Reitmans Annual Report 2015

FY2015 Annual Report · Reitmans
Loading PDF…
AnnuAl 
RepoRt 
2015

We are customer driven, value oriented  

and committed to excellence. By promoting 

innovation, growth, development and teamwork, 

Reitmans is  
CAnAdA’s leAding  
speCiAlty RetAileR

we strive to serve our customers the best  

quality/value proposition in the marketplace. 

Fiscal 2015 was a challenging year. 

sales for fiscal 2015 were $939,376,000 as compared with $960,397,000 for fiscal 2014, a decrease of 
2.2%, impacted by a net reduction of 55 stores as the Company closes underperforming locations. 
same store sales1 increased 1.2% with mall and power centre stores decreasing 0.2% and e-commerce 
sales  increasing  63.5%.  Mall  and  power  centre  stores  were  impacted  by  e-commerce  alternatives,  
a highly competitive environment and consumers with near record high debt levels. sales through the 
various banners’ e-commerce channels continued to show strong growth, although representing a small 
proportion of total Company sales. 

the Company’s gross margin for fiscal 2015 was 60.4% compared with 61.9% for fiscal 2014. the Company’s 
gross margin includes gains on foreign exchange contracts previously reported in finance income (gain of 
$10,921,000 for fiscal 2015 and $12,455,000 for fiscal 2014). 

net earnings for fiscal 2015 were $13,415,000 ($0.21 diluted earnings per share) as compared with net 
earnings of $10,788,000 ($0.17 diluted earnings per share) for fiscal 2014. the increase in net earnings 
was primarily attributable to the closure of non-performing stores and previously reported initiatives 
to reduce costs across the organization. For fiscal 2015, adjusted eBitdA1 was $64,805,000 as compared 
with $70,453,000 in fiscal 2014, a decrease of $5,648,000 or 8.0% largely attributable to lower sales 
and margins. 

on november 25, 2014 the Company announced its plan to close all smart set stores. in fiscal 2015,  
35 smart set stores were closed. the Company will convert 74 stores to other banners by october 31, 2015 
while 20 stores will be closed upon expiry of their leases.

during the year, the Company opened 12 new stores and closed 67. Accordingly, at January 31, 2015, there  
were 823 stores in operation, consisting of 341 Reitmans, 139 penningtons, 105 Addition elle, 76 RW & Co., 
68 thyme Maternity and 94 smart set, as compared with a total of 878 stores as at February 1, 2014. 
in addition, there were 21 thyme Maternity shop-in-shop boutiques in select Babies“R”us locations in 
Canada. We expect to open 6 new stores, close 51 stores, remodel 45 stores and convert 74 smart set 
stores at a capital cost of approximately $20,000,000.

the Company continues to execute its strategy of delivering fashionable clothing at excellent prices to 
Canadian consumers. We are proud of our achievements over the past 89 years and most confident of 
our future. We believe that we have the very best specialty retailing assets in Canada. our operations are 
led and staffed by highly motivated, extremely competent professionals. We extend sincere thanks and 
appreciation to all our associates, suppliers, customers and shareholders. these are the people who have 
made possible our many years of success and on whom we rely for the growth of the Company.

on behalf of the Board of directors,

(signed)

Jeremy H. Reitman 
Chairman and Chief executive officer

Montreal, April 1, 2015 

to ouR  
shaReholdeRs

1  please refer to the note on non-gAAp  
financial measures included in the 
Management’s discussion & Analysis.

FoR tHe yeARs ended: 
(in tHousAnds exCept  
peR sHARe AMounts) 
(unAudited)

2
2

5-yeAR 
highlights

sales

1st  Quarter
2nd Quarter
3rd Quarter
4th Quarter
total

ResUlts FRom
oPeRating aCtiVities 2

1st  Quarter
2nd Quarter
3rd Quarter
4th Quarter
total

net eaRnings (loss)

1st  Quarter
2nd Quarter
3rd Quarter
4th Quarter
total

BasiC eaRnings
(loss) PeR shaRe

1st  Quarter
2nd Quarter
3rd Quarter
4th Quarter
total

net eaRnings

BasiC eaRnings PeR shaRe

2015

2014

2013 1

2012

2011

$  206,478
258,326
238,295
236,277
$  939,376

$  216,861
253,445
249,414
240,677
$  960,397

$  217,094
279,513
236,247
267,659
$  1,000,513

$  219,296
286,075
254,072
259,954
$  1,019,397

$  235,745
292,026
262,515
268,714
$  1,059,000

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

(16,629)
10,904
14,078
4,143
12,496

(13,415)
9,557
12,866
4,407
13,415

(0.21)
0.15
0.20
0.07
0.21

13,415
0.21

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

(5,117)
13,463
6,133
(11,373)
3,106

(2,586)
10,182
5,763
(2,571)
10,788

(0.04)
0.16
0.09
(0.04)
0.17

10,788
0.17

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

(736)
35,211
(1,135)
(2,538)
30,802

(119)
27,649
(29)
(1,145)
26,356

0.00
0.42
0.00
(0.02)
0.40

26,356
0.40

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

5,018
40,968
10,609
4,493
61,088

624
31,680
10,561
4,674
47,539

0.01
0.48
0.16
0.07
0.72

47,539
0.72

$ 

22,825
53,612
27,819
19,886
$  124,142

$ 

$ 

$ 

$ 

$ 
$ 

15,770
38,706
20,692
13,817
88,985

0.23
0.58
0.31
0.21
1.33

88,985
1.33

shaReholdeRs’ eQUitY

PeR shaRe

$  421,123
6.52
$ 

$  423,431
6.56
$ 

$  454,893
7.04
$ 

$  492,852
7.51
$ 

$  512,800
7.73
$ 

nUmBeR oF stoRes

823

878

911

942

968

diVidends Paid

$ 

12,917

$ 

41,981

$ 

52,068

$ 

52,654

$ 

51,895

shaRe PRiCe at YeaR-end
Class a non-Voting 
Common 

$ 
$ 

8.10
7.11

$ 
$ 

5.56
5.61

$ 
$ 

12.39
11.85

$ 
$ 

14.64
14.98

$ 
$ 

17.81
18.18

1  Adjusted to reflect the impact from the implementation of the amendments 

to iAs 19, Employee Benefits. 

2  Adjusted to reflect the reclassification of realized and unrealized gains and 
losses on foreign exchange contracts not eligible for hedge accounting to 
conform with presentation in the current year. gains and losses on these 
foreign exchange contracts were previously reported in finance income and 
finance costs as described in the Management’s discussion and Analysis.

  
 
 
1080 

1060 

1040 

1020 

1000 

980 

960 

940 

920 

900 

880 

860

s
r
a
l
l
o
d
f
o
s
n
o
i
l
l
i
m
n

i

100

90

80

70

60

sales  

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

net  
eaRnings 1

s
r
a
l
l
o
d
f
o
s
n
o
i
l
l
i
m
n

i

120

100

80

60

40

20

 0

600 

500 

400 

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

ResUlts FRom  
oPeRating  
aCtiVities 1, 2

shaReholdeRs’   
eQUitY 1

3

200 

300 

s
r
a
l
l
o
d
f
o
s
n
o
i
l
l
i
m
n
0i

100 

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

60 

50 

40 

diVidends 

RetURn  
on eQUitY 1

20 

30 

s
r
a
l
l
o
d
f
o
s
n
o
i
l
l
i
m
n
0i

10 

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

1  the year ended 2013 has been adjusted to reflect 

the impact from the implementation of the 
amendments to iAs 19, Employee Benefits.

2  Adjusted to reflect the reclassification of realized 

and unrealized gains and losses on foreign exchange 
contracts not eligible for hedge accounting to 
conform with presentation in the current year.  
gains and losses on these foreign exchange  
contracts were previously reported in finance 
income and finance costs as described in the 
Management’s discussion and Analysis.

50

30

40

s
r
a
l
l
o
d
f
o
s
n
o
i
l
l
i
m
n
0i

20

10

20.0 

18.0 

16.0 

14.0 

12.0 

10.0 

8.0 

6.0 

4.0 

e
g
a
t
n
e
c
r
e
0p

2.0 

  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4

stoRes 
ACRoss  
CAnAdA

s
n
o
t
g
n
n
n
e
P

i

 3 

 1 

 6 

 4 

s
n
a
m
t
i
e
R

 14 

 3 

 19 

 13 

e
l
l
e
n
o
t
d
d
a

i

i

 2 

 –   

 2 

 3 

.

o
C
&
W
R

 1 

 –   

 1 

 3 

e
m
Y
h
t

 –   

 –   

 1 

 1 

t
e
s
t
R
a
m
s

 –   

 2 

 1 

 3 

 82 

 25 

 30 

 16 

 21 

 36 

 110 

 51 

 39 

 29 

 25 

 33 

 12 

 11 

 5 

 6 

 3 

 3 

 3 

 2 

 2 

 2 

 40 

 20 

 17 

 11 

 10 

 35 

 18 

 1 

 1 

 –   

 –   

 6 

 –   

 –   

 10 

 –   

 –   

 6 

 –   

 –   

 3 

 2 

 8 

 6 

 –   

 –   

s
e
R
o
t
s

l
A
t
o
t

20
6
30
27
210
287
28
26
106
81
1
1

neWFoundlAnd

pRinCe edWARd islAnd

novA sCotiA

neW BRunsWiCk

QuéBeC

ontARio

MAnitoBA

sAskAtCHeWAn

AlBeRtA

BRitisH ColuMBiA

noRtHWest teRRitoRies

yukon

341 139 105

76 68 94

823

 
 
 
 
 
 
 
 
Reitmans offers a unique combination of superior fit, fashion, quality and value. With 341 stoRes  
across Canada averaging 4,600 sq. ft., Reitmans is the preferred destination for women looking to update 

their wardrobe with the latest styles and colours for an affordable price. While Reitmans enjoys a strong 

reputation for service and benefits from a broad and loyal customer base, it will continue to strive to 

create an engaging customer experience by being there for her whenever she chooses to shop. Reitmans’ 

fashions can also be purchased online at reitmans.com.

Canadian leader of plus-size apparel, Penningtons offers unparalleled value to our customers  
by providing fit expertise, quality and a unique inspiring shopping experience. penningtons is the “Art of 
Affordable Fashion!” the plus-size fashion destination for sizes 14–32, penningtons operates 139 stoRes 
across Canada averaging 6,000 sq. ft. and is available online at penningtons.com.

addition elle  is  Canada’s  leading  fashion  destination  for  plus-size  women.  Addition  elle’s  vision 
of “Fashion democracy” delivers the latest trends to updated fashion essentials in an inspiring shopping 

environment, offering casual daywear, dresses, contemporary career, sexy intimates, accessories, footwear, 

high performance activewear and a large assortment of premium denim labels. Addition elle operates 
105 stoRes averaging 6,000 sq. ft. in major malls and power centres nationwide and an e-commerce 
site at additionelle.com.

