MONTREAL, July 8, 2020 /CNW Telbec/ - Birks Group Inc. (the
"Company" or "Birks Group") (NYSE American: BGI), today reported
its financial results for the fiscal year ended March 28, 2020 ("fiscal 2020").
Highlights
All figures presented herein are in Canadian dollars.
During fiscal 2020, and prior to the outbreak of the novel
coronavirus disease (COVID-19) and the related store closures on
March 18, 2020, the Company
transitioned out of a very capital-intensive investment period and
focused 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 2020, the
Company achieved net sales of $169.4
million, a growth of $18.4
million, or 12.2%, compared to the fiscal period ended
March 30, 2019 ("fiscal 2019"), with
all three of its flagship stores operating at full capacity
following the completion of the major renovations to the
Montreal, Toronto and Vancouver locations. The Company also reported
an improvement in operating results from continuing operations of
$7.1 million, or 51.9%, compared to
fiscal 2019.
In March 2020, the World Health
Organization declared the outbreak of COVID-19 a pandemic and a
global emergency. In response to this pandemic, many government
authorities have taken preventative and protective actions to
contain the spread of the virus, including imposing restrictions on
business operations and travel, as well as advising individuals to
limit or forego the time outside of their homes. As a result of the
measures adopted by the Canadian federal and provincial governments
to mitigate the spread of COVID-19, and in order to ensure the
health and safety of its employees, customers and the community,
the Company temporarily closed all of its retail locations in
Canada effective on March 18, 2020 until further notice. This closure
has adversely impacted the Company's operations for the remainder
of fiscal 2020 and the first months of fiscal 2021, during which
the Company's sales were primarily derived from its e-commerce
business as well as its concierge service by which clients are
assisted by telephone. Starting on May 12,
2020, the Company gradually reopened its store
locations, market-by-market, in accordance with the directives
of local government and public health authorities. As of today, the
Company has reopened 29 of its 30 stores across Canada.
Mr. Jean-Christophe Bédos, President and Chief Executive Officer
of Birks Group, commented: "These are unprecedented times.
Retailers across Canada and the
world are now operating under a drastically different landscape,
and as such we need to be financially responsible and proactive. I
am extremely proud of our Crisis Management Team that was assembled
at the outset of the pandemic and is responsible for reviewing
business goals, objectives and processes in order to find ways to
reduce expenses, adapt to emerging trends, generate sales and
protect the well-being of our employees, clients, partners and
communities. I would also like to thank our loyal employees who had
to be placed on temporary layoff and those who made the adjustments
to work remotely."
Mr. Bédos further commented: "We accomplished a very important
part of our strategic plan prior to the outbreak of COVID-19 by
leveraging the major renovations to our flagship stores completed
in fiscal 2019 to generate an improved customer experience and
product offering which has yielded significant sales growth and
momentum. As we navigate through the COVID-19 pandemic and its
short-term challenges, we still continue to focus our attention on
the execution of our long-term strategic plan and its four key
strategic initiatives:
- offering our customers access to the most reputable watch and
jewellery brands through a complete omni-channel experience;
- expanding our e-commerce and wholesale channels through key
strategic investments;
- renewing our Birks branded bridal and fine jewellery product
offerings accentuating quality, design and accessible price points:
and
- developing the Birks product brand to position it as an
international brand.
The further spread of COVID-19, and the requirements to take
action to limit the spread of the virus, might impact the Company's
business, results of operations and financial condition but we
remain optimistic that the execution of our strategic initiatives
will lead to long-term value creation."
