Sales for the six months ended August 2, 2008 decreased 0.9% to $517,820,000 as compared with $522,637,000 for the six months ended August 4, 2007. Comparable store sales decreased 4.7% in a challenging retail environment characterized by unseasonable weather conditions, reduced customer traffic and reduced consumer confidence.
Operating earnings before depreciation and amortization for the period increased 9.1% to $103,319,000 as compared with $94,691,000 last year. A stronger Canadian dollar and tight inventory management positively impacted operating margins. Higher depreciation expenses due to an increased number of stores in operation and lower investment income negatively affected earnings before tax.
Net earnings increased 6.7% to $53,821,000 compared to $50,461,000 while diluted earnings per share increased 8.6% to $0.76 per share compared to $0.70 per share for last year. The Company had 970 stores in operation at the end of this period compared to 935 stores at the same time last year.
Sales for the second quarter ended August 2, 2008 decreased 0.8% to $289,502,000, as compared with $291,942,000 for the second quarter ended August 4, 2007. Same store sales for the comparable 13 weeks decreased 4.5%. Operating earnings before depreciation and amortization (EBITDA(1)) for the period increased 6.7% to $63,982,000 as compared with $59,941,000 last year.
Net earnings and diluted earnings per share increased to $35,385,000 or $0.50 per share as compared to $32,077,000 or $0.44 per share for the same period last year.
The Company adopted the Canadian Institute of Chartered Accountants new standard relating to the accounting for inventory costs (section 3031 - Inventories) in the first quarter of fiscal 2009 retrospectively, without restatement of prior periods.
The adoption of this new standard resulted in an increase in operating earnings of $2,746,000 for the three month period ended August 2, 2008. In the first quarter of this year, this accounting change reduced operating earnings by $2,721,000 such that the net effect of this accounting change for the six month year to date period was a $25,000 increase in operating income.
Sales for the month of August (four weeks ended August 30, 2008), as a result of the continuing difficult retail environment, increased 0.7% with comparable store sales decreasing 2.3%.
During the second quarter, the Company opened 10 new stores comprised of 4 Reitmans, 2 RW & CO., 2 Thyme Maternity, 1 Penningtons and 1 Addition Elle; 4 stores were closed. Accordingly, at August 2, 2008, there were 970 stores in operation, consisting of 377 Reitmans, 164 Smart Set, 57 RW & CO., 75 Thyme Maternity, 14 Cassis, 163 Penningtons and 120 Addition Elle. An additional 21 stores are scheduled to open this year, 20 stores will be remodeled and 6 stores will be closed.
At the Board of Directors meeting held on September 4, 2008, a quarterly cash dividend (constituting eligible dividends) of $0.18 per share on all outstanding Class A non-voting and Common shares of the Company was declared, payable October 30, 2008 to shareholders of record on October 16, 2008.
Reitmans (Canada) Limited