RW & Co. is an aspirational lifestyle brand which caters to men and women with an urban mindset. 
Whether for work or for weekend, RW & Co. offers fashion that blends the latest trends with style, 
quality and a unique attention to detail. RW & Co. operates 76 stoRes averaging 4,500 sq. ft. in 
premium locations in major shopping malls across Canada, as well as an e-commerce site at rw-co.com.

thYme mateRnitY, Canada’s leading fashion brand for modern moms-to-be, offers current styles 
for every aspect of life, from casual to work, including a complete line of nursing fashion and accessories. 

thyme brings future moms valuable advice, fashion tips and product knowledge to help them on their 
incredible  journey  during  and  after  pregnancy.  thyme  operates  68  stoRes  averaging  2,300  sq.  ft.  
in major malls and power centres nationwide, as well as 21 thyme shop-in-shops in select Babies“R”us 

locations in Canada. thyme Maternity fashions can also be purchased online at thymematernity.com.

With 94 stoRes, averaging 3,400 sq. ft., smaRt set is a style destination offering wear-to-work 
separates, denim, essentials and accessories. smart set offers the latest styles in women’s fashions to mix, 

match and innovate. smart set fashions can also be purchased online at smartset.ca.

5

the following Management’s discussion and Analysis of Financial Condition and Results of operations (“Md&A”)  
of  Reitmans  (Canada)  limited  and  its  subsidiaries  (“Reitmans”  or  the  “Company”)  should  be  read  in 
conjunction with the audited consolidated financial statements of Reitmans as at and for the fiscal year ended  
January 31, 2015 (“fiscal 2015”) and February 1, 2014 (“fiscal 2014”) and the notes thereto which are available 
at www.sedar.com. this Md&A is dated April 1, 2015.

All  financial  information  contained  in  this  Md&A  and  Reitmans’  audited  consolidated  financial  statements 
have been prepared in accordance with international Financial Reporting standards (“iFRs”), also referred to as 
generally Accepted Accounting principles (“gAAp”), as issued by the international Accounting standards Board 
(“iAsB”). All monetary amounts in this report are in thousands of Canadian dollars, except per share amounts. 
the audited consolidated financial statements and this Md&A were reviewed by Reitmans’ Audit Committee and 
were approved by its Board of directors on April 1, 2015.

Additional information about Reitmans is available on the Company’s website at www.reitmans.ca or on the 
sedAR website at www.sedar.com.

forWard-looKing statements

All  of  the  statements  contained  herein,  other  than  statements  of  fact  that  are  independently  verifiable 
at  the  date  hereof,  are  forward-looking  statements.  such  statements,  based  as  they  are  on  the  current 
expectations  of  management,  inherently  involve  numerous  risks  and  uncertainties,  known  and  unknown, 
many of which are beyond the Company’s control. such risks include but are not limited to: the impact of 
general  economic  conditions,  general  conditions  in  the  retail  industry,  seasonality,  weather  and  other  risks 
included in public filings of the Company, including those described in the “operating Risk Management” and 
“Financial Risk Management” sections of this Md&A. Consequently, actual future results may differ materially  
from the anticipated results expressed in forward-looking statements, which reflect the Company’s expectations 
only  as  of  the  date  of  this  Md&A.  Forward-looking  statements  are  based  upon  the  Company’s  current 
estimates, beliefs and assumptions, which are based on management’s perception of historical trends, current 
conditions and currently expected future developments, as well as other factors it believes are appropriate 
in  the  circumstances.  specific  forward-looking  statements  in  this  Md&A  include,  but  are  not  limited  to, 
statements  with  respect  to  the  Company’s  anticipated  future  results  and  events,  future  liquidity,  planned 
capital expenditures, amount of pension plan contributions, status and impact of systems implementation, the 
ability of the Company to successfully implement its strategic initiatives and cost reduction and productivity 
improvement initiatives as well as the impact of such initiatives. the reader should not place undue reliance 
on any forward-looking statements included herein. these statements speak only as of the date made and the 
Company is under no obligation and disavows any intention to update or revise such statements as a result of 
any event, circumstances or otherwise, except to the extent required under applicable securities law.

management’s  
disCUssion  
And analYsis 

6

oF FinAnCiAl  
Condition  
And Results  
oF opeRAtions

FoR tHe FisCAl yeAR ended  
JAnuARy 31, 2015

Reitmans 
(CAnAdA) 
liM i t e d

management’s 
disCussion  
And AnAlysis

non-gaap financial measUres

in addition to discussing earnings in accordance with iFRs, this Md&A provides adjusted earnings before interest, taxes, depreciation and amortization 
(“adjusted eBitdA”) as a non-gAAp financial measure. Adjusted eBitdA is defined as net earnings before income tax expense, other income, dividend 
income, interest income, realized gains or losses on disposal of available-for-sale financial assets, interest expense, depreciation, amortization and net 
impairment losses. the following table reconciles the most comparable gAAp measure, net earnings, to adjusted eBitdA. Management believes that 
adjusted eBitdA is an important indicator of the Company’s ability to generate liquidity through operating cash flow to fund working capital needs and 
fund capital expenditures and uses the metric for this purpose. the exclusion of dividend and interest income eliminates the impact of revenue derived 
from  non-operational  activities.  the  exclusion  of  depreciation,  amortization  and  impairment  charges  eliminates  the  non-cash  impact.  the  intent  of 
adjusted eBitdA is to provide additional useful information to investors and analysts and the measure does not have any standardized meaning under iFRs. 
Adjusted eBitdA should therefore not be considered in isolation or used in substitute for measures of performance prepared in accordance with iFRs. 
other companies may calculate adjusted eBitdA differently. From time to time, the Company may exclude additional items if it believes doing so would 
result in a more effective analysis of underlying operating performance. the exclusion of certain items does not imply that they are non-recurring.

the Company uses a key performance indicator (“kpi”), same store sales, to assess store performance (including each banner’s e-commerce store) and 
sales growth. same store sales are defined as sales generated by stores that have been continuously open during both of the periods being compared and 
include e-commerce sales. the same store sales metric compares the same calendar days for each period. Although this kpi is expressed as a ratio, it is 
a non-gAAp financial measure that does not have a standardized meaning prescribed by iFRs and may not be comparable to similar measures used by 
other companies. Management uses same store sales in evaluating the performance of stores and considers it useful in helping to determine what portion 
of new sales has come from sales growth and what portion can be attributed to the opening of new stores. same store sales is a measure widely used 
amongst retailers and is considered useful information for both investors and analysts. same store sales should therefore not be considered in isolation 
or used in substitute for measures of performance prepared in accordance with iFRs. 

the following table reconciles net earnings (loss) to adjusted eBitdA for the three months and fiscal year ended January 31, 2015 and February 1, 2014: 

net earnings (loss)
depreciation, amortization and net impairment losses
other income 1
dividend income
interest income
Realized (gains) losses on disposal of available-for-sale financial assets
impairment losses on available-for-sale financial assets
interest expense
income tax expense (recovery)
adjusted eBitda
adjusted eBitda as % of sales

FoR the thRee months ended

FoR the FisCal YeaR ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

JanUaRY 31, 2015

FeBRUaRY 1, 2014

7

$ 

$ 

4,407
12,265
–
(409)
(377)
(4,045)
384
88
1,829
14,142

5.99%

$ 

$ 

(2,571)
17,312
(6,054)
(873)
(184)
248
2,007
114
(1,863)
8,136
3.38%

$ 

$ 

13,415
54,038
–
(2,298)
(994)
(4,820)
958
394
4,112
64,805

$ 

$ 

10,788
63,724
(6,054)
(3,481)
(621)
248
2,699
496
2,654
70,453

6.90%

7.34% 

1  other income comprises a gain on sale of intellectual property rights and proceeds from the settlement of a trademark dispute.

Reitmans 
(CAnAdA) 
liM i t e d

corporate oVerVieW

the Company has a single reportable segment which derives its revenue from the sale of ladies’ specialty apparel to consumers through its six retail banners. 
the Company’s stores are primarily located in malls and retail power centres across Canada. the Company currently operates under the following banners:

the Reitmans banner, operating 341 stores averaging 4,600 sq. ft., is Canada’s largest women’s apparel specialty 
chain and leading fashion brand. Reitmans has developed strong customer loyalty through superior service, 
insightful marketing and quality merchandise. 

penningtons is a leader in the Canadian plus-size market, offering trend-right styles and affordable quality 
for plus-size fashion sizes 14–32. penningtons operates 139 stores in power centres across Canada averaging 
6,000 sq. ft. 

Addition elle is a fashion destination for plus-size women with a focus on fashion, quality and fit delivering the 
latest “must-have” trends to updated fashion essentials in an inspiring shopping environment. Addition elle 
operates 105 stores averaging 6,000 sq. ft. in major malls and power centres nationwide. 

RW & Co. operates 76 stores averaging 4,500 sq. ft. in premium locations in major shopping malls, catering to 
a customer with an urban mindset by offering fashions for men and women. 

thyme Maternity is a leading fashion brand for moms-to-be, offering current styles for every aspect of life, from 
casual to work, plus a complete line of nursing fashions and accessories. thyme operates 68 stores averaging 
2,300 sq. ft. in major malls and power centres across Canada. in addition, the Company operates 21 thyme 
Maternity shop-in-shop boutiques in select Babies“R”us locations in Canada. in June 2014 the Company closed 
its remaining thyme Maternity shop-in-shop boutiques in the u.s.

With 94 stores, averaging 3,400 sq. ft., smart set is a style destination offering the latest styles in women’s 
fashions to mix, match and innovate from wear-to-work separates, denim, essentials and accessories.

8

on november 25, 2014 the Company announced its plan to close all smart set stores. Management determined that its optimum strategy to improve 
operating results was to refocus its sales and merchandising efforts either through conversion of smart set stores to other Company banners or through 
store closures. the majority of the stores that will be converted will occur by october 31, 2015 while the remaining stores are anticipated to close by the 
year ending January 28, 2017.

the smart set banner sales for fiscal 2015 were $88,856 as compared to $95,764 for fiscal 2014, while losses from operating activities for fiscal 2015 were 
$10,030 as compared to $29,499 for fiscal 2014 (including an allocation of general overhead costs). the smart set banner non-cash asset write-offs 
amounted to $3,085 for fiscal 2015. the Company does not anticipate inventory write-downs or material employee severance costs.

e-commerce
the Company also offers e-commerce website shopping for all of its banners. these online channels offer customers convenience, selection and ease of 
purchase, while enhancing customer loyalty and continuing to build the brands.

