(TSX:
NWC): The North West
Company Inc. (the "Company" or "North West") today reported its
unaudited financial results for the first quarter ended
April 30, 2019. It also announced that the Board of
Directors have declared a dividend of $0.33 per share to
shareholders of record on June 28, 2019, to be paid on
July 15, 2019.
“Our remote market same store sales were up a
healthy 4.6% and, together with our stabilized air cargo service,
they delivered solid bottom line results, net of the non-operating
adjustments in the quarter. As expected, the strongest performance
came from northern Canada where we are focused on capturing sales
and market share within fast-growing local economies tied to
natural resources and infrastructure spending,” commented President
& CEO Edward Kennedy. “Giant Tiger, on the other hand, was very
disappointing, due to margin pressures in food and seasonal general
merchandise. We are committed to delivering better returns
from these locations and this will be a priority in the second half
of 2019 while we continue to invest in our high potential, core
areas.”
Financial Highlights
First quarter consolidated sales increased 6.2%
to $494.5 million led by same store sales gains, the impact of
foreign exchange on the translation of International Operations
sales and new stores. Excluding the foreign exchange impact,
consolidated sales increased 4.2% and were up 2.7%1 on a same store
basis. Food sales1 increased 3.8% and were up 2.5% on a same
store basis and general merchandise sales1 increased 7.8% and were
up 4.1% on a same store basis.
Gross profit increased 5.6% driven by higher
sales but was partially offset by an 18 basis point decrease in
gross profit rate. The decrease in gross profit rate was due
to lower margins in Giant Tiger stores ("GT"), competitive pricing
pressures in certain International Operations markets and stronger
big-ticket sales in northern Canada and Alaska markets which carry
a lower margin.
Selling, operating and administrative expenses
("Expenses") decreased 1.6% and were down 189 basis points as a
percentage to sales. This decrease is due to a $10.7 million gain
resulting from the final settlement of hurricane Irma insurance
claims and the impact of a greater share-based compensation cost
recovery related to mark-to-market adjustments. Excluding the
impact of the insurance gain and share-based option compensation,
Expenses increased $10.4 million or 57 basis points as a percentage
to sales mainly due to new stores, higher insurance and utility
costs and office restructuring costs in International Operations.
The impact of foreign exchange on the translation of International
Operations expenses was also a factor.
Earnings from operations increased 37.8% to
$37.0 million compared to $26.9 million in the first quarter last
year and earnings before interest, income taxes, depreciation and
amortization (EBITDA2) increased 25.2% to $58.2 million due to the
factors previously noted.
Excluding the impact of the insurance-related
gain and share-based compensation option expense recovery, adjusted
EBITDA2 was down 1.2% compared to last year due to higher Expenses
and as a percentage to sales was 9.0% compared to 9.6% last
year.
Net earnings increased $7.7 million or 41.7% to
$26.2 million and net earnings attributable to shareholders were
$25.1 million or $0.51 per share compared to $0.36 per share last
year on a diluted earnings per share basis. This increase is
due to strong performance from most store banners, an $8.4 million
gain, net of tax, resulting from the final settlement of hurricane
Irma insurance claims and an increase in share-based compensation
cost recovery related to mark-to-market adjustments on stock
options. Excluding the impact of the insurance-related gain
and share-based option compensation, adjusted net earnings2
decreased compared to the prior year due to poor performance at the
Company's GT store division and expenses related to the
restructuring and relocation of the Company's buying office in
Bellevue, Washington to both Anchorage, Alaska and south Florida to
locate resources closer to the markets they serve.
Further information on the financial results is
available in the Company's 2019 first quarter Report to
Shareholders, Management's Discussion and Analysis and unaudited
interim period condensed consolidated financial statements which
can be found in the investor section of the Company's website at
www.northwest.ca.
1 Excluding the foreign exchange impact2 See
Non-GAAP Measures Section of Management's Discussion &
Analysis
First Quarter Conference
Call
North West will host a conference call for its
first quarter results on June 12, 2019 at 2:00 p.m. (Central
Time). To access the call, please dial 647-794-1828 or
888-632-5004 with a pass code of 456490. The conference call
will be archived and can be accessed by dialing 905-694-9451 or
800-408-3053 with a pass code of 5667406 on or before July 12,
2019.
Notice to
Readers
Certain forward-looking statements are made in
this news release, within the meaning of applicable securities
laws. These statements reflect North West's current expectations
and are based on information currently available to management. The
words may, will, should, believe, expect, plan, anticipate, intend,
estimate, predict, potential, continue, or the negative of these
terms, identify forward-looking matters. These statements speak
only as of the date of this press release. The actual results could
differ materially from those anticipated in these forward-looking
statements.
Reliance should not be placed on forward-looking
statements because they involve known and unknown risks,
uncertainties and other factors, which may cause the actual
results, performance, capital expenditures or achievements of North
West to differ materially from anticipated future results,
performance, capital expenditures or achievement expressed or
implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those set forth in
the forward-looking statements include, but are not limited to,
business performance, fluctuations in interest rates and currency
values, legislative and regulatory developments, legal
developments, the occurrence of weather-related and other natural
catastrophes, changes in tax laws, and those risks and
uncertainties detailed in the section entitled Risk Factors in
North West's Management's Discussion and Analysis and Annual
Information Form, both for the year-ended
January 31, 2019. The preceding list is not an
exhaustive list of possible factors. These and other factors should
be considered carefully and readers are cautioned not to place
undue reliance on these forward-looking statements. North West
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
Company
Profile
The North West Company Inc., through its
subsidiaries, is a leading retailer of food and everyday products
and services to rural communities and urban neighbourhoods in
Canada, Alaska, the South Pacific and the Caribbean. North West
operates 245 stores under the trading names Northern, NorthMart,
Giant Tiger, Alaska Commercial Company, Cost-U-Less and RiteWay
Food Markets and has annualized sales of approximately CDN$2.0
billion.
The common shares of North West
trade on the Toronto Stock Exchange under the symbol
NWC.
For more information
contact:
Edward Kennedy, President and Chief Executive
Officer, The North West Company Inc.Phone 204-934-1482; fax
204-934-1317; email ekennedy@northwest.ca
John King, Executive Vice-President and Chief
Financial Officer, The North West Company Inc.Phone 204-934-1397;
fax 204-934-1317; email jking@northwest.ca
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