
|
1%
|
0%
|
1%
|
|
|
|
|
|
Fiscal 2016 vs.
Fiscal 2015
|
|
Comparable
Store Sales
|
Translation
Effect
|
Comparable
Store Sales on a
Constant
Exchange Rate
Basis
|
Comparable Store
Sales (in %)
|
|
|
|
|
|
|
|
Canada
|
-8%
|
-14%
|
6%
|
U.S
|
1%
|
0%
|
1%
|
Total
|
-4%
|
-7%
|
3%
|
|
|
|
|
|
Fiscal 2015 vs.
Fiscal 2014
|
|
Comparable
Store Sales
|
Translation
Effect
|
Comparable
Store Sales on a
Constant
Exchange Rate
Basis
|
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-GAAP measures
|
Year ended March
25, 2017
|
|
|
|
|
|
|
($'000)
|
GAAP
|
Restructuring
costs (a)
|
One-time
gain (b)
|
Impairment
loss (c)
|
Non-
GAAP
|
|
|
|
|
|
|
Operating
expenses
|
100,102
|
(842)
|
-
|
-
|
99,260
|
|
as a % of net
sales
|
34.9%
|
|
|
|
34.6%
|
|
|
|
|
|
|
Operating
income
|
8,332
|
842
|
-
|
-
|
9,174
|
|
as a % of net
sales
|
2.9%
|
|
|
|
3.2%
|
|
|
|
|
|
|
Reconciliation of
non-GAAP measures
|
Year ended March
26, 2016
|
|
|
|
|
|
|
($'000)
|
GAAP
|
Restructuring
costs (a)
|
One-time
gain (b)
|
Impairment
loss (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-GAAP measures
|
Year ended March
28, 2015
|
|
|
|
|
|
|
($'000)
|
GAAP
|
Restructuring
costs (a)
|
One-time
gain (b)
|
Impairment
loss (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 Year
Ended
March 25,
2017
|
|
|
Fiscal Year
Ended
March 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
|
|
|
|
|
|
|
SOURCE Birks Group Inc.