9

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDQ1
oPenings

Q1
Closings

Q2
oPenings

Q2
Closings

Q3
oPenings

Q3
Closings

Q4
oPenings

Q4
Closings

retail Banners

nUmBeR oF
stoRes at
FeBRUaRY 1,
2014

349
152
101
77
70
129
878

Reitmans
penningtons
Addition elle 
RW & Co.
thyme Maternity1
smart set
total

1
1
1
–
–
–
3

(5)
(7)
–
–
(2)
(5)
(19)

1  excludes boutiques in Babies“R”us shop-in-shop locations.

thyme Maternity shop-in-shop locations:

Babies“R”us – Canada
Babies“R”us – u.s.
Babies“R”Us – total

23
169
192

–
–
–

–
(102)
(102)

–
–
1
–
–
–
1

–
–
–

(2)
(3)
(1)
(1)
–
(11)
(18)

(2)
(67)
(69)

2
–
3
3
–
–
8

–
–
–

(2)
(2)
–
–
–
(6)
(10)

–
–
–

–
–
–
–
–
–
–

–
–
–

(2)
(2)
–
(3)
–
(13)
(20)

–
–
–

nUmBeR oF
stoRes at
JanUaRY 31,
2015

341
139
105
76
68
94
823 

21
–
21 

8

store  closings  take  place  for  a  variety  of  reasons  as  the  viability  of  each  store  and  its  location  is  constantly  monitored  and  assessed  for  continuing 
profitability. in most cases when a store is closed, merchandise at that location is sold off in the normal course of business and any unsold merchandise 
remaining at the closing date is generally transferred to other stores operating under the same banner for sale in the normal course of business.

tHree-Year reVieW of selected financial information

9

JanUaRY 31, 2015
(52 Weeks)

FoR the FisCal YeaRs ended
FeBRUaRY 1, 2014
(52 Weeks)

FeBRUaRY 2, 20131
(53 Weeks)

total of stores at end of fiscal year 2
sales
earnings before income taxes
net earnings 
earnings per share (“eps”) 

Basic
diluted
total assets
total non-current liabilities 
dividends per share 

823
$  939,376
17,527
13,415

0.21
0.21
584,391
48,600
0.20

$ 

878
$  960,397
13,442
10,788

0.17
0.17
589,939
51,039
0.65

$ 

911
$  1,000,513
34,778
26,356

0.40
0.40
594,968
52,792
0.80

$ 

1  Certain figures have been adjusted to reflect the impact from the implementation of the amendments to iAs 19  – Employee Benefits and adjusted to reflect a reclassification of certain items to conform with 

presentation in the current year. 

2  excludes boutiques in Babies“R”us shop-in-shop locations.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysissales over the last three years were impacted by a challenging retail environment. Weak economic conditions, the influx of foreign entrants into Canada and 
increased e-commerce competition have resulted in a highly competitive landscape as retailers aggressively compete in a limited consumer marketplace. 
Additionally, as the Company looked to close underperforming stores, it has decreased its store count, with a net reduction of 88 stores over two years. 

Fiscal  2013  sales  included  an  additional  week,  due  to  the  Company’s  retail  calendar,  resulting  in  an  increase  of  approximately  $13,600  in  sales.  
despite this increase, sales in fiscal 2013 were significantly impacted by a disruption in the flow of inventory to stores as a result of difficulties experienced 
with the deployment of a new warehouse management system.

sales for fiscal 2014 were weak, with particularly poor performance in the smart set banner, despite its efforts to regain acceptance by consumers 
through repositioning and rebranding.

in  fiscal  2015  the  net  reduction  of  stores  contributed  to  lower  sales  in  a  highly  competitive  environment  and  greater  e-commerce  alternatives.  
the smart set banner continued to perform poorly in fiscal 2015 in a highly competitive niche and was impacted by significant discounting as it competed 
with many retailers targeting the same customer demographics. in fiscal 2015 the Company announced its plan to close all smart set stores.

the Company’s gross profit, and ultimately net earnings, have been significantly impacted by fluctuations in the Canadian dollar in relation to the u.s. dollar. 
in the last three years, the Canadian dollar has seen a significant weakening vis-à-vis the u.s. dollar. this has resulted in increased merchandise costs as 
virtually all merchandise payments are settled in u.s. dollars.

in fiscal 2013, the Canadian dollar traded close to par with the u.s. dollar. As consumer demand weakened due to economic conditions higher promotional 
activity resulted. Fiscal 2013 margins were also impacted by a disruption in the flow of inventory to stores as noted above. 

in fiscal 2014 the Canadian dollar began to depreciate significantly vis-à-vis the u.s. dollar impacting the Company’s gross margin while sales continued to 
be under pressure due to the competitive landscape. in fiscal 2014 gross profit was further impacted by substantial discounting in the smart set banner. 
Additionally, in deciding to exit the u.s. marketplace for thyme Maternity shop-in-shop boutiques, gross profit was also impacted by significant discounting 
in its u.s. operations. 

in fiscal 2015, as the Canadian dollar further depreciated against the u.s. dollar, the Company’s gross margin was negatively impacted which was offset 
by improved inventory and markdown management.

10

despite a challenging retail environment over the past three years, the Company’s balance sheet has remained strong. the Company has continued to 
maintain a strong position in cash, cash equivalents and marketable securities. inventories, although trending somewhat higher on a per store basis, 
continue  to  be  closely  managed.  the  Company  invested  considerably  in  capital  expenditures  for  fiscal  2013  in  both  store  renovations  and  systems 
technology  at  the  head  office.  in  fiscal  2014,  the  Company  significantly  reduced  its  capital  expenditures  to  $34,524  and  to  $28,960  in  fiscal  2015.  
this level of expenditure is below earlier estimates due to cancellations and postponements of planned renovations and store openings. 

11

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD10

strategic initiatiVes 

the Company has undertaken a number of strategic initiatives to enhance its brands, improve productivity and profitability at all levels through system 
advances and foster a culture of process improvements.

ongoing and new Company initiatives include:

initiatiVes

statUs

the Company recently announced a plan to close the stores operating 
under  the  smart  set  banner.  it  is  in  the  early  stages  of  executing  its 
planned conversion and closure of the remaining smart set stores.

in March 2015, the Company launched a penningtons product offering 
through Amazon.com in the u.s. 

the Company is committed to continued investment in e-commerce, 
including 
in  customer  relationship  management  
and technology.

improvements 

Continuation  of  a  companywide  supply  chain  optimization  and  retail 
enterprise  initiative,  internally  branded  as  “sCoRe”,  focused  on 
deploying  best-in-class  retail  applications  supported  by  a  new  and 
improved technology platform. sCoRe will enable new processes that 
will  permit  flexibility  and  adaptability  across  the  merchandising  and 
supply chain operations.

A  comprehensive  review  of  the  Company’s  global  sourcing  strategy 
and execution continues with a goal of reducing lead time for bringing 
products to market.

A corporate initiative aimed at reducing costs across the Company has 
been  introduced  which  includes  a  review  of  head  office  activities  and 
processes targeted at improving efficiencies.

over the next twelve to eighteen months the Company plans to convert 
approximately 74 of its remaining smart set stores to other banners 
while closing 20 stores. this strategy is expected to improve operating 
results by allowing the Company to refocus its sales and merchandising 
efforts on the remaining banners.

this  entrance  into  e-commerce  in  the  u.s.  provides  the  Company 
with an introduction of its plus-size offering in the u.s. market while 
leveraging its current buying and distribution systems. 

the  Company  continues  to  invest  in  e-commerce,  including  the 
deployment  of  mobile  technology  in  fiscal  2015.  An  initiative  is 
underway to optimize the use of the Company’s customer relationship 
database through technological improvements such as advanced email 
technology enabling targeted marketing. the Company is pleased with 
the continued growth in e-commerce sales. 

the Company completed a key component to the financial workstream 
in  the  sCoRe  project.  significant  remaining  phases  of  the  sCoRe 
project are on track for a fiscal 2016 completion with the project end 
now anticipated for mid-fiscal 2017.

11

initiative 

this 
is  progressing  well  with  significant  milestone 
achievements.  A  corporate  global  sourcing  unit  has  been  developed 
with a goal of improving current sourcing practices, reducing costs and 
evaluating other sourcing opportunities. vendor consolidation has been 
achieved  and  further  improvements  in  the  supply  chain  are  ongoing. 

process  improvements  were  implemented  and  resulted  in  savings 
with further improvement in efficiencies anticipated as the Company 
continues to move forward with this project. initiatives also included a 
reduction in the number of employees.

operating resUlts for tHe tHree montHs ended JanUarY 31, 2015 (“foUrtH QUarter of fiscal 2015”)

and comparison to operating resUlts for tHe tHree montHs ended feBrUarY 1, 2014 

(“foUrtH QUarter of fiscal 2014”)

sales for the fourth quarter of fiscal 2015 were $236,277 as compared with $240,677 for the fourth quarter of fiscal 2014, a decrease of 1.8%. same store 
sales increased 2.1% with mall and power centre stores decreasing 0.6% and e-commerce sales increasing 84.9%. the following factors impacted sales 
in the fourth quarter of fiscal 2015:

•	

a	net	reduction	of	55	stores	as	the	Company	closes	underperforming	locations;

•	 mall	and	power	centre	stores	were	impacted	by	e-commerce	alternatives,	a	highly	competitive	environment	and	consumers	with	near	record	high	

debt	levels;	

•	

•	

e-commerce	sales	continued	to	show	strong	growth,	although	representing	a	small	proportion	of	total	Company	sales;

the	initiative	to	close	the	Smart	Set	banner	negatively	impacted	sales.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisgross profit for the fourth quarter of fiscal 2015 increased 1.9% to $144,104 as compared with $141,388 for the fourth quarter of fiscal 2014, an increase 
of  $2,716.  the  Company’s  gross  margin  for  the  fourth  quarter  of  fiscal  2015  increased  to  61.0%  from  58.7%  for  the  fourth  quarter  of  fiscal  2014. 
improvement in the gross margin is largely attributable to:

•	

•	

•	

improved	margins	in	the	plus-size	banners	and	e-commerce;	

improved	inventory	and	markdown	management,	reducing	the	negative	effect	of	foreign	exchange	(average	rate	for	the	U.S.	dollar	ranging	between	
$1.12	and	$1.27	Canadian	during	the	fourth	quarter	of	fiscal	2015	as	compared	to	$1.04	and	$1.12	Canadian	in	the	fourth	quarter	of	fiscal	2014);	

a	gain	of	$10,041	for	the	fourth	quarter	of	fiscal	2015	($9,505	for	the	fourth	quarter	of	fiscal	2014),	representing	realized	and	unrealized	gains	on	
foreign exchange contracts not eligible for hedge accounting. gains and losses on these foreign exchange contracts were previously reported in 
finance income and finance costs.

selling and distribution expenses for the fourth quarter of fiscal 2015 decreased 9.1% or $12,762 to $127,545 as compared with $140,307 for the fourth 
quarter of fiscal 2014. Factors contributing to this change included:

•	

•	

•	

a	net	decrease	in	stores,	mainly	due	to	the	Smart	Set	closures;

savings	related	to	ongoing	corporate	cost	reduction	initiatives;

lower	net	impairment	losses	and	write-offs	of	property,	equipment	and	intangibles	relating	to	underperforming	stores	and	store	closures	($966	for	
the fourth quarter of fiscal 2015 compared to $4,724 for the fourth quarter of fiscal 2014). this decrease is primarily due to reduced impairment 
charges	related	to	Thyme	Maternity	shop-in-shop	boutiques	in	the	U.S.	and	the	Smart	Set	banner;	

•	

a	reduction	in	depreciation	and	amortization	attributable	to	lower	capital	expenditures.

