MONTREAL, Nov. 16, 2018 /CNW Telbec/ – Birks Group Inc., today reported its financial results for the twenty-six week period ended September 29, 2018.
The first half of fiscal 2019 was the continuation of a transformational period during which the Company continued to invest considerably in both short-term and long-term growth initiatives as part of its five-year strategic plan intended to put the Company on a clear path to value creation for its stakeholders. During the twenty-six week period ended September 29, 2018, the Company reported an increase in net sales of $3.6 million.
Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, commented: “As announced in July of this year, the Company continues to focus on the execution of our five-year strategic plan and its key initiatives. The results of the first half of fiscal 2019, as expected, are reflective of this fact as we continue to invest in the core growth areas we have identified. We are pleased with the sales growth experienced during the period, especially the performance of the underlying retail business, which benefited from the impact of the fully renovated Montreal Flagship store. This is a promising sign of things to come as we continue the renovation of our Vancouver Flagship location and the major remodelling of our Toronto Flagship location, which is expected to be completed in the fourth quarter of fiscal 2019. We remain confident that the execution of our strategic initiatives will lead to long-term value creation.”
Financial overview for the twenty-six week period ended September 29, 2018:
- Net sales from continuing operations in the twenty-six week period ended September 29, 2018 increased by $3.6 million to $68.7 million, compared to $65.1 million in the twenty-six week period ended September 23, 2017. The $3.6 million increase in net sales was driven by a strong performance of the core retail business (excluding stores currently under renovation) mainly due to the re-opening of the Montreal Flagship store, by increased e-commerce sales, as well as by the successful execution of targeted marketing campaigns, partially offset by lower sales at stores undergoing renovations;
- Comparable store sales from continuing operations in the twenty-six week period ended September 29, 2018 were 4% greater than in the comparable prior year period. Comparable store sales from continuing operations increased by 7% when excluding the Company’s Toronto Flagship location. This store is in a temporary location while the building undergoes major renovations. This increase was primarily driven by a significant increase in sales of Birks branded jewellery collections and bridal offerings, as well as by an increase in sales of third-party branded watches;
- Gross profit from continuing operations was $26.4 million, or 38.4% of net sales, during the 26-week period ended September 29, 2018, compared to $26.1 million, or 40.0% of net sales, during the comparable prior year period. The gross margin rate decrease of approximately 160 basis points was primarily attributable to product sales mix driven by an increase in sales of third-party branded watches, as well as by increased promotional activity during the period mainly attributable to the Company’s efforts to sell through slow-moving inventory in order to focus on more productive inventory;
- Selling, general and administrative (“SG&A”) expenses from continuing operations, increased by $2.2 million, mainly due to increased marketing spending and increased strategic investment spending expanded in the areas of compensation, branding, and information technology, in line with the Company’s five-year strategic plan implemented to drive long-term growth and value creation; and
- The Company’s operating loss from continuing operations during the twenty-six week period ended September 29, 2018 was $8.5 million, an increase of $2.6 million compared to $5.9 million in the comparable prior year period. Adjusted operating loss from continuing operations (see “Non-GAAP Measures” below), which excludes restructuring costs, was $8.0 million, an increase of $2.1 million, compared to $5.9 million in the comparable prior year period.