MONTREAL, June 21, 2019 /CNW Telbec/ - Birks Group
Inc. (the "Company" or "Birks Group") (NYSE American: BGI), today
reported its financial results for the fiscal year ended
March 30, 2019 ("fiscal 2019").
Highlights
All figures presented herein are in Canadian dollars.
During fiscal 2019, the Company continued to focus on the
execution of its transformation plan intended to return the Company
to profitability and propel it onto the path of long-term value
creation for its shareholders.
In fiscal 2019, the Company reported net sales of $151.0 million, an increase of $4.4 million or 3% compared to the prior fiscal
year, driven by an increase in comparable store sales of 1%. The
Company also reported an improvement in gross margin percentage of
80 basis points and a reduction in operating expenses of
$1.5 million compared to the prior
fiscal year. As planned during this period of strategic
change, the Company recorded a loss from continuing operations of
$18.3 million.
The Company achieved several important milestones in fiscal 2019
as evidenced by its investments in both short-term and long-term
growth initiatives. It finalized major renovations and remodeling
of its three flagship locations, in Montreal (completed in June 2018, which experienced a 102% growth in
sales over the comparable period of time), Vancouver (completed the addition of 3
shop-in-shops in February 2019), and
Toronto (completed in March 2019). As a result of significant
investment in its website and e-commerce platform, the Company also
experienced sales growth of 110% in its e-commerce business.
Jean-Christophe Bédos, President and Chief Executive Officer of
Birks Group, commented: "Fiscal 2019 represented an important
milestone in the Company's transition as part of its five-year
strategic plan which began in 2018. During the fiscal year, we
incurred significant expenses and invested considerably in our
CAPEX program as we focused our efforts on completing the
transformation of our value proposition. The return to normal
selling conditions after the remodeling of the flagship stores has
been a key reason for the increase in sales and the recovery in
gross margin that we are reporting for fiscal 2019. In fact, in the
last quarter of the fiscal year, we saw an 11% increase in sales
over the prior year comparable period and continue to see strong
growth in the first two months of fiscal 2020. The completion of
the renovations at our flagship stores in Montreal, Vancouver, and Toronto allows us to feature some of the most
reputable watch and jewelry brands in the world, alongside Birks
fine jewelry and bridal collections, including for example the
introduction of a Richard Mille
shop-in-shop in Vancouver as well
as Rolex and Van Cleef & Arpels
shop-in-shops in Montreal. We also
opened a Graff Boutique and a Patek Philippe boutique in
Vancouver, in addition to the
remodeling of certain key store locations in Ontario and Quebec."
Mr. Bédos added: "Having accomplished an important part of our
strategic plan in completing the major renovations to our Flagship
stores in fiscal 2019, we now continue to focus our full attention
to the execution of our strategic plan and its four key strategic
initiatives:
- offering our customers access to the most reputable watch and
jewelry brands through a complete omni-channel experience;
- expanding our e-commerce and wholesale channels through key
strategic investments;
- renewing our bridal and fine jewelry product offerings
accentuating quality, design and accessible price points and;
- developing the Birks product brand to position it as an
international brand.
We are confident that the execution of these initiatives,
combined with our on-going optimization of corporate overhead cost
will better position the Company for long-term growth and value
creation."