Administrative expenses for the fourth quarter of fiscal 2015 were $12,416 comparable with $12,454 for the fourth quarter of fiscal 2014. depreciation, 
amortization and net impairment losses included in administrative expenses for the fourth quarter of fiscal 2015 were $409, compared to $611 for the 
fourth quarter of fiscal 2014.

12

Finance income for the fourth quarter of fiscal 2015 was $4,831 as compared to $3,254 for the fourth quarter of fiscal 2014, an increase of $1,577.  
gains  and  losses  on  foreign  exchange  contracts  not  eligible  for  hedge  accounting  previously  reported  in  finance  income  and  finance  costs  are  now 
presented as part of cost of goods sold. Finance costs for the fourth quarter of fiscal 2015 were $2,738 as compared to $2,369 for the fourth quarter of 
fiscal 2014, an increase of $369. net finance income recognized in net earnings was $2,093 for the fourth quarter of fiscal 2015 as compared to $885 for 
the fourth quarter of fiscal 2014, an increase of $1,208 or 136.5%. this change is largely attributable to the following:

•	

•	

•	

a	significant	repositioning	in	the	fourth	quarter	of	fiscal	2015	of	the	marketable	securities	portfolio	which	contributed	to	realized	gains	on	disposals	
on	available-for-sale	financial	assets	of	$4,045	for	the	fourth	quarter	of	fiscal	2015	($248	loss	for	the	fourth	quarter	of	fiscal	2014);	

a	lower	impairment	loss	on	available-for-sale	financial	assets	($384	in	the	fourth	quarter	of	fiscal	2015	as	compared	to	$2,007	in	the	fourth	quarter	
of	fiscal	2014),	due	to	the	above	noted	change	repositioning	of	the	marketable	securities	portfolio;

a	foreign	exchange	loss	of	$2,266	for	the	fourth	quarter	of	fiscal	2015	(gain	of	$2,197	for	the	fourth	quarter	of	2014),	largely	attributable	to	foreign	
exchange impact on u.s. denominated monetary assets and liabilities.

For the fourth quarter of fiscal 2015, earnings before income taxes were $6,236 as compared to a loss before income taxes of $4,434 for the fourth 
quarter of fiscal 2014, an increase of $10,670. Adjusted eBitdA for the fourth quarter of fiscal 2015 was $14,142 as compared with $8,136 for the fourth 
quarter of fiscal 2014, an increase of $6,006 or 73.8%. these increases were primarily attributable to improved gross margins in the fourth quarter of 
fiscal 2015 as explained above combined with reduced operating costs both at the store level and head office. previously reported initiatives aimed 
at reducing costs across the organization have yielded savings. A reduction in the number of employees in both head office and field operations, in 
conjunction with a reduction in the number of store locations, have resulted in wages and benefit savings. Additional savings have been achieved through 
improved cost management in non-wage areas.

income tax expense for the fourth quarter of fiscal 2015 amounted to $1,829 for an effective tax rate of 29.3%. in the fourth quarter of fiscal 2014, 
income tax recovery amounted to $1,863 for an effective tax recovery rate of 42.0%. the Company’s effective tax rates reflect the impact of changes in 
substantively enacted tax rates in various tax jurisdictions in Canada.

net earnings for the fourth quarter of fiscal 2015 were $4,407 ($0.07 diluted earnings per share) as compared with a net loss of $2,571 ($0.04 diluted loss 
per share) for the fourth quarter of fiscal 2014.

in the fourth quarter of fiscal 2015, the Company entered into certain qualifying foreign exchange contracts that it designated as cash flow hedging 
instruments under international Accounting standard 39 (“iAs 39”). this resulted in a $6,026 mark-to-market foreign exchange gain being recorded as a 
component of other comprehensive income.

13

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD12

operating resUlts for fiscal 2015 and comparison to operating resUlts for fiscal 2014

sales for fiscal 2015 were $939,376 as compared with $960,397 for fiscal 2014, a decrease of 2.2%. same store sales increased 1.2% with mall and power 
centre stores decreasing 0.2% and e-commerce sales increasing 63.5%.

the following factors impacted sales in fiscal 2015:

•	

a	net	reduction	of	55	stores	as	the	Company	closes	underperforming	locations;

•	 mall	and	power	centre	stores	were	impacted	by	e-commerce	alternatives,	a	highly	competitive	environment	and	consumers	with	near	record	high	

debt	levels;

•	

•	

e-commerce	sales	continued	to	show	strong	growth,	although	representing	a	small	proportion	of	total	Company	sales;

the	initiative	to	close	the	Smart	Set	banner	negatively	impacted	sales.

gross profit for fiscal 2015 was $567,343 as compared with $594,939 for fiscal 2014, a decrease of $27,596 or 4.6%.  the Company’s gross margin for  
fiscal 2015 was 60.4% compared with 61.9% for fiscal 2014. the change in the gross margin is largely attributable to:

•	

•	

•	

highly	promotional	activity	in	the	first	quarter	of	fiscal	2015	that	negatively	impacted	the	gross	margin;	

the	decline	in	the	Canadian	dollar	vis-à-vis	the	U.S.	dollar	which	has	negatively	impacted	margins	(average	rate	for	a	U.S.	dollar	ranging	between	$1.06	
and	$1.27	during	fiscal	2015	as	compared	to	$1.00	and	$1.12	in	fiscal	2014),	which	was	offset	by	improved	inventory	and	markdown	management;

a	gain	of	$10,921	for	fiscal	2015	($12,455	for	fiscal	2014),	representing	realized	and	unrealized	gains	on	foreign	exchange	contracts	not	eligible	for	
hedge accounting. gains and losses on these foreign exchange contracts were previously reported in finance income and finance costs.

selling  and  distribution  expenses  for  fiscal  2015  were  $507,244  as  compared  with  $544,448  for  fiscal  2014,  a  decrease  of  $37,204  or  6.8%.  
Factors contributing to this change included:

•	

•	

a	net	decrease	in	stores	as	well	as	savings	related	to	ongoing	corporate	cost	reduction	initiatives;	

fiscal	2015	included	an	expense	of	$8,141	compared	to	$9,826	in	fiscal	2014	for	net	impairment	losses	relating	to	underperforming	stores	and	
the write-off of property, equipment and intangibles upon store closures. this decrease is primarily due to reduced impairment charges related to  
Thyme	Maternity	shop-in-shop	boutiques	in	the	U.S.	and	the	Smart	Set	banner;	

13

•	

a	reduction	in	depreciation	and	amortization	attributable	to	lower	capital	expenditures.	

Administrative expenses for fiscal 2015 were $47,603 comparable with $47,385 for fiscal 2014, an increase of 0.5%. savings through reduced personnel 
costs  were  offset  by  increased  termination  costs.  depreciation  and  amortization  expense  included  in  administrative  expenses  for  the  fiscal  2015  
were $2,057, compared to $2,594 for fiscal 2014.

Finance income for fiscal 2015 was $8,112 as compared to $7,725 for fiscal 2014, an increase of $387. gains and losses on foreign exchange contracts 
not eligible for hedge accounting previously reported in finance income and finance costs are now presented as part of cost of goods sold. Finance costs 
for fiscal 2015 were $3,081 as compared to $3,443 for fiscal 2014, a decrease of $362. net finance income recognized in net earnings was $5,031 for  
fiscal 2015 as compared to $4,282 for fiscal 2014, an increase of $749 or 17.5%. this change is largely attributable to the following:

•	

•	

•	

•	

a	significant	repositioning	in	the	fourth	quarter	of	fiscal	2015	of	the	marketable	securities	portfolio	which	contributed	to	realized	gains	on	disposals	
on	available-for-sale	financial	assets	of	$4,820	in	fiscal	2015	($248	loss	for	fiscal	2014);	

a	lower	impairment	loss	on	available-for-sale	financial	assets	of	$958	recognized	for	fiscal	2015	($2,699	for	fiscal	2014)	due	to	the	above	noted	
repositioning	of	the	marketable	securities	portfolio;	

reduced	dividend	income	amounting	to	$2,298	for	fiscal	2015	($3,481	for	fiscal	2014)	due	to	lower	marketable	securities	caused	by	mandatory	
redemptions	and	the	sale	of	preferred	shares	earlier	in	fiscal	2015;

a	foreign	exchange	loss	of	$1,729	for	fiscal	2015	(gain	of	$3,623	for	fiscal	2014),	largely	attributable	to	foreign	exchange	impact	on	U.S.	denominated	
monetary assets and liabilities.

in fiscal 2015, earnings before income taxes were $17,527 as compared to $13,442 in fiscal 2014, an increase of $4,085. the increase was primarily 
attributable to the closure of non-performing stores and previously reported initiatives aimed at reducing costs across the organization. A reduction in the 
number of employees in both head office and field operations, in conjunction with a reduction in the number of store locations have resulted in wages and 
benefit savings. Additional savings have been achieved through improved cost management in non-wage areas. the impact of a significant decline in the 
Canadian dollar vis-à-vis the u.s. dollar resulting in increased cost of goods sold was offset by improved inventory and markdown management. Adjusted 
eBitdA in fiscal 2015 was $64,805 as compared with $70,453 in fiscal 2014, a decrease of $5,648 or 8.0%, largely attributable to lower sales and margins. 

