MONTREAL, Nov. 25, 2020 /CNW Telbec/ - Birks Group
Inc. (the "Company" or "Birks Group") (NYSE American: BGI), today
reported its financial results for the twenty-six week period ended
September 26, 2020.
Highlights
All figures presented herein are in Canadian dollars.
The Company's financial results for the twenty-six week period
ended September 26, 2020 were
significantly impacted by the COVID-19 pandemic, most notably by
the temporary closure of the Company's stores from the start of the
fiscal year through June 2020 as a
consequence of the restrictions imposed by provincial government
authorities.
In the twenty-six week period ended September 26, 2020, the Company achieved net
sales of $57.0 million, a decrease of
$28.3 million, or 33.2%, from the
comparable prior period in fiscal 2020, yielding gross profit of
$22.8 million, a decrease of
$9.8 million, or 30.0%, compared to
the same period in fiscal 2020, as a direct result of the negative
impact of COVID-19. Gross profit as a percentage of sales was
40.1%, an increase of 190 basis points from the gross profit as a
percentage of sales of 38.2% in the twenty-six week period ended
September 28, 2019. Despite the
decline in sales and gross profit volumes, the Company was able,
through its proactive management of the impact of the pandemic, to
control costs. Total operating expenses was $24.2 million in the twenty-six week period ended
September 26, 2020, representing a
decrease of $10.4 million, or 30.1%,
as compared to same period in fiscal 2020. Overall, the Company
reported a net loss of $2.8 million,
an improvement of $1.8 million, or
38.3%, compared to the twenty-six week period ended September 28, 2019. A significant factor leading
to the overall improvement was the fact that during the second
thirteen-week period ended September 26,
2020, subsequent to the re-opening of our store network, the
Company generated a 4% increase in comparable store sales.
As of July 2020, the Company had
re-opened all of its 30 stores, albeit at reduced operating hours.
As a result of provincial restrictions to address the "second wave"
of the COVID-19 pandemic, our Winnipeg store is currently temporarily closed
for in-person shopping for a four-week period since November 12, 2020 and six of our Ontario stores, including our Bloor street
flagship store, are also temporarily closed for in-person shopping,
for a four-week period since November
23, 2020. However, all of the affected stores remain
available for concierge telephone service and curbside pickup.
Mr. Jean-Christophe Bédos, President and Chief Executive Officer
of Birks Group, commented: "Since the start of the fiscal year, we
have shown great resilience and agility in taking the necessary
steps to mitigate the negative impacts of the COVID-19 pandemic on
the Company, notably by managing liquidity tightly, by working with
our various partners and stakeholders to contain costs, by
increasing our focus on generating revenues from our e-commerce
business and concierge service, and by adapting to emerging trends
to better serve our clients. At the outset of the pandemic, we
established a cross-functional management team that reviewed
business goals, objectives and processes in order to steer the
Company through this global crisis and protect the well-being of
our employees, clients, partners and communities. The
cross-functional management team continues to monitor the situation
very closely, on a provincial, national and global
basis."
Mr. Bédos further commented: "Thanks to the dedication of our
employees and the support from our key stakeholders and partners,
we have been able to achieve improved results in the twenty-six
week period ended September 26, 2020
as compared to last year. Our fiscal discipline during the period
has also allowed us to deliver improvements to results from
operations. As we continue to navigate through the pandemic, I
believe that the actions we have taken since the start of the
fiscal year and during the pandemic, has better positioned the
Company for managing challenges through uncertain times."
