MONTREAL, Nov. 16, 2018 /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 29, 2018.
Financial Highlights
All figures presented herein are in Canadian dollars.
The first half of fiscal 2019 was the continuation of a
transformational period during which the Company continued to
invest considerably in both short-term and long-term growth
initiatives as part of its five-year strategic plan intended to put
the Company on a clear path to value creation for its stakeholders.
During the twenty-six week period ended September 29, 2018, the Company reported an
increase in net sales of $3.6
million.
Jean-Christophe Bédos, President and Chief Executive Officer of
Birks Group, commented: "As announced in July of this year, the
Company continues to focus on the execution of our five-year
strategic plan and its key initiatives. The results of the
first-half of fiscal 2019, as expected, are reflective of this fact
as we continue to invest in the core growth areas we have
identified. We are pleased with the sales growth experienced during
the period, especially the performance of the underlying retail
business, which benefited from the impact of the fully renovated
Montreal Flagship store. This is a promising sign of things to come
as we continue the renovation of our Vancouver Flagship location
and the major remodeling of our Toronto Flagship location, which is
expected to be completed in the fourth quarter of fiscal 2019. We
remain confident that the execution of our strategic initiatives
will lead to long-term value creation."
Financial overview for the twenty-six week period ended
September 29, 2018:
- Net sales from continuing operations in the twenty-six week
period ended September 29, 2018
increased by $3.6 million to
$68.7 million, compared to
$65.1 million in the twenty-six week
period ended September 23, 2017. The
$3.6 million increase in net sales
was driven by a strong performance of the core retail business
(excluding stores currently under renovation) mainly due to the
re-opening of the Montreal Flagship store, by increased e-commerce
sales, as well as by the successful execution of targeted marketing
campaigns, partially offset by lower sales at stores undergoing
renovations;
- Comparable store sales from continuing operations in the
twenty-six week period ended September 29,
2018 were 4% greater than in the comparable prior year
period. Comparable store sales from continuing operations increased
by 7% when excluding the Company's Toronto Flagship location. This
store is in a temporary location while the building undergoes major
renovations. This increase was primarily driven by a significant
increase in sales of Birks branded jewelry collections and bridal
offerings, as well as by an increase in sales of third party
branded watches;
- Gross profit from continuing operations was $26.4 million, or 38.4% of net sales, during the
26-week period ended September 29,
2018, compared to $26.1
million, or 40.0% of net sales, during the comparable prior
year period. The gross margin rate decrease of approximately 160
basis points was primarily attributable to product sales mix driven
by an increase in sales of third party branded watches, as well as
by increased promotional activity during the period mainly
attributable to the Company's efforts to sell through slow moving
inventory in order to focus on more productive inventory;
- Selling, general and administrative ("SG&A") expenses from
continuing operations, increased by $2.2
million, mainly due to increased marketing spending and
increased strategic investment spending expended in the areas of
compensation, branding, and information technology, in line with
the Company's five-year strategic plan implemented to drive
long-term growth and value creation; and
- The Company's operating loss from continuing operations during
the twenty-six week period ended September
29, 2018 was $8.5 million, an
increase of $2.6 million compared to
$5.9 million in the comparable prior
year period. Adjusted operating loss from continuing operations
(see "Non-GAAP Measures" below), which excludes restructuring
costs, was $8.0 million, an increase
of $2.1 million, compared to
$5.9 million in the comparable prior
year period.
About Birks Group Inc.
Birks Group is a leading designer of fine jewelry, timepieces
and gifts and operator of luxury jewelry stores in Canada. The Company operates 26 stores under
the Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand and two
retail locations in Vancouver
under the Graff and Patek Philippe brands. Birks Collections are
available at Mappin & Webb and Goldsmiths in the United Kingdom in addition to several jewelry
retailers across North America.
Birks was founded in 1879 and has become Canada's premier retailer and designer of fine
jewelry, timepieces and gifts. Additional information can be found
on Birks' web site, www.birks.com.