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisincome tax expense for fiscal 2015 amounted to $4,112 for an effective tax rate of 23.5% as compared to $2,654 in fiscal 2014 for an effective tax rate 
of 19.7%. the increase in the effective tax rate is primarily attributed to change in tax exempt investment dividend income relative to the Company’s 
active business income compared to the previous year. the Company’s effective tax rates reflect the impact of changes in substantively enacted tax rates 
in various tax jurisdictions in Canada.

the Company recorded net earnings for fiscal 2015 of $13,415 ($0.21 diluted earnings per share) as compared with net earnings of $10,788 ($0.17 diluted 
earnings per share) for fiscal 2014.

in  the  fourth  quarter  of  fiscal  2015,  the  Company  entered  into  certain  qualifying  foreign  exchange  contracts  that  it  designated  as  cash  flow  
hedging instruments under iAs 39. this has resulted in a $6,026 mark-to-market foreign exchange gain being recorded as a component of other 
comprehensive income. 

the  Company  imports  a  majority  of  its  merchandise  purchases  from  foreign  vendors,  with  lead  times  in  some  cases  extending  twelve  months.  
the Company considers a variety of strategies designed to manage the cost of its continuing u.s. dollar commitments, including spot rate purchases 
and foreign exchange option contracts with maturities not exceeding twelve months. in fiscal 2015, the Company satisfied its u.s. dollar requirements 
through a combination of spot purchases and foreign exchange forward and option contracts. the Company entered into transactions with its banks 
whereby it purchased forward and call options and sold put options, all on the u.s. dollar. purchased call options and sold put options expiring on the 
same date have the same strike price. 

in  fiscal  2015,  these  merchandise  purchases,  payable  in  u.s.  dollars,  approximated  $228,000  u.s.  the  Company’s  u.s.  dollar  holdings,  along  with 
contracts to purchase u.s. dollars are sufficient to satisfy over 60% of projected u.s. dollar denominated merchandise purchases for the fiscal year ending  
January 30, 2016 with any additional requirements being met through spot u.s. dollar purchases.

details of the foreign currency contracts outstanding as at January 31, 2015 are as follows:

14

Foreign exchange contracts designated
as cash flow hedges:
Forwards
Call options purchased
put options sold 

Foreign exchange contracts classified at FVtPl 1 :
Call options purchased 
put options sold

aVeRage
stRike PRiCe

notional
amoUnt in
U.s. dollaRs

deRiVatiVe
FinanCial
asset

deRiVatiVe
FinanCial
liaBilitY

net

$ 
$ 
$ 

$ 
$ 

1.183
1.188
1.188

$ 
$ 
$ 

69,500
23,000
11,500

1.081
1.081

$ 
64,000
$  128,000

$ 

$ 

6,292
2,152
–

12,191
–
20,635

$ 

$ 

–
–
(94)

–
(2)
(96)

$ 

$ 

6,292
2,152
(94)

12,191
(2)
20,539

details of the foreign currency option contracts outstanding as at February 1, 2014 are as follows:

Foreign exchange contracts classified at FVtPl 1 :
Call options purchased
put options sold 

1   Fair value through profit or loss (“Fvtpl”) are held as economic hedges.

aVeRage
stRike PRiCe

notional
amoUnt in
 U.s. dollaRs

deRiVatiVe
FinanCial
asset

deRiVatiVe
FinanCial
liaBilitY

net

$ 
$ 

1.070
1.070

$  212,000
$  364,000

$ 

$ 

11,775
–
11,775

$ 

$ 

–
(3,065)
(3,065)

$ 

$ 

11,775
(3,065)
8,710

15

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDsUmmarY of QUarterlY resUlts

the table below sets forth selected consolidated financial data for the eight most recently completed quarters. this unaudited quarterly information has 
been prepared in accordance with iFRs. All references to “2015” are to the Company’s fiscal year ending January 31, 2015, to “2014” are to the Company’s 
fiscal year ended February 1, 2014.

FoURth QUaRteR

2015

2014

thiRd QUaRteR

2015

2014

seCond QUaRteR
2014

2015

FiRst QUaRteR

2015

2014

sales
net earnings (losses)
earnings (losses) per share

Basic
diluted

$  236,277 $  240,677 $  238,295 $  249,414 $  258,326 $  253,445 $  206,478 $  216,861
(2,586)

(13,415)

(2,571)

10,182

12,866

5,763

9,557

4,407

$ 

0.07 $ 
0.07

(0.04) $ 
(0.04)

0.20 $ 
0.20

0.09 $ 
0.09

0.15 $ 
0.15

0.16 $ 
0.16

(0.21) $ 
(0.21)

(0.04)
(0.04)

14

Fluctuations in the above-noted quarterly financial information reflect the underlying operations of the Company as well as the impact of pre-closing 
merchandise discounting at the thyme Maternity shop-in-shop boutiques in the u.s. in the fourth quarter of fiscal 2014. Financial results are also affected 
by seasonality and the timing of holidays. due to seasonality the results of operations for any quarter are not necessarily indicative of the results of 
operations for the fiscal year.

Balance sHeet

selected line items from the Company’s balance sheets as at January 31, 2015 and February 1, 2014 are presented below:

2015

2014

$ Change

% Change

assets
Cash and cash equivalents 
Marketable securities
trade and other receivables 
derivative financial asset 
income taxes recoverable
inventories 
prepaid expenses
property and equipment & intangible assets
goodwill 
deferred income taxes
total assets

liaBilities
trade and other payables
derivative financial liability
deferred revenue
deferred lease credits
long-term debt
pension liability
total liaBilities

$  139,913
57,364
4,599
20,635
1,977
106,440
12,148
172,426
42,426
26,463
$  584,391

$  101,622
96
21,073
13,178
5,331
21,968
$  163,268

$  122,355
55,062
6,422
11,775
5,656
109,601
12,512
195,552
42,426
28,578
$  589,939

$  102,576
3,065
19,998
15,607
7,003
18,259
$  166,508

$ 

$ 

$ 

$ 

17,558
2,302
(1,823)
8,860
(3,679)
(3,161)
(364)
(23,126)
–
(2,115)
(5,548)

(954)
(2,969)
1,075
(2,429)
(1,672)
3,709
(3,240)

15

14.4
4.2
(28.4)
75.2
(65.0)
(2.9)
(2.9)
(11.8)
–
(7.4)
(0.9)

(0.9)
(96.9)
5.4
(15.6)
(23.9)
20.3
(1.9)

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysissignificant changes in total assets of the Company year over year were primarily due to:

•	

•	

•	

•	

•	

•	

cash	 and	 cash	 equivalents	 increased	 despite	 reduced	 cash	 flows	 from	 operating	 activities	 as	 reduced	 capital	 expenditures	 and	 dividends	 paid	
contributed	to	positive	cash	flows;

the	 increase	 in	 marketable	 securities	 was	 due	 to	 purchases	 of	 securities	 done	 in	 conjunction	 with	 a	 significant	 repositioning	 of	 the	 marketable	
securities	portfolio	in	the	fourth	quarter	of	fiscal	2015.	The	marketable	securities	are	comprised	of	preferred	shares	of	Canadian	public	companies;

a	decrease	in	trade	and	other	receivables	was	primarily	due	to	the	collection	of	receivables	related	to	intellectual	property	rights,	a	trademark	
settlement	and	wholesale	trade	receivables.	Trade	and	other	receivables	are	primarily	credit	card	sales	from	the	last	few	days	of	the	fiscal	quarter;

the	Company	has	recorded	a	net	derivative	financial	asset,	related	to	foreign	exchange	contracts.	This	increase	in	the	net	derivative	financial	asset	
is	attributable	to	the	impact	of	positive	mark-to-market	adjustments	on	foreign	exchange	contracts;

income	taxes	recoverable	are	attributable	to	instalments	made	in	excess	of	estimated	tax	liabilities;

inventories	were	lower	due	to	a	reduction	in	the	number	of	stores	in	Canada	along	with	the	exit	of	Babies“R”Us	in	the	U.S.	This	is	despite	the	impact	
of a weaker Canadian dollar vis-à-vis the u.s. dollar resulting in increased merchandise costs which were mitigated by a significant reduction in 
the number of units on hand. Additionally, the Company is continuing to carefully manage its inventory levels to improve markdown levels for the 
ensuing	fiscal	year;

•	

a	 reduction	 in	 property,	 equipment	 and	 intangible	 assets	 reflects	 a	 significantly	 reduced	 level	 of	 capital	 expenditures	 over	 the	 past	 two	 years.

significant changes in total liabilities of the Company year-over-year were primarily due to:

•	

•	

•	

•	

16

deferred	revenue	increased	largely	due	to	the	timing	of	loyalty	reward	program	incentives.	Deferred	revenue	consists	of	unredeemed	gift	cards,	loyalty	
points	and	awards	granted	under	customer	loyalty	programs.	Revenue	is	recognized	when	the	gift	cards,	loyalty	points	and	awards	are	redeemed;

tenant	allowances	are	recorded	as	deferred	lease	credits	and	amortized	as	a	reduction	of	rent	expense	over	the	term	of	the	related	leases.	A	reduced	
level	of	tenant	allowances	is	reflective	of	fewer	new	store	openings;

a	decrease	in	long-term	debt	is	attributable	to	the	continued	repayment	of	the	mortgage	debt	principal.	The	Company’s	long-term	debt	consists	of	
a	mortgage,	which	is	secured	by	the	Company’s	distribution	centre;

the	increase	in	pension	liability	is	due	to	$1,975	of	pension	expense,	actuarial	losses	of	$2,609	partially	offset	by	pension	contributions	paid	of	$875.	
the pension liability is primarily related to the unfunded supplemental executive Retirement plan (“seRp”).

operating risK management

economic enVironment
economic  factors  that  impact  consumer  spending  patterns  could  deteriorate  or  remain  unpredictable  due  to  global,  national  or  regional  economic 
volatility. these factors could negatively affect the Company’s revenue and margins. inflationary trends are unpredictable and changes in the rate of 
inflation or deflation will affect consumer prices, which in turn could negatively affect the financial performance of the Company. the Company closely 
monitors economic conditions in order to react to consumer spending habits and constraints in developing both its short-term and long-term operating 
decisions. the Company is in a strong financial position with significant liquidity available and ample credit resources to draw upon as deemed necessary.

competitiVe enVironment
the retail apparel business in Canada is highly competitive with competitors including department stores, specialty apparel chains and independent 
retailers. if the Company is ineffective in responding to consumer trends or in executing its strategic plans its financial performance could be negatively 
affected.  there  is  no  effective  barrier  to  entry  into  the  Canadian  apparel  retailing  marketplace  by  any  potential  competitor,  foreign  or  domestic,  
as witnessed by the arrival over the past few years of a number of foreign-based competitors and additional foreign retailers continuing to expand into 
the Canadian marketplace. Additionally, Canadian women have a significant number of e-commerce shopping alternatives available to them on a global 
basis. the Company believes that it is well positioned to compete with any competitor. the Company operates multiple banners with product offerings 
that are diversified as each banner is directed to and focused on a different niche in the Canadian women’s apparel market. our stores, located throughout 
Canada, offer affordable fashions to consumers. the Company also offers an e-commerce alternative for shoppers through each of the banners’ websites. 
the e-commerce retail landscape is highly competitive with both domestic and foreign competition. the Company has invested significantly in its 
e-commerce websites and social media to drive consumers to the websites and believes that it is positioned well to compete in this environment. 

17

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD16

seasonalitY
the Company’s business is seasonal and is also subject to a number of factors which directly impact retail sales of apparel over which it has no control, 
namely fluctuations in weather patterns, swings in consumer confidence and buying habits and the potential of rapid changes in fashion preferences.

distriBUtion and sUpplY cHain
the Company depends on the efficient operation of its sole distribution centre, such that any significant disruption in the operation thereof (e.g. natural 
disaster, system failures, destruction or major damage by fire), could materially delay or impair its ability to replenish its stores on a timely basis causing 
a loss of sales, which could have a significant effect on the Company’s results of operations.

information tecHnologY
the Company depends on information systems to manage its operations, including a full range of retail, financial, merchandising and inventory control, 
planning, forecasting, reporting and distribution systems. the Company embarked on a major systems development project in 2010. the new functionality 
offered  by  this  project  which  spans  warehousing  and  distribution,  merchandising,  operations  and  finance  is  projected  for  completion  in  fiscal  2017.  
Any significant disruptions in the performance of distribution or any other systems could have a material adverse impact on the Company’s operations 
and financial results. 

goVernment laWs and regUlation
the Company is structured in a manner that management considers to be most effective to conduct its business across Canada. the Company is therefore 
subject to all manner of material and adverse changes in government regulation that can take place in any one or more of these jurisdictions as they might 
impact income and sales, taxation, duties, quota impositions or re-impositions and other legislated or government regulated matters.

