Grows Q1 Revenue by 4%, Increases Adjusted EBITDA(1) by 16%, and Reaffirms 2024 Outlook
- System-wide sales(2) were
$352.9 million , an increase of 3.9% versus the prior year. Same-store sales growth(2) was 0.8%, driven by same-store average spend per transaction growth(2). - Revenue was
$260.8 million , up 4.2% versus the prior year, similar to system-wide sales growth. - Adjusted EBITDA was
$56.6 million , up 15.9% versus the prior year, representing 21.7% of revenue. Operating income was$33.3 million , down 4.5% versus the prior year. - Net income was
$17.5 million , down from$18.7 million in the prior year. - Adjusted Net Income(1) was
$25.3 million or$0.35 per diluted share, compared to$23.0 million or$0.32 per diluted share, respectively, in the prior year. - Opened 11 new stores and ended the quarter with 794 stores across the network.
- The Board of Directors of the Company declared a dividend of
$0.11 per common share.
- The Company expects revenue between
$1.11 and$1.14 billion , supported by same-store sales growth between 2% and 5% and 40-50 new store openings, Adjusted EBITDA between$248 and$254 million , and Adjusted Net Income per Diluted Share(3) between$1.57 and$1.63 .
"Our business delivered solid performance in the first quarter, underpinned by the resilience of our unique positioning, together with the exceptional efforts and agility of our teams," said
"We also advanced several key strategic initiatives set to go live in the second quarter," continued
All comparative figures below are for the 13-week period ended
Revenue was
Same-store sales growth was 0.8% in Q1 2024 primarily driven by a 3.2% increase in same-store average spend per transaction and partially offset by a 2.3% decrease in same-store transactions. This is compared to same-store sales growth of 9.4% in Q1 2023, which primarily consisted of a 3.0% increase in same-store transactions and a 6.3% increase in same-store average spend per transaction.
Gross profit increased by
Selling, general and administrative ("SG&A") expenses were
Adjusted EBITDA increased by
Net interest expense was
Income taxes were
Net income decreased by
Adjusted Net Income increased by
Adjusted Net Income per Diluted Share increased by
Cash at the end of the first quarter totaled
Free Cash Flow(1) amounted to
Inventory at the end of Q1 2024 was
On
For the full year 2024, the Company expects:
- Revenue between
$1.11 and$1.14 billion , supported by same-store sales growth of between 2% and 5%, 40 to 50 new store openings and higher wholesale merchandise sales penetration with Chico franchisees; - Adjusted EBITDA between
$248 and$254 million , supported by operating expense leverage, partially offset by pricing investment; - Adjusted Net Income per Diluted Share between
$1.57 and$1.63 , which incorporates approximately$20 million pre-tax, or$0.20 per diluted share, of incremental depreciation and lease liability interest expense associated with the new GTA and MVR distribution centres; - Business transformation costs of approximately
$17 million pre-tax, information technology costs of approximately$7 million pre-tax, and share-based compensation of approximately$12 million pre-tax, all of which are excluded from Adjusted EBITDA and Adjusted Net Income per Diluted Share; and - Net Capital Expenditures(1) of approximately
$55 million , roughly half of which is attributable to investments in the Company's supply chain transformation.
(1) This is a non-IFRS financial measure. Non-IFRS financial measures are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Refer to "Non-IFRS and Other Financial Measures" and "Selected Consolidated Financial Information" below for a reconciliation of the non-IFRS measures used in this release to the most comparable IFRS measures. Also refer to the sections entitled "How We Assess the Performance of our Business", "Non-IFRS and Other Financial Measures" and "Selected Consolidated Financial Information and Industry Metrics" in the MD&A for the first quarter ended | |
(2) This is a supplementary financial measure. Refer to "Non-IFRS and Other Financial Measures" below and to the section entitled "How We Assess the Performance of our Business" in the MD&A for the first quarter ended | |
(3) This is a non-IFRS ratio. Non-IFRS ratios are not recognized measures under IFRS and do not have standardized meanings prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Refer to "Non-IFRS and Other Financial Measures" below and to the section entitled "How We Assess the Performance of our Business" in the MD&A for the first quarter ended |
A conference call to discuss the Company's first quarter results is scheduled for
For those unable to participate, a playback will be available shortly after the conclusion of the call by dialing 1-866-813-9403 (ID: 139856) and will be accessible until
This press release makes reference to certain non-IFRS measures and non-IFRS ratios. These measures and ratios are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS.
Some of the information contained in this press release is forward-looking information. Forward-looking information is provided as at the date of this press release and is based on management's opinions, estimates and assumptions in light of its experience and perception of historical trends, current trends, current conditions and expected future developments, as well as other factors that management believes appropriate and reasonable in the circumstances. Such forward-looking information is intended to provide information about management's current expectations and plans, and may not be appropriate for other purposes.
Many factors could cause our actual results, level of activity, performance or achievements, future events or developments, or outlook to differ materially from those expressed or implied by the forward-looking information, including, without limitation, the factors discussed in the "Risk Factors" section of the AIF. A copy of the AIF and the Company's other publicly filed documents can be accessed under the Company's profile on SEDAR+ at www.sedarplus.ca.
