Ms. Andrea Limbardi reports

REITMANS (CANADA) LIMITED ANNOUNCES ITS RESULTS FOR THE 13 AND 26 WEEKS ENDED JULY 29, 2023

Reitmans (Canada) Ltd. has released its results for the second quarter of fiscal 2024. Unless otherwise indicated, all comparisons of results for the 13 weeks ended July 29, 2023 (second quarter of 2024), are against results for the 13 weeks ended July 30, 2022 (second quarter of 2023), and all comparisons of results for the 26 weeks ended July 29, 2023 (year to date fiscal 2024), are against results for the 26 weeks ended July 30, 2022 (year to date fiscal 2023). All amounts are in Canadian dollars.

The company performed well in the second quarter of 2024, although below the results of the second quarter of 2023, which benefited from exceptional market conditions due to the easing of pandemic-related restrictions. The current economic environment necessitated higher promotional activity as Canadian consumers cautiously managed their discretionary spending budgets. Results were also negatively impacted by unfavourable foreign exchange on U.S.-dollar-denominated merchandise purchases.

"We saw positive customer response in our second quarter with traffic and conversion remaining relatively stable in our stores despite the challenging economic environment. Additionally, RCL has a strong balance sheet and cash flows from operations in the quarter contributed to the strength in financial position," said Andrea Limbardi, president and chief executive officer of RCL. "We are continuing to invest in our strategic initiatives to build on our strong market position and we remain disciplined to continue to deliver value and choice to our customers whether shopping in our stores or on-line. I look forward to working with our talented team in delivering on our long-term results and value to shareholders."

Second quarter of 2024:

• Net sales decreased to $213.2-million from $229.2-million.
• Net earnings decreased to $13.4-million from $37.3-million.

Year to date fiscal 2024:

• Net sales decreased to $378.3-million from $383.1-million.
• Net earnings decreased to $9.5-million from $35.6-million.

13 weeks ended July 29, 2023

Net sales for the second quarter of 2024 decreased by $16.0-million, or 7.0 per cent, to $213.2-million. Comparable sales (1), which include e-commerce net sales, decreased 7.0 per cent during the second quarter of 2024. The decrease in comparable sales was primarily due to lower average transaction values and higher promotional activity. In addition, the company believes that comparatively higher interest rates and inflation overall compared with the corresponding period last year negatively impacted consumer spending during the second quarter of 2024.

Gross profit for the second quarter of 2024 decreased $20.4-million to $118.3-million, as compared with $138.7-million for the second quarter of 2023. Gross profit as a percentage of net sales for the second quarter of 2024 decreased to 55.5 per cent from 60.5 per cent for the second quarter of 2023. The decrease in gross profit and as a percentage of net sales is primarily attributable to higher markdown and promotional activity combined with an unfavourable foreign exchange impact of approximately $4.8-million on U.S.-dollar-denominated purchases included in cost of goods sold, partially offset by lower supply chain costs in the second quarter of 2024, as global shipping industry disruptions were prevalent in the second quarter of 2023.

Net earnings for the second quarter of 2024 were $13.4-million (basic and diluted earnings of 27 cents per share), as compared with net earnings of $37.3-million (basic and diluted earnings of 76 cents per share) for the second quarter of 2023. The decrease in net earnings of $23.9-million is primarily attributable the decrease in gross profit.

Adjusted results from operating activities (adjusted ROA) for the second quarter of 2024 was $18.0-million, as compared with $37.8-million for the second quarter of 2023. The decrease of $19.8-million is primarily attributable to a decrease in gross profit.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2024 was $19.2-million, as compared with $39.6-million for the second quarter of 2023. The decrease of $20.4-million is primarily attributable to a decrease in gross profit.

26 weeks ended July 29, 2023

Net sales for the year to date fiscal 2024 decreased by $4.8-million, or 1.3 per cent, to $378.3-million. Comparable sales, which include e-commerce net sales, decreased 1.6 per cent during the year to date fiscal 2024. The decrease in comparable sales was primarily due to lower average transaction values and higher promotional activity. In addition, the company believes that comparatively higher interest rates and inflation overall compared with the corresponding period last year negatively impacted consumer spending during the year to date fiscal 2024.

Gross profit for the year to date fiscal 2024 decreased $16.3-million to $206.4-million as compared with $222.7-million for the year to date fiscal 2023. Gross profit as a percentage of sales for the year to date fiscal 2024 decreased to 54.6 per cent from 58.1 per cent for the year to date fiscal 2023. The decrease both in gross profit and as a percentage of sales is primarily attributable to higher markdowns and promotional activity in the year to date fiscal 2024 combined with an unfavourable foreign exchange impact of approximately $8.2-million on U.S.-dollar-denominated purchases included in cost of goods sold, partially offset by lower supply chain costs in the year to date fiscal 2024 as global shipping industry disruptions were prevalent in the year to date fiscal 2023.

Net earnings for the year to date fiscal 2024 were $9.5-million (basic earnings of 20 cents per share and diluted earnings of 19 cents per share), as compared with $35.6-million (basic earnings of 73 cents per share and diluted earnings of 73 cents per share) for the year to date fiscal 2023. The decrease in net earnings of $26.1-million is primarily attributable to the decrease in gross profit, the increase in operating costs and the increase in income tax expense.

Adjusted ROA for the year to date fiscal 2024 was $14.4-million as compared with $36.8-million for the year to date fiscal 2023. The decrease of $22.4-million is primarily attributable to the decrease in gross profit and the increase in operating costs, as noted above.

Adjusted EBITDA for the year to date fiscal 2024 was $17.9-million as compared with $42.7-million for the year to date fiscal 2023. The decrease of $24.8-million is primarily attributable to the decrease in gross profit and the increase in operating costs, as noted above.

About Reitmans (Canada) Ltd.

The company is a leading women's specialty apparel retailer with retail outlets throughout Canada. As at July 29, 2023, the company operated 405 stores consisting of 235 Reitmans, 90 Penningtons and 80 RW&CO.

(1) Non-GAAP (generally accepted accounting principles) financial measures and supplementary financial measures

This news release makes reference to certain non-GAAP measures. These measures are not recognized measures under IFRS (international financial reporting standards) and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable with similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for the company's analysis of its financial information reported under IFRS.

We seek Safe Harbor.