Changes to any of the laws, rules, regulations or policies (collectively, “laws”) applicable to the Company’s business, including income, capital, property 
and other taxes, and laws affecting the importation, distribution, packaging and labelling of products, could have an adverse impact on the financial or 
operational performance of the Company. in the course of complying with such changes, the Company could incur significant costs. Changing laws or 
interpretations of such laws or enhanced enforcement of existing laws could restrict the Company’s operations or profitability and thereby threaten the 
Company’s competitive position and ability to efficiently conduct business. Failure by the Company to comply with applicable laws and orders in a timely 
manner could subject the Company to civil or regulatory actions or proceedings, including fines, assessments, injunctions, recalls or seizures, which in 
turn could negatively affect the reputation, operations and financial performance of the Company. 

the Company is subject to tax audits from various government and regulatory agencies on an ongoing basis. As a result, from time to time, taxing 
authorities may disagree with the positions and conclusions taken by the Company in its tax filings or legislation could be amended or interpretations of 
current legislation could change, any of which events could lead to reassessments. these reassessments could have a material impact on the Company 
in future periods.

17

mercHandise soUrcing
virtually all of the Company’s merchandise is private label. on an annual basis, the Company directly imports approximately 80% of its merchandise, 
largely from China. in fiscal 2015, no supplier represented more than 12% of the Company’s purchases (in dollars and/or units) and there are a variety 
of alternative sources (both domestic and international) for virtually all of the Company’s merchandise. the Company has good relationships with its 
suppliers and has no reason to believe that it is exposed to any material risk that would prevent the Company from acquiring, distributing and/or selling 
merchandise on an ongoing basis.

the Company endeavours to be environmentally responsible and recognizes that the competitive pressures for economic growth and cost efficiency 
must be integrated with sound sustainability management, including environmental stewardship. the Company has adopted sourcing and other business 
practices to address the environmental concerns of its customers. the Company has established guidelines that require compliance with all applicable 
environmental laws and regulations. Although the Company requires its suppliers to adhere to these guidelines, there is no guarantee that these suppliers 
will not take actions that hurt the Company’s reputation, as they are independent third parties that the Company does not control. However, if there is 
a lack of apparent compliance, it may lead the Company to search for alternative suppliers. this may have an adverse effect on the Company’s financial 
results, by increasing costs and potentially causing delays in delivery. 

priVacY and information secUritY 
the Company is subject to various laws regarding the protection of personal information of its customers, cardholders and employees and has adopted 
a privacy policy setting out guidelines for the handling of personal information. the Company’s it systems contain personal information of customers, 
cardholders and employees. Any failures or vulnerabilities in these systems or non-compliance with laws or regulations, including those in relation to 
personal information belonging to the Company’s customers and employees, could negatively affect the reputation, operations and financial performance 
of the Company.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisfinancial risK management

the Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and 
controls,  and  to  monitor  risks  and  adherence  to  limits.  Risk  management  policies  and  systems  are  reviewed  regularly  to  reflect  changes  in  market 
conditions and the Company’s activities. disclosures relating to the Company’s exposure to risks, in particular credit risk, liquidity risk, foreign currency risk, 
interest rate risk and equity price risk are provided below.

credit risK
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. the Company’s 
financial instruments that are exposed to concentrations of credit risk are primarily cash and cash equivalents, marketable securities, trade and other 
receivables and foreign currency option contracts. the Company limits its exposure to credit risk with respect to cash and cash equivalents and foreign 
currency forwards and option contracts by dealing with Canadian financial institutions. Marketable securities consist of preferred shares of highly-rated 
Canadian public companies. the Company’s trade and other receivables consist primarily of credit card receivables from the last few days of the fiscal year, 
which are settled within the first days of the next fiscal year. 

As at January 31, 2015, the Company’s maximum exposure to credit risk for these financial instruments was as follows:

Cash and cash equivalents
Marketable securities
trade and other receivables
derivative financial asset

$ 

139,913
57,364
4,599
20,635
$  222,511

liQUiditY risK
liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. the Company’s approach to managing liquidity 
risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet liabilities when due. the contractual maturity of the majority of 
trade and other payables is within twelve months. As at January 31, 2015, the Company had a high degree of liquidity with $197,277 in cash and cash 
equivalents and marketable securities. in addition, the Company has unsecured credit facilities of $100,000 subject to annual renewals. the Company 
has  financed  its  store  expansion  through  internally-generated  funds  and  its  unsecured  credit  facilities  are  used  to  finance  seasonal  working  capital 
requirements for u.s. dollar merchandise purchases. the Company’s long-term debt consists of a mortgage bearing interest at 6.40%, due november 
2017, which is secured by the Company’s distribution centre.

18

foreign cUrrencY risK
the Company purchases a significant amount of its merchandise with u.s. dollars and as such significant volatility in the u.s. dollar vis-à-vis the 
Canadian dollar can have an adverse impact on the Company’s gross margin. the Company has a variety of alternatives that it considers to manage 
its foreign currency exposure on cash flows related to these purchases. these include, but are not limited to, various styles of foreign currency option 
or forward contracts, not to exceed twelve months, and spot rate purchases. A foreign currency option contract represents an option or obligation 
to buy a foreign currency from a counterparty. A forward foreign exchange contract is a contractual agreement to buy or sell a specified currency at 
a  specific  price  and  date  in  the  future.  effective  in  the  fourth  quarter  of  fiscal  2015,  the  Company  entered  into  certain  qualifying  foreign  exchange 
contracts that it designated as cash flow hedging instruments under international Accounting standard 39 (“iAs 39”). this has resulted in mark-to-market 
foreign exchange adjustments, for qualifying hedged instruments, being recorded as a component of other comprehensive income. For the year ended  
January 31, 2015, the Company satisfied its u.s. dollar requirements primarily through spot rate purchases and foreign exchange option contracts.

the  Company  has  performed  a  sensitivity  analysis  on  its  u.s.  dollar  denominated  financial  instruments,  which  consist  principally  of  cash  
and cash equivalents of $14,398 and trade payables of $24,694 to determine how a change in the u.s. dollar exchange rate would impact net earnings.  
on January 31, 2015, a 1% rise or fall in the Canadian dollar against the u.s. dollar, assuming that all other variables, in particular interest rates, had 
remained the same, would have resulted in a $100 decrease or increase, respectively, in the Company’s net earnings for the year ended January 31, 2015.

the Company has performed a sensitivity analysis on its derivative financial instruments, a series of call and put options on u.s. dollars and forward 
contracts, to determine how a change in the u.s. dollar exchange rate would impact net earnings and other comprehensive income. on January 31, 2015, 
a 1% rise or fall in the Canadian dollar against the u.s. dollar, assuming that all other variables had remained the same, would have resulted in a $514 
decrease or a $508 increase, respectively, in the Company’s net earnings and would have resulted in a $862 decrease or increase in the Company’s other 
comprehensive income for the year ended January 31, 2015.

interest rate risK
interest rate risk exists in relation to the Company’s cash and cash equivalents. Market fluctuations in interest rates impacts the Company’s earnings 
with respect to interest earned on cash and cash equivalents that are invested mainly in short term deposits with major Canadian financial institutions.  
the Company has unsecured borrowing and working capital credit facilities available up to an amount of $100,000 or its u.s. dollar equivalent that it 
utilizes for documentary and standby letters of credit, and the Company funds the drawings on these facilities as the payments are due.

19

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD18

the Company has performed a sensitivity analysis on interest rate risk at January 31, 2015 to determine how a change in interest rates would impact 
net  earnings.  For  the  year  ended  January  31,  2015,  the  Company  earned  interest  income  of  $994  on  its  cash  and  cash  equivalents.  An  increase  or 
decrease of 25 basis points in the average interest rate earned during the year would have increased net earnings by $98 or decreased net earnings by  
$50, respectively. this analysis assumes that all other variables, in particular foreign currency rates, remain constant.

eQUitY price risK
equity price risk arises from available-for-sale equity securities. the Company monitors the mix of equity securities in its investment portfolio based on 
market expectations. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the 
Chief executive officer.

the  Company  has  performed  a  sensitivity  analysis  on  equity  price  risk  at  January  31,  2015,  to  determine  how  a  change  in  the  market  price  of  the 
Company’s marketable securities would impact other comprehensive income. the Company’s equity investments consist principally of preferred shares of 
Canadian public companies. the Company believes that changes in interest rates influence the market price of these securities. A 5% increase or decrease 
in the market price of the securities at January 31, 2015, would result in a $2,532 increase or decrease, respectively, in other comprehensive income for 
the year ended January 31, 2015. the Company’s equity securities are subject to market risk and, as a result, the impact on other comprehensive income 
may ultimately be greater than that indicated above.

liQUiditY, casH floWs and capital resoUrces

shareholders’ equity as at January 31, 2015 amounted to $421,123 or $6.52 per share (February 1, 2014 – $423,431 or $6.56 per share). the Company 
continues to be in a strong financial position. the Company’s principal sources of liquidity are its cash and cash equivalents and investments in marketable 
securities of $197,277 as at January 31, 2015 (February 1, 2014 – $177,417). Cash is held in interest bearing accounts and in short-term deposits with 
major Canadian financial institutions. the Company closely monitors its risk with respect to short-term cash investments. the Company has unsecured 
borrowing  and  working  capital  credit  facilities  available  up  to  an  amount  of  $100,000  or  its  u.s.  dollar  equivalent.  As  at  January  31,  2015,  $29,984 
(February 1, 2014 – $30,270) of the operating lines of credit were committed for documentary and standby letters of credit. these credit facilities are used 
principally for u.s. dollar letters of credit to satisfy international third-party vendors which require such backing before confirming purchase orders issued 
by the Company and to support u.s. dollar foreign exchange forward contract purchases. the Company rarely uses such credit facilities for other purposes.

the Company has granted irrevocable standby letters of credit, issued by highly-rated financial institutions, to third parties to indemnify them in the 
event the Company does not perform its contractual obligations. As at January 31, 2015, the maximum potential liability under these guarantees was 
$5,007 (February 1, 2014 – $5,019). the standby letters of credit mature at various dates during fiscal 2016. the Company has recorded no liability with 
respect to these guarantees, as the Company does not expect to make any payments for these items.