Change in Reporting Currency
The Company changed its reporting currency from U.S. dollars
($USD) to Canadian dollars ($CAD) for the period commencing
April 1, 2018. The Company ceased
using the U.S. dollar as its reporting currency in order to better
reflect the fact that subsequent to the Company's divestiture of
its former wholly-owned subsidiary, Mayor's Jewelers, Inc., on
October 23, 2017, its business is
primarily conducted in Canada, and
a substantial portion of its revenues, expenses, assets and
liabilities are denominated in $CAD.
Non-GAAP Measures
The Company reports information in accordance with U.S Generally
Accepted Accounting Principles ("U.S GAAP"). The Company's
performance is monitored and evaluated using various sales and
earnings measures that are adjusted to include or exclude amounts
from the most directly comparable GAAP measure ("non-GAAP
measures"). The Company presents such non-GAAP measures in
reporting its financial results to investors and other external
stakeholders to provide them with useful complimentary information
which will allow them to evaluate the Company's operating results
using the same financial measures and metrics used by the Company
in evaluating performance. The Company does not, nor does it
suggest that investors and other external stakeholders should,
consider non-GAAP measures in isolation from, or as a substitute
for, financial information prepared in accordance with U.S GAAP.
These non-GAAP measures may not be comparable to similarly-titled
measures presented by other companies.
Total operating expenses from continuing operations and
operating loss from continuing operations
The Company evaluates its operating earnings performance using
financial measures which exclude expenses associated with
operational restructuring plans. The Company believes that such
measures provide useful supplemental information with which to
assess the Company's results relative to the corresponding period
in the prior fiscal year and can result in a more meaningful
comparison of the Company's performance between the periods
presented. The tables below reconcile total operating expenses from
continuing operations and operating loss from continuing operations
from GAAP to non-GAAP for the periods presented.
|
|
|
Reconciliation of
non-GAAP measures
|
26 Weeks Ended
September 29, 2018
|
|
|
GAAP
|
Restructuring
costs (a)
|
Non-GAAP
|
|
CAD
($'000)
|
|
|
|
|
|
|
Total operating
expenses – from continuing operations
|
34,868
|
(498)
|
34,370
|
|
|
as a % of net
sales from continuing operations
|
50.7%
|
|
50.0%
|
|
|
|
|
|
|
Operating loss – from
continuing operations
|
(8,495)
|
498
|
(7,997)
|
|
|
as a % of net
sales from continuing operations
|
(12.4)%
|
|
(11.7)%
|
|
|
|
|
|
|
Reconciliation of
non-GAAP measures
|
26 Weeks Ended
September 23, 2017*
|
|
|
GAAP
|
Restructuring
costs (a)
|
Non-GAAP
|
|
($'000)
|
|
|
|
|
|
|
Total operating
expenses – from continuing operations
|
31,964
|
-
|
31,964
|
|
|
as a % of net
sales from continuing operations
|
49.1%
|
|
49.1%
|
|
|
|
|
|
|
Operating loss – from
continuing operations
|
(7,349)
|
-
|
(7,349)
|
|
|
as a % of net
sales from continuing operations
|
(11.3)%
|
|
(11.3)%
|
|
|
|
(a)
|
Expenses associated
with the Company's operational restructuring plan
|
(*)
|
The Company has
changed its reporting currency from U.S dollars ("USD") to Canadian
dollars ("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 Form 6-K for the 26-week period ended September 29,
2018)
|
Forward Looking Statements
This press release contains certain "forward-looking" statements
concerning the Company's performance and strategies, including that
the Company continues to invest considerably in both short-term and
long-term growth initiatives as part of its five-year strategic
plan intended to put the Company on a clear path to value creation
for its stakeholders; that the Company continues to focus on the
execution of its five-year strategic plan and its key initiatives;