The Company cautions that the list of risk factors and uncertainties described in the AIF is not exhaustive and other factors could also adversely affect its results. Readers are urged to consider the risks, uncertainties and assumptions carefully in evaluating forward-looking information and are cautioned not to place undue reliance on such information.
Condensed Interim Consolidated Statements of Income and Comprehensive Income
(Unaudited, expressed in thousands of Canadian dollars, except per share amounts)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Revenue: | ||
Retail sales | $ 100,309 | $ 102,019 |
Franchise and other revenues | 160,477 | 148,273 |
Total revenue | 260,786 | 250,292 |
Cost of sales | 173,435 | 163,078 |
Gross profit | 87,351 | 87,214 |
Selling, general and administrative expenses | 54,052 | 52,347 |
Total operating income | 33,299 | 34,867 |
Interest expenses, net | 8,555 | 6,907 |
Loss on foreign exchange | 397 | 311 |
Other loss | — | 1,425 |
Income before income taxes | 24,347 | 26,224 |
Income tax expense | 6,829 | 7,495 |
Net income | 17,518 | 18,729 |
Other comprehensive income, net of tax: | ||
Currency translation adjustments that may be reclassified to net income, net of tax | — | 14 |
Comprehensive income for the period attributable to the shareholders of the Company | $ 17,518 | $ 18,743 |
Basic net income per share attributable to the common shareholders | $ 0.25 | $ 0.26 |
Diluted net income per share attributable to the common shareholders | $ 0.24 | $ 0.26 |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Reconciliation of net income to Adjusted EBITDA: | ||
Net income | $ 17,518 | $ 18,729 |
Depreciation and amortization | 16,119 | 10,628 |
Interest expenses, net | 8,555 | 6,907 |
Income tax expense | 6,829 | 7,495 |
EBITDA | 49,021 | 43,759 |
Adjustments to EBITDA: | ||
Information technology transformation costs(1) | 2,132 | 722 |
Business transformation costs(2) | 1,505 | 1,580 |
Other professional fees(3) | 456 | — |
Share-based compensation(4) | 3,069 | 1,001 |
Loss on foreign exchange(5) | 397 | 311 |
Investment in associate(6) | — | 1,425 |
Adjusted EBITDA | $ 56,580 | $ 48,798 |
Adjusted EBITDA as a percentage of revenue | 21.7 % | 19.5 % |
Notes: | |
(1) | Represents discrete, project-based implementation costs associated with new information technology systems and discrete Software-as-a-Service ("SaaS") arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes. |
(2) | Represents expenses associated with supply chain transformation initiatives such as duplicative warehousing and distribution costs, implementation costs associated with new information technology systems and other transition costs incurred during the transition to a new distribution centre. The expenses included in cost of sales in Q1 2024 were |
(3) | Professional fees primarily incurred with respect to the |
(4) | Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and deferred share unit plan. |
(5) | Represents foreign exchange gains and losses. |
(6) | Represents the Company's share of loss from associate of |
Reconciliation of Net Income to Adjusted Net Income
(Unaudited, in thousands of Canadian dollars unless otherwise noted)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Reconciliation of net income to Adjusted Net Income: | ||
Net income | $ 17,518 | $ 18,729 |
Adjustments to net income: | ||
Information technology transformation costs(1) | 2,132 | 722 |
Business transformation costs(2) | 4,156 | 1,580 |
Other professional fees(3) | 456 | — |
Share-based compensation(4) | 3,069 | 1,001 |
Loss on foreign exchange(5) | 397 | 311 |
Investment in associate(6) | — | 1,425 |
Tax effect of adjustments to net income | (2,394) | (816) |
Adjusted Net Income | $ 25,334 | $ 22,952 |
Adjusted Net Income as a percentage of revenue | 9.7 % | 9.2 % |
Adjusted Net Income per Diluted Share | $ 0.35 | $ 0.32 |
Notes: | |
(1) | Represents discrete, project-based implementation costs associated with new information technology systems and discrete SaaS arrangements for transformational initiatives supporting merchandise planning, inventory and order management, e-commerce and omni-channel capabilities, customer relationship management and other key processes. |
(2) | Represents expenses associated with supply chain transformation initiatives such as duplicative warehousing and distribution costs, implementation costs associated with new information technology systems, and other transition costs incurred during the transition to a new distribution centre. This also includes duplicative depreciation expense on property and equipment and right-of-use assets, and interest expense on lease liabilities. The expenses included in cost of sales in Q1 2024 were |
(3) | Professional fees primarily incurred with respect to the CRA's examination of the Company's Canadian tax filings for the 2016 and 2018 fiscal years. |
