Reitmans, the Montreal-based retailer, experienced an increase in sales during the fourth quarter of fiscal 2023, with an 11.4% rise to $211.9 million. However, despite the growth in sales, the company's net earnings were significantly lower than expected.
The company's full fiscal year also saw a substantial increase in sales, with a 20.9% rise to $800.6 million. Unfortunately, this growth did not translate into higher profits. Net earnings from continuing operations for the fourth quarter were $27.5 million, a sharp decline of almost 72% from $97.5 million a year earlier. Full-year earnings also suffered, dropping nearly 46% to $77.7 million from $143.2 million.
Reitmans attributed the decrease in earnings to various factors, including increased operating and financing costs, as well as several one-time boosts in fiscal 2022. Despite these challenges, President and CEO Stephen F. Reitman expressed pride in the team's performance in fiscal 2023, particularly after the company emerged from creditor protection in January 2022.
The retailer initially filed for creditor protection in May 2020, and after 19 months of restructuring, it managed to bounce back, albeit with the loss of 160 stores, two brands (Addition Elle and Thyme Maternity), and approximately 1,400 employees. The company's stock is currently undervalued, with a fair market net asset value of $7.84 per share and a 20% free cash flow yield that would command a price of $6.35. At its peak in 2012, Reitmans was paying an annual dividend of $0.80 per share.
While Reitmans experienced a significant increase in sales during the fourth quarter of fiscal 2023, the company's profits remained slim due to various factors, including increased operating and financing costs. Despite these challenges, the company's leadership remains optimistic about its future performance.