that the recent renovation of the Montreal Flagship location is a
promising sign of things to come as the Company continues the
renovation of its Vancouver Flagship location and the major
remodeling of its Toronto Flagship location; that the major
remodeling of the Company's Toronto Flagship location is expected
to be completed in the fourth quarter of fiscal 2019; and 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) 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 July 3, 2018 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 weeks ended
September 29, 2018
|
|
26 weeks ended
September 23, 2017*
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
68,728
|
|
$
|
65,071
|
Cost of
sales
|
|
|
42,355
|
|
|
39,020
|
Gross
profit
|
|
|
26,373
|
|
|
26,051
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
|
32,471
|
|
|
30,330
|
Restructuring
charges
|
|
|
498
|
|
|
-
|
Depreciation and
amortization
|
|
|
1,899
|
|
|
1,634
|
Total operating
expenses
|
|
|
34,868
|
|
|
31,964
|
Operating (loss)
income
|
|
|
(8,495)
|
|
|
(5,913)
|
Interest and other
financial costs
|
|
|
1,866
|
|
|
1,436
|
(Loss) income from
continuing operations
|
|
|
(10,361)
|
|
|
(7,349)
|
Income taxes
(benefits)
|
|
|
-
|
|
|
-
|
Net (loss) income
from continuing operations
|
|
|
(10,361)
|
|
|
(7,349)
|
(Loss) income from
discontinued operations, net of tax
|
|
|
(444)
|
|
|
1,802
|
Net loss
|
|
|
(10,805)
|
|
|
(5,547)
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
|
|
|
|
|
Basic
|
|
|
17,961
|
|
|
17,961
|
Diluted
|
|
|
17,961
|
|
|
17,961
|
Net loss per common
share
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.60)
|
|
$
|
(0.31)
|
Diluted
|
|
$
|
(0.60)
|
|
$
|
(0.31)
|
Net loss from
continuing operations per common share
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.58)
|
|
$
|
(0.41)
|
Diluted
|
|
$
|
(0.58)
|
|
$
|
(0.41)
|
|
|
(*)
|
The Company has
changed its reporting currency from U.S dollars ("USD") to Canadian
dollars ("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 Form 6-K for the 26-week period ended September 29,
2018)
|
BIRKS GROUP INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS – UNAUDITED
(In
thousands)
|
|
As
of
|
|
|
|
September
29, 2018
|
|
March
31, 2018*
(recast)
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,224
|
|
$
|
1,005
|
|
Accounts receivable
and other receivables
|
|
|
3,989
|
|
|
6,210
|
|
Inventories
|
|
|
88,618
|
|
|
84,827
|
|
Prepaid expenses and
other current assets
|
|
|
3,379
|
|
|
4,929
|
|
Total current
assets
|
|
|
97,210
|
|
|
96,971
|
|
|
|
|
|
|
|
|
|
Property and
equipment
|
|
|
24,060
|
|
|
19,426
|
|
Long-term
receivables
|
|
|
926
|
|
|
—
|
|
Intangible assets and
other assets
|
|
|
5,888
|
|
|
3,878
|
|
Total non-current
assets
|
|
|
30,874
|
|
|
23,304
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
128,084
|
|
$
|
120,275
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
43,603
|
|
$
|
36,925
|
|
Accounts
payable
|
|
|
27,161
|
|
|
26,364
|
|
Accrued
liabilities
|
|
|
8,630
|
|
|
7,496
|
|
Current portion of
long-term debt
|
|
|
3,349
|
|
|
3,372
|
|
Total current
liabilities
|
|
|
82,743
|
|
|
74,157
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
14,480
|
|
|
4,838
|
|
Other long-term
liabilities
|
|
|
9,138
|
|
|
8,803
|
|
Total long-term
liabilities
|
|
|
23,618
|
|
|
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
|
|
|
19,099
|
|
|
19,042
|
|
Accumulated
deficit
|
|
|
(90,592)
|
|
|
(79,787)
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(132)
|
|
|
(126)
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
21,723
|
|
|
32,477
|
|
Total liabilities and
stockholders' equity
|
|
$
|
128,084
|
|
$
|
120,275
|
|
|
|
(*)
|
The Company has
changed its reporting currency from U.S dollars ("USD") to Canadian
dollars ("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 Form 6-K for the 26-week period ended September 29,
2018)
|
SOURCE Birks Group Inc.