Financial overview for fiscal 2019:
- Net sales from continuing operations for fiscal 2019 increased
by $4.4 million, or 3%, to
$151.0 million, compared to
$146.6 million in fiscal 2018. This
$4.4 million increase in net sales in
fiscal 2019 was primarily driven by the successful re-opening of
the Company's Montreal flagship
store. The store re-opened in June
2018 after undergoing major renovations in fiscal 2018 and
the first quarter of fiscal 2019, yielding a 102% sales increase in
this location over the comparable period of time. The Company also
experienced sales growth throughout the majority of its retail
network as well as through its e-commerce channel, partially offset
by lower sales in the Vancouver
region driven by a temporary decline in certain affluent tourists
in the second half of the fiscal year
- Comparable store sales from continuing operations in fiscal
2019 were 1% greater than in the comparable prior period. The
increase was driven by strong sales of Birks branded products and
increased sales of third party branded timepieces;
- Gross profit from continuing operations was $58.6 million, or 38.8% of net sales, for fiscal
2019 compared to $55.7 million, or
38.0% of net sales, for fiscal 2018. The increase of 80 basis
points in gross margin percentage was mainly attributable to
product sales mix as well as to a reduction in sales promotions in
fiscal 2019 compared to fiscal 2018 during which the Company was
engaged in more promotional activity as a result of the
Montreal and Toronto flagship locations undergoing major
renovations during the fiscal year;
- Selling, general and administrative ("SG&A") expenses from
continuing operations were $67.1
million, or 44.4% of net sales, in fiscal year 2019 compared
to $66.8 million, or 45.5% of net
sales, in fiscal 2018, an increase of $0.3
million. This nominal increase is driven in part by higher
direct variable costs driven by increased sales, such as sales
commissions and credit card transaction fees, as well as by higher
occupancy costs resulting from new leases, notably at our
Toronto flagship location. As a
percentage of net sales, SG&A expenses from continuing
operations decreased by 110 basis points in fiscal 2019 as compared
to fiscal 2018;
- The Company's fiscal 2019 reported operating loss from
continuing operations was $13.6
million, a decrease of $4.4
million compared to a reported operating loss from
continuing operations of $18.0
million for fiscal 2018. Adjusted operating loss from
continuing operations (see "Non-GAAP measures"), which excludes
restructuring costs and impairment charges was $12.4 million, a decrease of $1.9 million compared to an adjusted operating
loss from continuing operations of $14.3
million in fiscal 2018 (excluding restructuring costs and
impairment charges); and
- The Company recognized a net loss for fiscal 2019 of
$18.7 million, or $1.04 per share, comprised of a net loss from
continuing operations of $18.3
million or $1.02 per share,
and a net loss from discontinuing operations of $0.4 million, or $0.02 per share, compared to net income in fiscal
2018 of $14.1 million, or
$0.78 per share comprised of a net
loss from continuing operations of $22.0
million, or $1.22 per share,
and net income from discontinued operations of $36.1 million (including a one-time gain on
disposal of discontinued operations of $37.7
million), or $2.00 per
share.
About Birks Group Inc.
Birks Group is a leading designer of fine jewelry, timepieces
and gifts and operator of luxury jewelry stores in Canada. The Company operates 26 stores under
the Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand and two
retail locations in Vancouver
under the Graff and Patek Philippe brands. Birks Collections are
available at Mappin & Webb and Goldsmiths in the United Kingdom in addition to several jewelry
retailers across North America.
Birks was founded in 1879 and has become Canada's premier retailer and designer of fine
jewelry, timepieces and gifts. Additional information can be found
on Birks' web site, www.birks.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.
Total adjusted operating expenses from continuing operations
and adjusted operating loss from continuing operations
The Company evaluates its operating earnings performance using
financial measures which exclude expenses associated with
operational restructuring plans 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 fiscal year and can result in a
more meaningful comparison of the Company's performance between the
periods presented. The tables below reconcile total operating
expenses from continuing operations and operating loss from
continuing operations from GAAP to non-GAAP for the periods
presented.
