News

Birks Group Reports its Fiscal 2021 Results

All figures presented herein are in Canadian dollars.

June 29, 2021

478

The Company’s financial results for the fiscal year ended March 27, 2021, were significantly impacted by the COVID-19 pandemic, most notably by the temporary closure of certain of the Company’s stores at intermittent periods during fiscal 2021 as a consequence of the restrictions imposed by provincial governmental authorities.

During the fiscal year ended March 27, 2021, or fiscal 2021, the Company achieved net sales of $143.1 million, a decrease of $26.3 million, or 15.5%, from the fiscal year ended March 28, 2020, or fiscal 2020, yielding a gross profit of $56.4 million, a decrease of $8.1 million, or 12.6%, compared to fiscal 2020, as a direct result of the negative impacts of COVID-19.

Gross profit as a percentage of sales was 39.4%, an increase of 130 basis points from the gross profit as a percentage of sales of 38.1% in fiscal 2020. Despite the decline in sales and gross profit volumes, the Company was able, through its proactive management of the impact of the pandemic, to control costs. Total operating expenses were $59.2 million in the fiscal year ended March 27, 2021, representing a decrease of $11.8 million, or 16.6%, as compared to fiscal 2020. The Company’s fiscal 2021 EBITDA(1) was $2.6 million, an increase of $4.3 million compared to EBITDA(1) of negative $1.7 million for fiscal 2020.

As of June 17, 2021, 20 of the Company’s 29 stores are open, albeit at reduced operating hours. The remaining nine stores, all located in Ontario, are expected to remain closed for in-person shopping in accordance with the Ontario government’s orders until at least July 6, 2021.

Mr. Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, commented: “I am very proud of how we have navigated through the challenges brought about by COVID-19 during the past fiscal year and I believe that our results reflect the agility, hard work and adaptability of our employees as we ended the year stronger than we started. In response to the pandemic, our teams reacted very quickly to ensure that we continuously met the evolving needs of our customers throughout these unprecedented times, including the improvement of our omnichannel offering which was reflected in the 201% increase in our e-commerce sales during fiscal 2021.”

Mr. Bédos further commented: “Thanks to our disciplined approach at managing liquidity, our focus on cost containment and our emphasis on generating revenues from our retail network while open under strict health and safety protocols, our concierge service, and our e-commerce business, as well as the continued support from our key stakeholders and partners, we have been able to achieve improved results in fiscal 2021 as compared to last year. Looking forward, I believe that the actions we have taken since the start of the pandemic and our lessons learned have placed the Company in a stronger position in terms of customer focus and dedication, innovation, and productivity which we can leverage to fuel long-term growth.”

Financial overview for fiscal 2021:

Net sales were $143.1 million for fiscal 2021, a decrease of $26.3 million, or 15.5% compared to net sales of $169.4 million in fiscal 2020. The decrease in net sales in fiscal 2021 was primarily attributable to the effects of COVID-19, and the resulting temporary closures of all stores across the retail channel, which were in effect throughout the first quarter of fiscal 2021 and the temporary closures of certain stores (in Ontario, Québec and Manitoba) at intermittent periods throughout the fiscal year including during the third and fourth quarters of fiscal 2021. The overall decrease was partially offset by strong e-commerce sales, growing by 201% and representing approximately 4.9% of total net sales, as compared to approximately 1.4% in fiscal 2020.
Comparable store sales decreased by 14.3% compared to fiscal 2020 driven primarily by the temporary store closures in fiscal 2021 due to the COVID-19 pandemic.
Gross profit was $56.4 million, or 39.4% of net sales, for fiscal 2021 compared to $64.5 million, or 38.1% of net sales, for fiscal 2020. This decrease was primarily due to the reduction of sales volume caused by COVID-19, partially offset by an improvement of gross margin of 130 basis points. The increase of 130 basis points in gross margin percentage was mainly attributable to the Company’s strategic focus on reducing sales promotions and discounting, and foreign currency gains due to the strengthened Canadian dollar, partially offset by a shift in product sales mix towards branded timepieces.
SG&A expenses were $53.7 million, or 37.5% of net sales, in fiscal 2021 compared to $65.9 million, or 38.9% of net sales, in fiscal 2020. SG&A expenses in fiscal 2021 decreased by $12.2 million versus SG&A expenses in fiscal 2020. This decrease was driven primarily by the effects of COVID-19 and various cost containment initiatives undertaken by management including lower occupancy costs ($3.5 million) driven by the negotiation of rent abatements with the Company’s landlords, lower compensation costs ($6.5 million) driven by the impact of temporary lay-offs, reduced operating hours at retail locations, lower sales commissions due to the decrease in net sales, and temporary wage reductions at the corporate head office, wage subsidies ($1.4 million) and rent subsidies ($0.5 million), lower credit cards fees ($0.7 million) due to lower sales volume, lower marketing costs ($1.0 million) and lower general operating costs ($2.5 million) driven by cost containment measures. These year-over-year reductions in SG&A expenses were partially offset by the impact of the revaluation of certain deferred stock units, restricted stock units and share appreciation rights which increased the Company’s non-cash stock-based compensation expense ($3.6 million) during the year due to the fluctuations in the Company’s stock price during the fiscal year. As a percentage of sales, SG&A expenses in fiscal 2021 have decreased by 140 basis points as compared to fiscal 2020.
The Company’s fiscal 2021 EBITDA(1) was $2.6 million, an increase of $4.3 million compared to EBITDA(1) of negative $1.7 million for fiscal 2020. Adjusted EBITDA(1) for fiscal 2021 was $2.6 million, an increase of $4.0 million compared to adjusted EBITDA(1) of negative $1.4 million for fiscal 2020.
The Company’s fiscal 2021 reported operating loss from continuing operations was $2.8 million, an improvement of $3.7 million compared to a reported operating loss from continuing operations of $6.5 million for fiscal 2020. Adjusted operating loss(1) from continuing operations was $2.8 million, a decrease of $3.4 million compared to an adjusted operating loss(1) from continuing operations of $6.2 million in fiscal 2020.
The Company recognized a net loss for fiscal 2021 of $5.8 million, or $0.32 per share, all of which was comprised of a net loss from continuing operations, compared to a net loss for fiscal 2020 of $12.8 million, or $0.71 per share, comprised of a net loss from continuing operations of $12.2 million or $0.68 per share, and a net loss from discontinued operations of $0.6 million, or $0.03 per share.