19

the Company is self-insured on a limited basis with respect to certain property risks and also purchases excess insurance coverage from financially 
stable third-party insurance companies. the Company maintains comprehensive internal security and loss prevention programs aimed at mitigating the 
financial impact of theft.

the  Company  continued  repayment  on  its  long-term  debt,  relating  to  the  mortgage  on  the  distribution  centre,  paying  down  $1,672  in  fiscal  2015.  
the Company paid $0.20 dividends per share in fiscal 2015 totalling $12,917 compared to $0.65 dividends per share totalling $41,981 in fiscal 2014.  
With regard to dividend policy, the Board of directors considers the Company’s earnings per share, cash flow from operations, the level of planned capital 
expenditures and its cash and marketable securities. the targeted payout ratio is approximately 50% to 80% of sustainable earnings per share, 50% to 
75% of cash flow from operations with consideration as to the ability to augment the dividend from the liquidity on the Company’s balance sheet, if these 
targets are missed in a given year. the Board of directors reviews these guidelines regularly.

the Company embarked on a major systems development project (“sCoRe”) in 2010, which is in the final phases of completion. the new functionality 
offered  by  this  project  which  spans  warehousing  and  distribution,  merchandising,  operations  and  finance  is  projected  for  completion  in  fiscal  2017.  
due to delays in the project, the total project costs have been increasing and most recent projected costs to completion are estimated at $40,000 of which 
approximately $28,700 has been incurred to date. the escalation in the sCoRe project costs are a result of problems encountered during the warehouse 
management system deployment in fiscal 2013, which have been remedied, along with a longer deployment schedule than was originally planned.

in  fiscal  2015,  the  Company  invested  $28,960,  on  a  cash  basis,  primarily  on  new  and  renovated  stores.  in  fiscal  2016,  the  Company  expects  to 
invest  approximately  $40,000  in  capital  expenditures,  including  in  its  sCoRe  project.  these  expenditures,  together  with  the  payment  of  dividends,  
the repayments related to the Company’s bank credit facility and long-term debt obligations, are expected to be funded by the Company’s existing 
financial resources and funds derived from its operations.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisfinancial commitments

the following table sets forth the Company’s financial commitments, excluding trade and other payables, as at January 31, 2015, the details of which 
are described in the previous commentary.

Contractual obligations

store & office operating leases 1
purchase obligations 2
other operating leases 3
long-term debt
interest on long-term debt
total contractual obligations

total

Within 1 YeaR

2 to 4 YeaRs

5 YeaRs and oVeR

$  376,372
112,879
13,412
5,331
504
$  508,498

$ 

94,516
112,396
3,943
1,780
286
$  212,921

$  189,399
483
7,887
3,551
218
$  201,538

$ 

$ 

92,457
–
1,582
–
–
94,039

1  Represents the minimum lease payments under long-term leases for store locations and office space.
2  includes amounts pertaining to agreements to purchase goods or services that are enforceable and legally binding on the Company.
3  includes lease payments for computer equipment, automobiles and office equipment.

As at January 31, 2015, the Company had additional long-term liabilities which included pension liability and deferred income tax liabilities. these long-term 
liabilities have not been included in the table above as the timing and amount of these future payments are uncertain.

oUtstanding sHare data

At April 1, 2015, 13,440,000 Common shares and 51,145,506 Class A non-voting shares of the Company were issued and outstanding. each Common 
share entitles the holder thereof to one vote at meetings of shareholders of the Company. the Company has 2,908,600 share options outstanding at 
an average exercise price of $10.59. each share option entitles the holder to purchase one Class A non-voting share of the Company at an exercise price 
established based on the market price of the shares at the date the option was granted.

20

in fiscal 2015, the Company did not purchase any shares under a normal course issuer bid approved in december 2013. the normal course issuer bid 
expired on december 17, 2014. in december 2014, the Company received approval from the toronto stock exchange to proceed with a normal course 
issuer bid. under the bid, the Company may purchase up to 3,511,815 Class A non-voting shares of the Company, representing 10% of the public float of 
the issued and outstanding Class A non-voting shares as at december 5, 2014. the bid commenced on december 18, 2014 and may continue to december 
17, 2015. no Class A non-voting shares were purchased to date under this new program.

off-Balance sHeet arrangements

deriVatiVe financial instrUments
the Company in its normal course of business must make long lead time commitments for a significant portion of its merchandise purchases, in some 
cases as long as twelve months. Most of these purchases must be paid for in u.s. dollars. the Company considers a variety of strategies designed to 
manage the cost of its continuing u.s. dollar long-term commitments, including spot rate purchases and foreign currency option contracts and forward 
contracts with maturities not exceeding twelve months. the Company entered into transactions with its bank whereby it purchased call options and sold 
put options, both on the u.s. dollar and entered into forward contracts. these foreign exchange contracts extend over a period not exceeding twelve 
months. purchased call options and sold put options expiring on the same date have the same strike price.

details of the foreign currency option contracts outstanding as at January 31, 2015 and as at February 1, 2014 are included in the “operating Results for 
Fiscal 2015 and Comparison to operating Results for Fiscal 2014” section of this Md&A. 

A  foreign  currency  option  contract  represents  an  option  (call  option)  or  obligation  (put  option)  to  buy  a  foreign  currency  from  a  counterparty  at  a 
predetermined date and amount. A forward foreign exchange contract is a contractual agreement to buy or sell a specified currency at a specific price and 
date in the future. Credit risks exist in the event of failure by a counterparty to fulfill its obligations. the Company reduces this risk by dealing only with 
highly-rated counterparties, normally Canadian chartered banks. the Company does not use derivative financial instruments for speculative purposes.

related partY transactions

transactions WitH KeY management personnel
key management personnel are those persons who have the authority and responsibility for planning, directing and controlling the activities of the 
entity – directly or indirectly. the definition of key management personnel includes directors (both executive and non-executive). the Board of directors, 
which includes the Chief executive officer and president, has the responsibility for planning, directing and controlling the activities of the Company and 
is considered key management personnel. the directors participate in the share option plan, as described in note 17 to the audited consolidated financial 
statements for fiscal 2015.

21

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD20

Compensation expense for key management personnel is as follows:

salaries, directors’ fees and short-term benefits
share-based compensation costs

FoR the FisCal YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

2,134
176
2,310

$ 

$ 

1,993
338
2,331

Further information about the remuneration of individual directors is provided in the annual Management proxy Circular.

otHer related-partY transactions
the Company leases two retail locations which are owned by companies controlled by the major shareholders of the Company. For fiscal 2015, the rent 
expense under these leases was, in the aggregate, $223 (fiscal 2014 – $204).

the Company incurred $384 in fiscal 2015 (fiscal 2014 – $560) with professional service firms connected to outside directors of the Company for fees in 
conjunction with general legal advice and other consultation. 

these transactions are recorded at the amount of consideration paid as established and agreed to by the related parties.

financial instrUments

the  Company  is  highly  liquid  with  significant  cash  and  cash  equivalents  along  with  marketable  securities.  the  Company  uses  its  cash  resources  to 
fund ongoing store construction and renovations along with working capital needs. Financial instruments that are exposed to concentrations of credit 
risk consist primarily of cash and cash equivalents, marketable securities, trade and other receivables and foreign currency contracts. the Company 
reduces this risk by dealing only with highly-rated counterparties, normally major Canadian financial institutions. the Company closely monitors its risk 
with respect to short-term cash investments. Marketable securities consist primarily of preferred shares of Canadian public companies. the Company’s 
investment portfolio is subject to stock market volatility. 

the volatility of the u.s. dollar vis-à-vis the Canadian dollar impacts earnings and while the Company considers a variety of strategies designed to 
manage the cost of its continuing u.s. dollar commitments, such as spot rate purchases and foreign exchange contracts, this volatility can result in 
exposure to risk.

21

KeY soUrces of estimation UncertaintY

pension plans
the cost of defined benefit pension plans is determined by means of actuarial valuations, which involve making assumptions about discount rates, future 
salary increases, mortality rates and the future increases in pensions. Because of the long-term nature of the plans, such estimates are subject to a high 
degree of uncertainty.

gift cards / loYaltY points and aWards
gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are redeemed. An estimate is made of gift cards not 
expected to be redeemed based on the terms of the gift cards and historical redemption patterns. loyalty points and awards granted under customer 
loyalty programs are recognized as a separate component of revenue and are deferred at the date of initial sale. Revenue is recognized when the loyalty 
points and awards are redeemed and the Company has fulfilled its obligation. the amount of revenue deferred is measured based on the fair value of 
loyalty points and awards granted, taking into consideration the estimated redemption percentage. 

inVentorY
inventories are valued at the lower of cost and net realizable value. estimates are required in relation to forecasted sales and inventory balances. in 
situations where excess inventory balances are identified, estimates of net realizable values for the excess inventory are made. the Company has set up 
provisions for merchandise in inventory that may have to be sold below cost. For this purpose, the Company has developed assumptions regarding the 
quantity of merchandise sold below cost.

asset impairment
the  Company  must  assess  the  possibility  that  the  carrying  amounts  of  tangible  and  intangible  assets  (including  goodwill)  may  not  be  recoverable. 
impairment testing is performed whenever there is an indication of impairment, except for goodwill and intangible assets with indefinite useful lives for 
which impairment testing is performed at least once per year. significant management estimates are required to determine the recoverable amount of 
the cash-generating unit (“Cgu”) including estimates of fair value, selling costs or the discounted future cash flows related to the Cgu. differences in 
estimates could affect whether tangible and intangible assets (including goodwill) are in fact impaired and the dollar amount of that impairment.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisneW accoUnting policies adopted in fiscal 2015

ifric 21 – leVies
in May 2013, the iAsB issued iFRiC Interpretation 21 – Levies, which is an interpretation of iAs 37 – Provisions, Contingent Liabilities and Contingent Assets. 
iFRiC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the 
payment of the levy. the Company implemented this standard retrospectively in the first quarter of the year ended January 31, 2015. there were no 
measurement impacts on the Company’s consolidated financial statements as a result of the adoption of iFRiC 21.

neW accoUnting standards and interpretations not Yet adopted

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended January 31, 2015 and have not 
been applied in preparing the consolidated financial statements. new standards and amendments to standards and interpretations that are currently 
under review include:

ifrs 9 – financial instrUments
on July 24, 2014 the iAsB issued the complete iFRs 9 (iFRs 9 (2014)). iFRs 9 (2014) introduces new requirements for the classification and measurement 
of  financial  assets.  under  iFRs  9  (2014),  financial  assets  are  classified  and  measured  based  on  the  business  model  in  which  they  are  held  and  the 
characteristics of their contractual cash flows. 

the standard introduces additional changes relating to financial liabilities. it also amends the impairment model by introducing a new “expected credit loss” 
model for calculating impairment.

iFRs  9  (2014)  also  includes  a  new  general  hedge  accounting  standard  which  aligns  hedge  accounting  more  closely  with  risk  management.  this  new 
standard does not fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, however it 
will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce more judgment to assess the 
effectiveness of a hedging relationship.

special transitional requirements have been set for the application of the new general hedging model.