Financial overview for the twenty-six week period ended
September 26, 2020:
- Net sales for the twenty-six week period ended September 26, 2020 were $57.0 million, a decrease of $28.3 million, or 33.2%, compared to $85.3 million for the twenty-six week period
ended September 28, 2019. The
decrease in net sales was primarily attributable to the effects of
COVID-19, and the resulting temporary closures of all stores across
the retail channel during the first quarter of fiscal 2021. The
overall decrease was partially offset by strong e-commerce sales,
representing approximately 4.5% of total net sales, as compared to
approximately 1.0% in the same period in fiscal 2020;
- Comparable store sales decreased by 32% compared to the
twenty-six week period ended September 28,
2019, primarily due to the negative impact of COVID-19
during the period, including the temporary store closures. During
the first quarter of the fiscal year, during which time the
Company's stores were temporarily closed, the Company experienced a
65% decrease in comparable store sales. In the second quarter of
fiscal 2021, during which time the Company's stores were fully
re-opened, albeit operating at reduced hours and with lower levels
of foot traffic, the Company experienced a 4% increase in
comparable store sales. This increase was driven in part by the
sales performance of third party branded watches resulting from the
Company's improved portfolio of third party watch brands, and the
Company's successful targeted marketing campaigns which we believe
led to increases in average sales transaction value throughout
the retail network;
- Gross profit for the twenty-six week period ended September 26, 2020 decreased by $9.8 million to $22.8
million, or 40.1% of net sales, as compared to $32.6 million or 38.2% of net sales, during the
twenty-six week period ended September 28,
2019. This decrease was primarily due to the reduction of
sales volume caused by COVID-19, partially offset by an improvement
of gross margin of 190 basis points. The increase of 190 basis
points in gross margin percentage was mainly attributable to the
Company's strategic focus to reduce sales promotions and
discounting, partially offset by a shift in product sales mix
towards branded timepieces;
- SG&A expenses were $21.4
million, or 37.5% of net sales, in the twenty-six week
period ended September 26, 2020,
compared to $32.3 million, or 37.8%
of net sales, in the twenty-six week period ended September 28, 2019. SG&A expenses in the
twenty-six week period ended September 26,
2020 decreased by $10.9
million versus SG&A expenses in the prior comparable
period in fiscal 2020. This variance is driven primarily by cost
containment initiatives undertaken by management as a proactive
measure against the potential impact of COVID-19, which initiatives
included lower occupancy costs driven by the negotiation of rent
abatements with the Company's landlords, lower compensation costs
driven by the impact of temporary lay-offs, the receipt of the
federal government's wage subsidies, reduced operating hours at
retail locations, temporary wage reductions at the corporate head
office, lower marketing costs and lower general expenses; and
- The Company's operating loss from continuing operations during
the twenty-six week period ended September
26, 2020 was $1.4 million, an
improvement of $0.7 million compared
to an operating loss of $2.1 million
in the comparable prior year period. The Company's total net loss
was $2.8 million during the
twenty-six week period ended September 26,
2020, an improvement of $1.8
million compared to a net loss of $4.6 million in the twenty-six week period ended
September 28, 2019.
About Birks Group Inc.
Birks Group is a leading designer of fine jewellery, timepieces
and gifts and operator of luxury jewellery stores in Canada. As of November
25, 2020, the Company operates 26 stores under the Maison
Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand, one retail
location in Vancouver operated
under the Graff brand and one location in Vancouver under the Patek Philippe brand.
Bijoux Birks fine jewellery collections are also available through
Mappin & Webb and Goldsmiths locations in the United Kingdom in addition to several
jewellery retailers across North
America. Birks was founded in 1879 and has become
Canada's premier retailer and
designer of fine jewellery, timepieces and gifts. Additional
information can be found on Birks' web site, www.birks.com.
Forward Looking Statements
This press release contains forward- looking statements which
can be identified by their use of words like "plans," "expects,"
"believes," "will," "anticipates," "intends," "projects,"
"estimates," "could," "would," "may," "planned," "goal," and other
words of similar meaning. All statements that address expectations,
possibilities or projections about the future, including without
limitation, statements about our strategies for growth, expansion
plans, sources or adequacy of capital, expenditures and financial
results are forward-looking statements.
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 the
Company will meet the results projected in the forward-looking
statements. These risks and uncertainties include, but are not
limited to the following: (i) the magnitude and length of economic
disruption as a result of the worldwide COVID-19 outbreak,
including its impact on macroeconomic conditions, generally, as
well as its impact on the results of operations and financial
condition of the Company and the trading price of the shares; (ii)
economic, political and market conditions, including the economies
of Canada, and the U.S., 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, 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; (iii) 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; (iv)
changes in interest rates; (v) 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;
(vi) the Company's ability to continue to borrow under its credit
facilities, (vii) the Company's ability to maintain profitable
operations, as well as maintain specified excess availability
levels under its credit facilities, make scheduled payments of
principal and interest, and fund capital expenditures; (viii) the
Company's financial performance in the second half of fiscal 2021
and the level of capital expenditures requirements related to
renewing store leases; (ix) the Company's ability to execute its
strategic vision; and * the Company's ability to continue as a
going concern.
