Ms. Andrea Limbardi reports

REITMANS (CANADA) LIMITED REPORTS FISCAL 2024 AND FOURTH QUARTER FISCAL 2024 FINANCIAL RESULTS

Reitmans (Canada) Ltd. has released its results for the fourth quarter of fiscal 2024. Unless otherwise indicated, all comparisons of results for the 14 weeks ended Feb. 3, 2024, are against results for the 13 weeks ended Jan. 28, 2023, and all comparisons of results for the 53 weeks ended Feb. 3, 2024, are against the results for the 52 weeks ended Jan. 28, 2023. The inclusion of an extra week occurs every fifth or sixth fiscal year due to the company's floating year-end date.

"We are pleased with the results for the fourth quarter of 2024, which capped off a year that saw significant headwinds for the retail industry with high inflation and high interest rates negatively impacting consumer shopping behaviour," said Andrea Limbardi, president and chief executive officer of Reitmans. "Results from operating activities for the fourth quarter of fiscal 2024 and the full fiscal 2024 year were amongst the best for RCL in a decade, even after excluding the extra week of fiscal 2024 and an unfavourable foreign exchange impact. Having come off an exceptional year in fiscal 2023, driven by post-COVID demand, fiscal 2024 was a year adjusting to a new reality in consumer shopping behaviour. RCL is positioning itself to accelerate growth through initiatives aimed at delivering exceptional product at competitive prices across all channels. To facilitate this growth, modernization in digital technology, including 3-D design capabilities, improved handling systems in our distribution facility and a new point-of-sale system are but a few of the improvements being delivered over the next 12 months. We are confident of the future and remain focused on delivering long-term value to our shareholders."

14 weeks ended Feb. 3, 2024

Net revenues for the fourth quarter of 2024, which include an additional week of net revenue of $10.0-million, increased by $8.1-million, or 3.8 per cent, to $221.0-million compared with the fourth quarter of fiscal 2023. Comparable sales, which include e-commerce net sales, decreased 1.6 per cent during the fourth quarter of 2024. The decrease in comparable sales was primarily due to lower average transaction values and higher promotional activity. The company believes that comparatively higher interest rates and inflation over all compared with the corresponding period last year negatively impacted consumer spending during the fourth quarter of 2024.

Gross profit for the fourth quarter of 2024 increased $5.4-million to $114.9-million as compared with $109.5-million for the fourth quarter of 2023. Gross profit as a percentage of net revenues for the fourth quarter of 2024 increased to 52.0 per cent from 51.4 per cent for the fourth quarter of 2023. The improvement in gross profit and the increase in gross profit as a percentage of net revenues were primarily a result of the impact of inclusion of a 14th week (instead of the normal 13 weeks) of $5.5-million and lower supply chain costs in the fourth quarter of 2024 as global shipping industry disruptions were prevalent in the fourth quarter of 2023, partially offset by an unfavorable foreign exchange impact of approximately $2.6-million on U.S.-dollar-denominated purchases in the fourth quarter of 2024.

Adjusted results from operating activities for the fourth quarter of 2024 were $500,000 as compared with ($6.3-million) for the fourth quarter of 2023. The increase of $6.8-million is primarily attributable to the increase in gross profit.

The company had net earnings of nil for the fourth quarter of 2024 (nil basic and diluted earnings per share) as compared with net earnings of $27.5-million (56-cent basic and diluted earnings per share) for the fourth quarter of 2023. The decrease in net earnings of $27.5-million is primarily attributable to the recognition of previously unrecognized tax assets in fiscal 2023, as well as to the increase in operating costs in fiscal 2024, partially offset by the increase in gross profit in fiscal 2024.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter of 2024 was $1.7-million as compared with ($3.7-million) for the fourth quarter of 2023. The increase of $5.4-million is primarily attributable to the increase in gross profit.

53 weeks ended Feb. 3, 2024

Net revenues for the fiscal 2024 decreased by $8.6-million, or 1.1 per cent, to $794.7-million, despite an additional week of net revenues of $10.0-million in fiscal 2024. Comparable sales, which include e-commerce net sales, decreased 3.2 per cent during the fiscal 2024. The decrease in net revenues and comparable sales was primarily due to lower average transaction values and higher promotional activity. The company believes that comparatively higher interest rates and inflation over all compared with the corresponding period last year negatively impacted consumer spending during the fiscal 2024. In fiscal 2023, following the lifting of pandemic restrictions, net revenues of $803.3-million were exceptional as the company leveraged pent-up demand for work and social gathering apparel, and drove compelling marketing campaigns that led to an increase in store and e-commerce traffic, all with lower promotional activity.

Gross profit for fiscal 2024 decreased $20.4-million to $431.0-million as compared with $451.4-million for fiscal 2023, despite the inclusion of a 53rd week (instead of the normal 52 weeks) of $5.5-million. Gross profit as a percentage of net revenues for fiscal 2024 decreased to 54.2 per cent from 56.2 per cent for fiscal 2023. The decrease both in gross profit and as a percentage of net revenues is primarily attributable to higher markdowns and promotional activity in fiscal 2024 combined with an unfavourable foreign exchange impact of approximately $14.0-million on U.S.-dollar-denominated purchases included in cost of goods sold, partially offset by lower supply chain costs in fiscal 2024.

Adjusted ROA for fiscal 2024 was $22.0-million as compared with $45.7-million for the fiscal 2023. The decrease of $23.7-million is primarily attributable to the decrease in gross profit and the increase in operating costs.

Net earnings for fiscal 2024 was $14.8-million (30-cent basic and diluted earnings per share) as compared with $77.7-million ($1.59 basic and diluted earnings per share) for fiscal 2023. The decrease in net earnings of $62.9-million is primarily attributable to the company's recognition of deferred income taxes in fiscal 2023, the decrease in gross profit and the increase in operating costs in fiscal 2024.

Adjusted EBITDA for fiscal 2024 was $29.2-million as compared with $57.0-million for fiscal 2023. The decrease of $27.8-million is primarily attributable to the decrease in gross profit and the increase in operating costs.

The company's complete financial statements, including notes and management's discussion and analysis, for fiscal 2024, are available on-line at SEDAR+.

About Reitmans (Canada) Ltd.

The company is a leading women's specialty apparel retailer with retail outlets throughout Canada. As at Feb. 3, 2024, the company operated 393 stores consisting of 226 Reitmans, 86 Penningtons and 81 RW&CO.

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