Financial overview for fiscal 2020:
- Net sales were $169.4 million for
fiscal 2020, an increase of $18.4
million, or 12.2%, compared to net sales of $151.0 million in fiscal 2019. The increase
in sales in fiscal 2020 was primarily driven by strong results
experienced throughout the Company's retail channel, which
benefited from all three of its flagship stores operating at full
capacity following the major renovations completed at the
Montreal, Toronto and Vancouver locations in fiscal 2019. The
increase in sales in fiscal 2020 is also reflective of a comparable
store sales increase of 1.7%. This was partially offset by the
negative impacts of COVID-19 disruptions in the last month of
fiscal 2020 which resulted in unexpected temporary store closures
and lower consumer spending;
- Comparable store sales increased by 1.7% compared to the prior
fiscal year ended March 30, 2019
driven primarily by increased sales of third party branded
timepieces;
- Gross profit was $64.5 million,
or 38.1% of net sales, for fiscal 2020 compared to $58.6 million, or 38.8% of net sales, for fiscal
2019. The decrease of 70 basis points in gross margin percentage
was mainly attributable to a shift in product sales mix towards
branded timepieces, partially offset by a reduction in sales
promotions in fiscal 2020 compared to fiscal 2019 as a result of
the Montreal and Toronto flagship locations
post-renovations;
- SG&A expenses were $65.9
million, or 38.9% of net sales, in fiscal 2020 compared to
$67.1 million, or 44.4% of net sales,
in fiscal 2019. This decrease is driven in part by the application
of cost optimization initiatives to corporate overheads undertaken
in fiscal 2020, including a reduction of compensation costs as the
Company further rationalized its organizational structure. Other
factors contributing to this decrease include a reduction in
marketing expenses as the Company temporarily reallocated capital
to other strategic priorities in fiscal 2020, partially offset by
an increase in occupancy expenses resulting from new leases,
notably at our Toronto flagship
location and by higher direct variable costs driven by increased
sales such as credit card transaction fees. As a percentage of
sales, SG&A expenses in fiscal 2020 have decreased by 550 basis
points as compared to fiscal 2019;
- The Company's fiscal 2020 reported operating loss from
continuing operations was $6.5
million, a decrease of $7.1
million compared to a reported loss from continuing
operations of $13.6 million for
fiscal 2019. Adjusted operating loss from continuing operations
(this is a non-GAAP financial measure defined below under "Non-GAAP
measures" and accompanied by a reconciliation to the most directly
comparable GAAP financial measure), which excludes restructuring
costs and impairment charges was $6.2
million, a decrease of $6.2
million compared to an adjusted operating loss from
continuing operations of $12.4
million in fiscal 2019 (excluding restructuring costs and
impairment charges); and
- The Company recognized a net loss for fiscal 2020 of
$12.8 million, or $0.71 per share, comprised of a net loss from
continuing operations of $12.2
million, or $0.68 per share,
and a net loss from discontinued operations of $0.6 million, or $0.03 per share, compared to a net loss in 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 discontinued operations of $0.4 million or $0.02 per share.
About Birks Group Inc.
Birks Group is a leading designer of fine jewellery, timepieces
and gifts and operator of luxury jewellery stores in Canada. The Company operates 27 stores under
the 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.
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.
Non-GAAP Measures
The Company reports financial 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 provides a reconciliation of
the non-GAAP measures presented on the most directly comparable
financial measures calculated with GAAP.
|
|
|
Reconciliation of
non-GAAP measures
|
|
Fiscal year ended
March 28, 2020
|
($'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
|
71,021
|
-
|
(309)
|
-
|
70,712
|
as a % of net sales
from continuing operations
|
41.9%
|
|
|
|
41.7%
|
|
|
|
|
|
|
Operating loss and
adjusted operating loss – from continuing operations
|
(6,544)
|
-
|
309
|
-
|
(6,235)
|
as a % of net sales
from continuing operations
|
(3.9)%
|
|
|
|
(3.7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
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)%
|
|
*
|
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)
|
Non-cash impairment
of long-lived assets in fiscal 2020 related to leasehold
improvements that are associated to store leases that have a
possibility of early lease termination. Non-cash impairment of
long-lived assets in fiscal 2019 relate to leasehold improvements
that are associated with a retail location due to the projected
operating performance of the location. Non-cash impairment of