|
|
|
Reconciliation of
non-GAAP measures
|
|
Fiscal year ended
March 30, 2019
|
|
|
|
|
|
|
|
($'000)
|
|
GAAP
Measure
|
Restructuring
costs (a)
|
Impairment
of long
lived
assets
(b)
|
|
Non-GAAP
Adjusted
measure
|
|
|
|
|
|
|
|
Total operating
expenses and total adjusted operating expenses – from continuing
operations
|
|
72,193
|
(1,182)
|
(46)
|
|
70,965
|
as a % of net sales
from continuing operations
|
|
47.8%
|
|
|
|
47.0%
|
|
|
|
|
|
|
|
Operating loss and
adjusted operating loss – from continuing operations
|
|
(13,616)
|
1,182
|
46
|
|
(12,388)
|
as a % of net sales
from continuing operations
|
|
(9.0)%
|
|
|
|
(8.2)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP measures
|
|
Fiscal year ended
March 31, 2018*
|
|
|
|
|
|
|
|
($'000)
|
|
GAAP
Measure
|
Restructuring
costs
(a)
|
Impairment
of long
lived
assets
(b)
|
|
Non-GAAP
Adjusted
measure
|
|
|
|
|
|
|
|
Total operating
expenses and total adjusted operating expenses – from continuing
operations
|
|
73,700
|
(894)
|
(2,788)
|
|
70,018
|
as a % of net sales
from continuing operations
|
|
50.3%
|
|
|
|
47.8%
|
|
|
|
|
|
|
|
Operating loss and
adjusted operating loss – from continuing operations
|
|
(18,007)
|
894
|
2,788
|
|
(14,325)
|
as a % of net sales
from continuing operations
|
|
(12.3)%
|
|
|
|
(9.8)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
non-GAAP measures
|
|
Fiscal year ended
March 25, 2017*
|
|
|
|
|
|
|
|
($'000)
|
|
GAAP
Measure
|
Restructuring
costs (a)
|
Impairment
of long lived
assets (b)
|
|
Non-GAAP
Adjusted
measure
|
|
|
|
|
|
|
|
Total operating
expenses and total adjusted operating expenses – from continuing
operations
|
|
65,924
|
(897)
|
-
|
|
65,027
|
as a % of net sales
from continuing operations
|
|
43.1%
|
|
|
|
42.5%
|
|
|
|
|
|
|
|
Operating loss and
adjusted operating loss – from continuing operations
|
|
(4,392)
|
897
|
-
|
|
(3,495)
|
as a % of net sales
from continuing operations
|
|
(2.9)%
|
|
|
|
(2.3)%
|
*
|
The Company has
changed its reporting currency from USD to CAD for the period
commencing April 1, 2018. Prior periods' comparative financial
information has been recast as if the Company always used CAD as
its reporting currency (see note 1 to the accompanying notes to the
financial statements in the Company's Annual Report on Form 20-F
for the fiscal year-ended March 30, 2019).
|
(a)
|
Expenses associated
with the Company's operational restructuring plan
|
(b)
|
For fiscal 2019,
non-cash impairment associated with the impairment of long-lived
assets at a retail location due to the projected operating
performance of the location. For fiscal 2018, non-cash impairment
associated with the impairment of long-lived assets at a retail
location due to the projected operating performance of the location
and software impairment associated with a decision to modify the
scope of the implementation of the Company's new enterprise
resource planning system
|
Forward Looking Statements
This press release contains certain "forward-looking" statements
concerning the Company's performance and strategies, including that
the Company's continued focus on the execution of its
transformation plan is intended to return the Company to
profitability and propel it onto the path of long-term value
creation for its shareholders, and that execution of the Company's
initiatives, combined with its on-going optimization of corporate
overhead cost will better position the Company for long-term growth
and value creation. Given 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 Canada and the U.S., which could adversely
affect the Company's business, operating results or financial
condition, including its 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; (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; and (iv) the Company's ability to execute
its strategic vision. 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 the Company's Annual Report on