(4) | Represents share-based compensation in respect of our amended and restated share option plan, long-term incentive plan, and deferred share unit plan. |
(5) | Represents foreign exchange gains and losses. |
(6) | Represents the Company's share of loss from associate of |
Condensed Interim Consolidated Statements of Cash Flows
(Unaudited, in thousands of Canadian dollars)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Cash provided by (used in): | ||
Operating activities: | ||
Net income for the period | $ 17,518 | $ 18,729 |
Adjustments for items not affecting cash: | ||
Depreciation and amortization | 16,119 | 10,628 |
Deferred franchise fees | (154) | 83 |
Gain on disposal of property and equipment | (327) | (137) |
(Gain) loss on sale of right-of-use assets | (2) | 355 |
Loss on foreign exchange | 397 | 311 |
Loss on financial instruments | — | 1,302 |
Share-based compensation expense | 3,069 | 1,001 |
Share of loss from associate | — | 123 |
Interest expenses, net | 8,555 | 6,907 |
Income tax expense | 6,829 | 7,495 |
Income taxes paid | (7,090) | (24,410) |
Changes in non-cash operating working capital: | ||
Accounts receivable | (3,056) | 648 |
Inventories | (7,707) | (21,704) |
Prepaid expenses | 8,702 | 2,921 |
Accounts payable and accrued liabilities | 2,031 | 955 |
Net cash provided by operating activities | 44,884 | 5,207 |
Financing activities: | ||
Proceeds from exercise of share options | — | 608 |
Repayment of 2021 Term Facility | (4,437) | (32,438) |
Interest paid on long-term debt | (5,828) | (1,773) |
Repayment of principal on lease liabilities | (15,623) | (17,879) |
Interest paid on lease liabilities | (5,772) | (3,204) |
Standby letter of credit commitment fees | — | (316) |
Net cash used in financing activities | (31,660) | (55,002) |
Investing activities: | ||
Purchases of property and equipment | (12,310) | (10,718) |
Purchase of intangible assets | (728) | (543) |
Proceeds on disposal of property and equipment | 1,026 | 283 |
Right-of-use asset initial direct costs | (590) | (468) |
Tenant allowances | 850 | 427 |
Notes receivable | 157 | 66 |
Lease receivables | 8,391 | 7,213 |
Interest received on lease receivables and other | 3,007 | 2,975 |
Net cash used in investing activities | (197) | (765) |
Effect of exchange rate on cash | (321) | (224) |
Net increase (decrease) in cash | 12,706 | (50,784) |
Cash, beginning of period | 28,444 | 63,034 |
Cash, end of period | $ 41,150 | $ 12,250 |
Free Cash Flows
(Unaudited, expressed in thousands of Canadian dollars)
Quarters Ended | ||
|
| |
13 weeks | 13 weeks | |
Cash provided by operating activities | $ 44,884 | $ 5,207 |
Cash used in investing activities | (197) | (765) |
Repayment of principal on lease liabilities | (15,623) | (17,879) |
Interest paid on lease liabilities | (5,772) | (3,204) |
Notes receivable | (157) | (66) |
Free Cash Flow | $ 23,135 | $ (16,707) |
Condensed Interim Consolidated Statements of Financial Position
(Unaudited, expressed in thousands of Canadian dollars)
As at | As at | |
Assets | ||
Current assets: | ||
Cash | $ 41,150 | $ 28,444 |
Accounts and other receivables | 31,010 | 27,875 |
Inventories, net | 129,776 | 122,069 |
Income taxes recoverable | 6,372 | 6,012 |
Prepaid expenses and other assets | 10,701 | 19,403 |
Current portion of lease receivables | 35,006 | 34,332 |
Total current assets | 254,015 | 238,135 |
Non-current assets: | ||
Long-term lease receivables | 158,892 | 159,101 |
Right-of-use assets, net | 242,147 | 237,941 |
Property and equipment, net | 127,928 | 120,493 |
Intangible assets, net | 52,007 | 52,205 |
97,562 | 97,562 | |
Deferred tax assets | 7,230 | 7,230 |
Other assets | 4,139 | 4,240 |
Total non-current assets | 689,905 | 678,772 |
Total assets | $ 943,920 | $ 916,907 |
Liabilities and shareholders' equity | ||
Current liabilities: | ||
Accounts payable and accrued liabilities | $ 103,493 | $ 88,416 |
Provisions | 669 | 669 |
Current portion of deferred franchise fees | 1,359 | 1,344 |
Current portion of lease liabilities | 65,699 | 64,068 |
Current portion of long-term debt | 17,750 | 17,750 |
Total current liabilities | 188,970 | 172,247 |
Non-current liabilities: | ||
Long-term deferred franchise fees | 4,131 | 4,166 |
Long-term lease liabilities | 384,958 | 379,833 |
Long-term debt | 271,320 | 275,474 |
Deferred tax liabilities | 8,864 | 8,864 |
Other liabilities | 2,016 | 3,977 |
Provisions | 2,647 | 2,626 |
Total non-current liabilities | 673,936 | 674,940 |
Total liabilities | 862,906 | 847,187 |
Shareholders' equity: | ||
Common shares | 321,752 | 321,752 |
Contributed surplus | 8,514 | 6,877 |
Deficit | (249,111) | (258,768) |
Currency translation reserve | (141) | (141) |
Total shareholders' equity | 81,014 | 69,720 |
Total liabilities and shareholders' equity | $ 943,920 | $ 916,907 |
SOURCE
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