long-lived assets in fiscal 2018 related to leasehold improvements
are associated with 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 implementation of its growth driven
strategic objectives and 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, that the Company remains positive
that with everyone's co-operation and vigilance, this crisis will
pass and the Company will be able to return to the normal course of
our lives and work; that the further spread of COVID-19, and the
requirements to take action to limit the spread of the illness,
might impact the Company's business, results of operations
and financial condition and that the Company remains optimistic
that the execution of the Company's strategic initiatives will lead
to long-term 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)
the magnitude and length of economic disruption as a result of the
worldwide novel coronavirus (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 its shares; (ii) a decline in
consumer spending or deterioration in consumer financial position;
(iii) 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; (iv) 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; (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 jewellers, to succeed in its marketing
initiatives, and to have a successful customer service program, and
(vi) 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 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 - AUDITED
|
|
|
|
Fiscal Year
Ended
|
|
March 28,
2020
|
|
March 30,
2019
|
|
March 31,
2018*
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
Net sales
|
$
|
169,420
|
$
|
151,049
|
$
|
146,608
|
Cost of
sales
|
|
104,943
|
|
92,472
|
|
90,915
|
Gross
profit
|
|
64,477
|
|
58,577
|
|
55,693
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
65,867
|
|
67,106
|
|
66,754
|
Restructuring
charges
|
|
-
|
|
1,182
|
|
894
|
Depreciation and
amortization
|
|
4,845
|
|
3,859
|
|
3,264
|
Impairment of
long-lived assets
|
|
309
|
|
46
|
|
2,788
|
Total operating
expenses
|
|
71,021
|
|
72,193
|
|
73,700
|
Operating
loss
|
|
(6,544)
|
|
(13,616)
|
|
(18,007)
|
Interest and other
financial costs
|
|
5,683
|
|
4,689
|
|
3,988
|
|
|
|
|
|
|
|
Loss from continuing
operations
|
|
(12,227)
|
|
(18,305)
|
|
(21,995)
|
Income taxes
(benefits
|
|
-
|
|
-
|
|
-
|
Loss from continuing
operations
|
|
(12,227)
|
|
(18,305)
|
|
(21,995)
|
Discontinued
operations:
|
|
|
|
|
|
|
Loss income from
discontinued operations, net of tax
|
|
(552)
|
|
(381)
|
|
(1,592)
|
Gain on disposal of
discontinued operations
|
|
-
|
|
-
|
|
37,682
|
Net (loss) income
from discontinued operations, net of tax
|
|
(552)
|
|
(381)
|
|
36,090
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(12,779)
|
$
|
(18,686)
|
$
|
14,095
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
17,968
|
|
17,961
|
|
17,961
|
Diluted
|
|
17,968
|
|
17,961
|
|
18,393
|
|
|
|
|
|
|
|
Net (loss) income per
common share:
|
|
|
|
|
|
|
Basic
|
$
|
(0.71)
|
$
|
(1.04)
|
$
|
0.78
|
Diluted
|
|
(0.71)
|
|
(1.04)
|
|
0.77
|
Net (loss) income
from continuing operations per common share:
|
|
|
|
|
|
|
Basic
|
$
|
(0.68)
|
$
|
(1.02)
|
$
|
(1.22)
|
Diluted
|
|
(0.68)
|
|
(1.02)
|
|
(1.20)
|
|
*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
|
|
As
of
|
|
|
March 28,
2020
|
|
March 30,
2019
|
|
(In
thousands)
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
565
|
$
|
1,179
|
Accounts receivable
and other receivables
|
|
6,019
|
|
3,537
|
Inventories
|
|
101,899
|
|
91,541
|
Prepaids and other
current assets
|
|
2,007
|
|
2,142
|
Total current
assets
|
|
110,490
|
|
98,399
|
|
|
|
|
|
Long-term
receivables
|
|
4,538
|
|
1,266
|
Property and
equipment
|
|
26,613
|
|
29,727
|
Operating lease
right-of-use asset
|
|
64,069
|
|
–
|
Intangible assets and
other assets
|
|
4,942
|
|
4,403
|
Total non-current
assets
|
|
100,162
|
|
35,396
|
Total
assets
|
$
|
210,652
|
$
|
133,795
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Bank
indebtedness
|
$
|
58,035
|
$
|
47,021
|
Accounts
payable
|
|
48,183
|
|
33,264
|
Accrued
liabilities
|
|
4,661
|
|
9,657
|
Current portion of
long-term debt
|
|
64
|
|
993
|
Current portion of
operating lease liabilities
|
|
5,823
|
|
-
|
Total current
liabilities
|
|
116,766
|
$
|
90,935
|
|
|
|
|
|
Long-term
debt
|
|
16,217
|
|
16,111
|
Long-term portion of
operating lease liabilities
|
|
72,636
|
|
–
|
Other long-term
liabilities
|
|
1,623
|
|
12,966
|
Total long-term
liabilities
|
|
90,476
|
|
29,077
|
Stockholders'
equity:
|
|
|
|
|
Class A common stock –
no par value, unlimited shares
authorized, issued and outstanding 10,252,911
|
|
35,613
|
|
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
|
|
19,131
|
|
19,120
|
Accumulated
deficit
|
|
(108,862)
|
|
(98,473)
|
Accumulated other
comprehensive loss
|
|
(227)
|
|
(212)
|
Total stockholders'
equity
|
|
3,410
|
|
13,783
|
Total liabilities and
stockholders' equity
|
$
|
210,652
|
$
|
133,795
|
SOURCE Birks Group Inc.