Information concerning factors that could cause actual results
to differ materially is set forth under the captions "Risk Factors"
and "Operating and Financial Review and Prospects" and elsewhere in
the Company's Annual Report on Form 20-F filed with the Securities
and Exchange Commission on July 8,
2020 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
|
|
|
|
|
|
|
|
|
26 weeks ended
September 26, 2020
|
|
|
26 weeks ended
September 28, 2019
|
|
|
|
|
|
|
Net sales
|
|
$
|
57,025
|
|
|
$
|
85,343
|
Cost of
sales
|
|
|
34,182
|
|
|
|
52,719
|
Gross
profit
|
|
|
22,843
|
|
|
|
32,624
|
Selling, general and
administrative expenses
|
|
|
21,404
|
|
|
|
32,289
|
Depreciation and
amortization
|
|
|
2,829
|
|
|
|
2,386
|
Total operating
expenses
|
|
|
24,233
|
|
|
|
34,675
|
Operating
loss
|
|
|
(1,390)
|
|
|
|
(2,051)
|
Interest and other
financial costs
|
|
|
1,437
|
|
|
|
2,417
|
Loss from continuing
operations
|
|
|
(2,827)
|
|
|
|
(4,468)
|
Income taxes
(benefits)
|
|
|
-
|
|
|
|
-
|
Net loss from
continuing operations
|
|
|
(2,827)
|
|
|
|
(4,468)
|
(Loss) income from
discontinued operations, net of tax
|
|
|
-
|
|
|
|
(117)
|
Net loss
|
|
$
|
(2,827)
|
|
|
$
|
(4,585)
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
|
Basic
|
|
|
17,971
|
|
|
|
17,965
|
Diluted
|
|
|
17,971
|
|
|
|
17,965
|
Net loss per common
share
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.16)
|
|
|
$
|
(0.26)
|
Diluted
|
|
$
|
(0.16)
|
|
|
$
|
(0.26)
|
Net loss from
continuing operations per common share
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.16)
|
|
|
$
|
(0.25)
|
Diluted
|
|
$
|
(0.16)
|
|
|
$
|
(0.25)
|
BIRKS GROUP
INC. CONDENSED CONSOLIDATED BALANCE SHEETS –
UNAUDITED
|
|
|
|
|
As
of
|
|
September
26, 2020
|
|
March 28,
2020
|
|
(In
thousands)
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
2,408
|
|
$
|
565
|
Accounts receivable
and other receivables
|
|
6,274
|
|
|
6,019
|
Inventories
|
|
100,327
|
|
|
101,899
|
Prepaids and other
current assets
|
|
2,030
|
|
|
2,007
|
Total current
assets
|
|
111,039
|
|
|
110,490
|
|
|
|
|
|
|
Long-term
receivables
|
|
4,725
|
|
|
4,538
|
Property and
equipment
|
|
24,310
|
|
|
26,613
|
Operating lease
right-of-use asset
|
|
60,973
|
|
|
64,069
|
Intangible assets and
other assets
|
|
4,931
|
|
|
4,942
|
Total non-current
assets
|
|
94,939
|
|
|
100,162
|
Total
assets
|
$
|
205,978
|
|
$
|
210,652
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Bank
indebtedness
|
$
|
59,951
|
|
$
|
58,035
|
Accounts
payable
|
|
36,157
|
|
|
48,183
|
Accrued
liabilities
|
|
7,145
|
|
|
4,661
|
Current portion of
long-term debt
|
|
2,569
|
|
|
64
|
Current portion of
operating lease liabilities
|
|
5,754
|
|
|
5,823
|
Total current
liabilities
|
|
111,576
|
|
|
116,766
|
|
|
|
|
|
|
Long-term
debt
|
|
23,551
|
|
|
16,217
|
Long-term portion of
operating lease liabilities
|
|
69,189
|
|
|
72,636
|
Other long-term
liabilities
|
|
1,021
|
|
|
1,623
|
Total long-term
liabilities
|
|
93,761
|
|
|
90,476
|
Stockholders'
equity:
|
|
|
|
|
|
Class A common stock –
no par value, unlimited shares
authorized, issued and outstanding 10,252,911
|
|
35,613
|
|
|
35,613
|
Class B common stock –
no par value, unlimited shares
authorized, issued and outstanding 7,717,970
|
|
57,755
|
|
|
57,755
|
Preferred stock
– no par value, unlimited shares
authorized, none issued
|
|
–
|
|
|
–
|
Additional paid-in
capital
|
|
19,131
|
|
|
19,131
|
Accumulated
deficit
|
|
(111,689)
|
|
|
(108,862)
|
Accumulated other
comprehensive loss
|
|
(169)
|
|
|
(227)
|
Total stockholders'
equity
|
|
641
|
|
|
3,410
|
Total liabilities and
stockholders' equity
|
$
|
205,978
|
|
$
|
210,652
|
SOURCE Birks Group Inc.