(TSX:
NWC): The North West
Company Inc. (the "Company" or "North West") today reported its
unaudited financial results for the third quarter ended
October 31, 2019. It also announced that the Board of
Directors have declared a dividend of $0.33 per share to
shareholders of record on December 31, 2019, to be paid on
January 15, 2020.
“This quarter was led by gross margin gains in
Canada and solid same store sales in International, despite a delay
in Alaska Permanent Fund Dividend payments,” commented President
& CEO Edward Kennedy. “We have good sales momentum in all
banners heading into the final weeks of holiday selling and we
expect net margin rates to be up over last year, building on our
third quarter trends.”
Financial Highlights
Third quarter consolidated sales increased 1.6%
to $519.5 million led by same store sales gains in International
Operations, the impact of foreign exchange on the translation of
International Operations sales and new stores. Excluding the
foreign exchange impact, consolidated sales increased 0.9% and were
up 0.4%1 on a same store basis. Food sales1 increased 2.0%
and were up 1.5% on a same store basis led by sales gains in
International Operations. General merchandise sales1
decreased 3.2% and were down 4.3% on a same store basis due in part
to a delay in the issuance of Permanent Fund Dividend cheques in
Alaska until late October and lower big-ticket sales in Canadian
Operations.
Gross profit increased 3.3% driven by higher
sales and a 53 basis point increase in gross profit rate. The
increase in gross profit rate was due to higher general merchandise
and other business margin rates in Canadian Operations.
Selling, operating and administrative expenses
("Expenses") increased 23.1% and were up 446 basis points to last
year as a percentage to sales primarily due to a $17.0 million
pre-tax hurricane-related insurance gain in International
Operations and a $3.1 million pre-tax fire-related insurance gain
in Canadian Operations last year. Support office
restructuring and relocation expenses and store opening costs in
International Operations of $2.3 million were also factors.
Excluding the impact of the insurance gains, support office
restructuring and store opening costs, Expenses increased $2.6
million or 11 basis points as a percentage to sales partially due
to higher insurance and utility costs.
Earnings from operations decreased 34.5% to
$37.0 million compared to $56.5 million last year and earnings
before interest, income taxes, depreciation and amortization
(EBITDA2) decreased $18.3 million or 23.6% to $59.3 million.
Excluding the impact of the $20.1 million in insurance-related
gains last year and share-based compensation, adjusted EBITDA2 was
up 2.5% compared to last year and as a percentage to sales was
11.3% compared to 11.2% last year as sales gains and improvements
in gross profit rate were partially offset by the Expense factors
noted above.
Net earnings decreased $14.7 million or 37.1% to
$24.8 million. Net earnings attributable to shareholders were $24.1
million and diluted earnings per share were $0.49 per share
compared to $0.78 per share last year due to the factors noted
above. Excluding the impact of the $15.4 million in after-tax
insurance-related gains last year and share-based compensation,
adjusted net earnings2 increased 2.7% compared to last year as
higher gross profit was partially offset by the Expense factors
previously noted.
Further information on the financial results is
available in the Company's 2019 third 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
Third Quarter Conference
Call
North West will host a conference call for its
third quarter results on December 11, 2019 at 1:30 p.m.
(Central Time). To access the call, please dial 416-340-2217
or 800-806-5484 with a pass code of 2976340. The conference
call will be archived and can be accessed by dialing 905-694-9451
or 800-408-3053 with a pass code of 9313908 on or before January
11, 2020.
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 246 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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