MONTREAL, Nov. 16, 2017 /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 23, 2017. During this
period, the Company announced the sale of its subsidiary, Mayor's
Jewelers, Inc. ("Mayors"), which was subsequently completed on
October 23, 2017. As a result of the
sale of Mayors, the Company is presenting Mayors' results as a
discontinued operation in its financial statements for the current
and comparable prior periods.
Jean-Christophe Bédos, President and Chief Executive Officer of
Birks Group, commented: "The sale of Mayors and our results for the
half-year reflect the transformation of the Company's operations in
order to achieve its objective of becoming an international
omni-channel business and to attain our goal of becoming a globally
renowned luxury brand. The major renovations at our two flagship
locations in Montreal and
Toronto coupled with a soft
Canadian retail environment affected our results for the first half
of the year. The sale of Mayors on October
23, 2017 for total cash consideration of $107.7 million, subject to customary post-closing
adjustments, allowed us to substantially reduce our debt. In
addition, this allows us to focus on the execution of our
short-term and long-term strategies, namely the renovations of our
flagship stores, the global expansion of the Birks product brand,
the implementation of our new store concept and the development of
our wholesale and e-commerce businesses. Our omni-channel approach,
as well as our creative marketing campaigns will allow us to
achieve the Company's sales growth and profitability objectives as
well as long-term shareholder value."
For the twenty-six week period ended September 23, 2017 compared to the twenty-six
week period ended September 24, 2016
- from continuing operations:
- Net sales from continuing operations for the twenty-six week
period ended September 23, 2017
declined by $5.1 million to
$49.8 million from the twenty-six
week period ended September 23, 2017,
compared to $54.9 million in the
twenty-six week period ended September
24, 2016. The decrease in net sales was reflective of
a 10% decline in comparable store sales on a constant exchange rate
basis (see "Non-GAAP measures") related to a decrease in sales of
third party branded fine jewelry and bridal offerings. This decline
in comparable store sales was driven by a decrease in traffic and
transaction volume caused primarily by a softening of luxury retail
conditions across Canada and an
overall softening of retail conditions in the 2017 summer period,
as well as to the fact that, as part of the Company's strategic
plan, the Company began renovations affecting two of its flagship
stores (Montreal and Toronto) that led to a temporary decline in
sales volume during the construction period;
- Gross profit from continuing operations was $20.0 million, or 40.1% of net sales, during the
twenty-six week period ended September 23,
2017, compared to $22.5
million, or 41.0% of net sales, during the comparable prior
fiscal year period. The 90 basis point gross margin rate decrease
was primarily attributable to product sales mix and increased sales
promotions;
- Operating expenses from continuing operations, excluding
depreciation, for the period increased by $0.3 million mainly due to increased marketing
and operational costs related to the Company's strategic focus on
the promotion and development of the Birks product brand; and
- The Company incurred a net loss of $4.3
million, or $0.24 per share,
for the 26 week period ended September 23,
2017, comprised of a net loss from continuing operations of
$5.7 million, or $0.32 per share and a net income from
discontinued operations of $1.3
million, or $0.08 per
share, compared to a net loss of $2.0
million, or $0.11 per share
for the 26 week period ended September 24,
2016, comprised of a net loss from continuing operations of
$4.0 million, or $0.22 per share and a net income of $2.0 million, or $0.11 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 28 stores under
the Birks brand in most major metropolitan markets in Canada and two retail locations in
Calgary and Vancouver under the Brinkhaus brand. 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.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 exchange rate 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 exchange rate basis).
Net sales, comparable store sales, gross profit on a constant
exchange rate basis are calculated by taking the current period's
sales, 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 sales performance
relative to the corresponding period in the prior year comparable
period. The following tables reconcile the net sales, comparable
store sales and gross profit increases (decreases) from GAAP to
non-GAAP versus the comparable prior year period:
|
|
Constant Exchange
Rate Basis
Reconciliation
|
26 week period
ended September 23, 2017 vs.
26 week period ended September 24, 2016
|
|
GAAP
|
Translation
Effect
|
Constant-Exchange
Rate Basis
|
|
|
|
|
Net sales increase
(decrease) – from continuing operations (in $ 000's)
|
|
|
|
|
|
|
|
Net sales -
Retail
|
(5,887)
|
(188)
|
(5,699)
|
Net sales -
Other
|
866
|
(159)
|
1,025
|
Total Net
Sales
|
(5,021)
|
(347)
|
(4,674)
|
|
|
|
|
Gross profit
decrease – from continuing operations (in $ 000's)
|
|
|
|
|
|
|
|
Gross
Profit
|
(2,505)
|
(98)
|
(2,407)
|
|
|
|
|
|
|
Constant Exchange
Rate Basis
Reconciliation
|
26 week period
ended September 23, 2017 vs.
26 week period ended September 24, 2016
|
|
GAAP
|
Translation
Effect
|
Constant-Exchange
Rate Basis
|
Comparable store
sales decrease – from continuing operations (in %)
|
|
|
|
|
|
|
|
Comparable store
sales
|
(11)%
|
(1)%
|
(10)%
|
Forward Looking Statements
This press release contains certain "forward-looking" statements
concerning the Company's performance and strategies, including that
the sale of Mayors and the Company's results for the half-year
reflect the transformation of the Company's operations in order to
achieve its objective of becoming an international omni-channel
business and to attain its goal of becoming a globally renowned
luxury brand; that the sale of Mayors will allow the Company to
focus on the execution of its short-term and long-term strategies,
namely the renovations of its flagship stores, the global expansion
of the Birks product brand, the implementation of its new store
concept and the development of its wholesale and e-commerce
businesses; and that the Company's omni-channel approach, as well
as its creative marketing campaigns will allow the Company to
achieve its sales growth, profitability objectives and long-term
shareholder value. 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 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)
|
|
|
26 week period
ended September 23, 2017
|
|
Continuing
operations
|
Discontinued
operations
|
Combined
operations
|
|
|
|
|
(in $
000's)
|
|
|
|
|
|
|
|
Net sales
|
49,831
|
72,080
|
121,911
|
Cost of
sales
|
29,839
|
45,736
|
75,575
|
Gross
profit
|
19,992
|
26,344
|
46,336
|
Operating
expenses
|
24,562
|
22,445
|
47,007
|
Operating (loss)
income
|
(4,570)
|
3,899
|
(671)
|
Interest and other
financial costs
|
1,101
|
2,480
|
3,581
|
Income tax
expense
|
-
|
75
|
75
|
Net (loss)
income
|
(5,671)
|
1,344
|
(4,327)
|
|
|
|
26 week period
ended September 24, 2016
|
|
Continuing
operations
|
Discontinued
operations
|
Combined
operations
|
|
|
|
|
(in $
000's)
|
|
|
|
|
|
|
|
Net sales
|
54,852
|
74,875
|
129,727
|
Cost of
sales
|
32,355
|
47,847
|
80,202
|
Gross
profit
|
22,497
|
27,028
|
49,525
|
Operating
expenses
|
24,520
|
22,092
|
46,612
|
Operating (loss)
income
|
(2,023)
|
4,936
|
2,913
|
Interest and other
financial costs
|
1,999
|
2,720
|
4,719
|
Income tax
expense
|
-
|
184
|
184
|
Net (loss)
income
|
(4,022)
|
2,032
|
(1,990)
|
SOURCE Birks Group Inc.