Form 20-F filed with the Securities and Exchange
Commission on June 21, 2019 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 -
AUDITED (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
Ended
|
|
|
March 30,
2019
|
|
March 31,
2018*
|
|
March 25,
2017*
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Net sales
|
$
|
151,049
|
$
|
146,608
|
$
|
152,992
|
Cost of
sales
|
|
92,472
|
|
90,915
|
|
91,460
|
Gross
profit
|
|
58,577
|
|
55,693
|
|
61,532
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
67,106
|
|
66,754
|
|
61,599
|
Restructuring
charges
|
|
1,182
|
|
894
|
|
897
|
Depreciation and
amortization
|
|
3,859
|
|
3,264
|
|
3,428
|
Impairment of
long-lived assets
|
|
46
|
|
2,788
|
|
-
|
Total operating
expenses
|
|
72,193
|
|
73,700
|
|
65,924
|
Operating
loss
|
|
(13,616)
|
|
(18,007)
|
|
(4,392)
|
Interest and other
financial costs
|
|
4,689
|
|
3,988
|
|
4,467
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
(18,305)
|
|
(21,995)
|
|
(8,859)
|
Income taxes
(benefits)
|
|
-
|
|
-
|
|
-
|
Loss from continuing
operations
|
|
(18,305)
|
|
(21,995)
|
|
(8,859)
|
Discontinued
operations:
|
|
|
|
|
|
|
(Loss) income from
discontinued operations, net of tax
|
|
(381)
|
|
(1,592)
|
|
15,934
|
Gain on disposal of
discontinued operations
|
|
-
|
|
37,682
|
|
-
|
Net (loss) income
from discontinued operations, net of tax
|
|
(381)
|
|
36,090
|
|
15,934
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(18,686)
|
$
|
14,095
|
$
|
7,075
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
17,961
|
|
17,961
|
|
17,961
|
Diluted
|
|
17,961
|
|
18,393
|
|
18,418
|
|
|
|
|
|
|
|
Net income per common
share:
|
|
|
|
|
|
|
Basic
|
$
|
(1.04)
|
$
|
0.78
|
$
|
0.39
|
Diluted
|
|
(1.04)
|
|
0.77
|
|
0.38
|
Net (loss) income
from continuing operations per common share:
|
|
|
|
|
|
|
Basic
|
$
|
(1.02)
|
$
|
(1.22)
|
$
|
(0.49)
|
Diluted
|
|
(1.02)
|
|
(1.20)
|
|
(0.48)
|
*Recast (see note 1
to the accompanying notes to the financial statements in the
Company's Annual Report on Form 20-F for the year-ended March 30,
2019)
|
BIRKS GROUP
INC. CONDENSED CONSOLIDATED BALANCE SHEETS –
AUDITED (In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
March 30,
2019
|
|
|
March 31,
2018*
|
|
|
(In
thousands)
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,179
|
|
$
|
1,005
|
Accounts receivable
and other receivables
|
|
3,537
|
|
|
5,845
|
Inventories
|
|
91,541
|
|
|
84,827
|
Prepaids and other
current assets
|
|
2,142
|
|
|
4,929
|
Total current
assets
|
|
98,399
|
|
|
96,606
|
|
|
|
|
|
|
Property and
equipment
|
|
29,727
|
|
|
19,426
|
Long-term
receivables
|
|
1,266
|
|
|
365
|
Intangible assets and
other assets
|
|
4,403
|
|
|
3,878
|
Total non-current
assets
|
|
35,396
|
|
|
23,669
|
Total
assets
|
$
|
133,795
|
|
$
|
120,275
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Bank
indebtedness
|
$
|
47,021
|
|
$
|
36,925
|
Accounts
payable
|
|
33,264
|
|
|
26,364
|
Accrued
liabilities
|
|
9,657
|
|
|
7,496
|
Current portion of
long-term debt
|
|
993
|
|
|
3,372
|
Total current
liabilities
|
|
90,935
|
|
$
|
74,157
|
|
|
|
|
|
|
Long-term
debt
|
|
16,111
|
|
|
4,838
|
Other long-term
liabilities
|
|
12,966
|
|
|
8,803
|
Total long-term
liabilities
|
|
29,077
|
|
|
13,641
|
Stockholders'
equity:
|
|
|
|
|
|
Class A common stock –
no par value, unlimited shares
authorized, issued and outstanding 10,242,911
|
|
35,593
|
|
|
35,593
|
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
|
|
19,120
|
|
|
19,042
|
Accumulated
deficit
|
|
(98,473)
|
|
|
(79,787)
|
Accumulated other
comprehensive loss
|
|
(212)
|
|
|
(126)
|
Total stockholders'
equity
|
|
13,863
|
|
|
32,477
|
Total liabilities and
stockholders' equity
|
$
|
133,795
|
|
$
|
120,275
|
*Recast (see note 1
to the accompanying notes to the financial statements in the
Company's Annual Report on Form 20-F for the year-ended March 30,
2019)
|
SOURCE Birks Group Inc.