22

the  mandatory  effective  date  of  iFRs  9  is  for  annual  periods  beginning  on  or  after  January  1,  2018  and  must  be  applied  retrospectively  with  some 
exemptions. early adoption is permitted. the restatement of prior periods is not required and is only permitted if information is available without the 
use of hindsight.

the Company plans to early adopt iFRs 9 for its fiscal year beginning on February 1, 2015. the adoption of iFRs 9 is not expected to result in any 
measurement adjustments to financial assets and financial liabilities, and is not expected to result in any changes in the eligibility for hedge accounting 
and the accounting for the derivative financial instruments designated as effective hedging instruments at the transition date. the Company is also 
reviewing its significant accounting policies for financial instruments, derivative financial instruments and hedging relationships to align them with iFRs 9.

ifrs 15 – reVenUe from contracts WitH cUstomers
in May 2014, the iAsB issued iFRs 15, Revenue from Contracts with Customers (IFRS 15). the standard contains a single model that applies to contracts 
with customers and two approaches to recognizing revenue: at a point in time or over time. the model features a contract-based five-step analysis of 
transactions to determine whether, how much and when revenue is recognized. new estimates and judgmental thresholds have been introduced, which 
may affect the amount and/or timing of revenue recognized. the new standard applies to contracts with customers. it does not apply to insurance 
contracts, financial instruments or lease contracts, which fall in the scope of other iFRss. iFRs 15 becomes effective for annual periods beginning on or 
after January 1, 2017. early adoption is permitted. 

the Company is currently assessing the impact of the new standard on its consolidated financial statements.

disclosUre initiatiVe: amendments to ias 1
on december 18, 2014 the iAsB issued amendments to iAs 1 Presentation of Financial Statements as part of its major initiative to improve presentation 
and disclosure in financial reports (the “disclosure initiative”). the amendments are effective for annual periods beginning on or after January 1, 2016. 
early adoption is permitted. the Company is currently assessing the impact of the new standard on its consolidated financial statements.

annUal improVements to ifrs (2010–2012) and (2011–2013) cYcles
on  december  12,  2013  the  iAsB  issued  narrow-scope  amendments  to  a  total  of  nine  standards  as  part  of  its  annual  improvements  process.  
Most amendments will apply prospectively for annual periods beginning on or after July 1, 2014. the Company is currently assessing the impact of the 
amendments on its consolidated financial statements.

disclosUre controls and procedUres

disclosure controls and procedures are designed to provide reasonable assurance that all material information related to the Company is gathered and 
reported to senior management, including the Chairman and Chief executive officer (“Ceo”) and the Chief Financial officer (“CFo”), on a timely basis so 
that appropriate decisions can be made regarding public disclosure. 

23

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteD22

during fiscal 2015, the Company implemented a key component to the financial workstream in the sCoRe project to provide enhanced financial and 
other information that will support its strategic plans and business operations. the implementation of this change has affected the Company’s disclosure 
controls and internal controls over financial reporting. the evaluation of the changes to the design of the disclosure controls and internal controls over 
financial reporting concluded that there is reasonable assurance that material and required disclosure information is appropriately identified and reported 
and that financial reporting is reliable and in accordance with iFRs. the operation of the revised or new controls related to changes implemented including 
internal controls over financial reporting were fully tested and evaluated prior to the Company’s fiscal 2015 year-end. 

there were no other changes in the Company’s disclosure controls and procedures and internal controls over financial reporting that occurred during fiscal 
2015 that have materially affected or are reasonably likely to materially affect the Company’s disclosures of required information and internal control 
over financial reporting.

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was conducted as of January 31, 2015. 
Based on this evaluation, the Ceo and the CFo have concluded that, as of January 31, 2015, the disclosure controls and procedures, as defined by National 
Instrument 52-109, were appropriately designed and were operating effectively.

internal controls oVer financial reporting

internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation 
of financial statements in accordance with iFRs. Management is responsible for establishing and maintaining adequate internal control over financial 
reporting for the Company.

An evaluation of the effectiveness of the design and operation of the Company’s internal control over financial reporting was conducted as of  
January 31, 2015. Based on that evaluation, the Ceo and the CFo concluded that the internal control over financial reporting, as defined by National 
Instrument 52-109, was appropriately designed and was operating effectively.

the evaluations were conducted in accordance with the framework and criteria established in internal Control – integrated Framework, issued by the 
Committee of sponsoring organizations of the treadway Commission (“Coso”) 2013, a recognized control model, and the requirements of National 
Instrument 52-109, Certification of disclosure in issuers’ Annual and interim Filings.

in designing such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed and operated, can provide 
only reasonable assurance of achieving the desired control objectives and may not prevent or detect misstatements. projections of any evaluations of 
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of 
compliance with the policies or procedures may deteriorate.

23

other than the implementation of the financial workstream of the sCoRe project described earlier, there have been no changes in the Company’s internal 
controls over financial reporting during fiscal 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal 
controls over financial reporting.

oUtlooK

the retail environment continues to be highly competitive with increased competition due to the entrance of new retailers in the Canadian marketplace. 
Additionally,  consumers  have  many  options  available  to  respond  to  their  shopping  needs  including  traditional  stores  or  e-commerce  fulfillment.  
the continued decline in the Canadian dollar vis-à-vis the u.s. dollar contributes to reduced cross border shopping, however it also increases the cost of 
inputs for Canadian retailers. the Company considers these factors along with changes in consumer shopping behaviours and economic conditions when 
evaluating the Company’s product sourcing and pricing strategies.

the Company has made significant changes in branding among its banners with consumers showing positive acceptance as the changes take effect.  
the decision to close the smart set banner demonstrates the Company’s commitment to improving profitability and focusing its efforts on segments 
where it is dominant in the marketplace. the Company has invested considerably in its information technology and handling systems while reducing 
capital  expenditures,  significantly  at  store  level.  in  addition,  cost  reduction  and  process  improvement  initiatives  have  started  to  yield  results.  in 
conjunction, the Company will leverage its technology with improved systems and processes as part of the sCoRe project while continuing further 
process improvement initiatives.

the Company’s Hong kong office is dedicated to seeking out the highest quality, affordable and fashionable apparel for all of our banners. A comprehensive 
review of the Company’s global sourcing strategy and execution has been undertaken with a goal of reducing lead time for bringing products to market.

the  Company  has  a  strong  balance  sheet,  with  excellent  liquidity  and  borrowing  capacity  providing  the  ability  to  act  when  opportunities  present 
themselves in whatever format including merchandising, store acquisition/construction, system replacements/upgrading or expansion by acquisition.  
the Company believes in the strength of its employees and is committed to continue to invest in training for all levels.

ManageMent’s Discussion  anD analysisReitMans (canaDa) limiteDManageMent’s Discussion  anD analysisthe  accompanying  consolidated  financial  statements  and  all  the  information  in  the  annual  report  are  the 
responsibility of management and have been approved by the Board of directors of Reitmans (Canada) limited.

these consolidated financial statements have been prepared by management in conformity with international 
Financial Reporting standards and include amounts that are based on best estimates and judgments.  
the financial information used elsewhere in the annual report is consistent with that in the consolidated 
financial statements.

Management  of  the  Company  has  developed  and  maintains  a  system  of  internal  accounting  controls. 
Management  believes  that  this  system  of  internal  accounting  controls  provides  reasonable  assurances  that 
financial records are reliable and form a proper basis for the preparation of the consolidated financial statements 
and that assets are properly accounted for and safeguarded.

the Board of directors carries out its responsibility for the consolidated financial statements in this annual 
report principally through its Audit Committee, consisting of all outside directors. the Audit Committee 
reviews the Company’s annual consolidated financial statements and recommends their approval to the Board 
of directors. the auditors appointed by the shareholders have full access to the Audit Committee, with and 
without management being present.

these consolidated financial statements have been examined by the auditors appointed by the shareholders, 
kpMg llp, and their report is presented hereafter.

24
24

management’s  
ResPonsiBilitY  
FoR ConsolidAted  
FinAnCiAl  
stAteMents

(signed) 

(signed)

Jeremy H. Reitman 

Chairman and 
Chief executive officer  

April 1, 2015

eric Williams, CpA, CA

vice-president, Finance and
Chief Financial officer

Reitmans 
Reitmans 
(CAnAdA) 
(CAnAdA) 
liM i t e d
liM i t e d

 
 
 
 
to the shareholders of Reitmans (Canada) limited

We have audited the accompanying consolidated financial statements of Reitmans (Canada) limited, which 
comprise the consolidated balance sheets as at January 31, 2015 and February 1, 2014, the consolidated statements 
of earnings, comprehensive income, changes in shareholders’ equity and cash flows for the years then ended, 
and notes, comprising a summary of significant accounting policies and other explanatory information.

management’s responsiBilitY for tHe consolidated financial statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements 
in accordance with international Financial Reporting standards, and for such internal control as management 
determines  is  necessary  to  enable  the  preparation  of  consolidated  financial  statements  that  are  free  from 
material misstatement, whether due to fraud or error.

aUditors’ responsiBilitY
our responsibility is to express an opinion on these consolidated financial statements based on our audits.  
We conducted our audits in accordance with Canadian generally accepted auditing standards. those standards 
require  that  we  comply  with  ethical  requirements  and  plan  and  perform  the  audit  to  obtain  reasonable 
assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the 
consolidated financial statements. the procedures selected depend on our judgment, including the assessment 
of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. 
in  making  those  risk  assessments,  we  consider  internal  control  relevant  to  the  entity’s  preparation  and  fair 
presentation of the consolidated financial statements in order to design audit procedures that are appropriate 
in  the  circumstances,  but  not  for  the  purpose  of  expressing  an  opinion  on  the  effectiveness  of  the  entity’s 
internal  control.  An  audit  also  includes  evaluating  the  appropriateness  of  accounting  policies  used  and  the 
reasonableness of accounting estimates made by management, as well as evaluating the overall presentation 
of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a 
basis for our audit opinion.

opinion
in our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated  
financial position of Reitmans (Canada) limited as at January 31, 2015 and February 1, 2014, and its consolidated 
financial performance and its consolidated cash flows for the years then ended in accordance with international 
Financial Reporting standards.

(signed)

Montreal, Canada
April 1, 2015

independent  
aUditoRs’  
RePoRt

25
25

* CpA auditor, CA, public accountancy permit no. A122264 

kpMg llp is a Canadian limited liability partnership and a member firm  
of  the  kpMg  network  of  independent  member  firms  affiliated  with  
kpMg international Cooperative (“kpMg international”), a swiss entity. 
kpMg Canada provides services to kpMg llp.

Reitmans 
Reitmans 
(CAnAdA) 
(CAnAdA) 
liM i t e d
liM i t e d

 
 
 
 
 
ConsolidAted  
statements oF eaRnings
FoR tHe yeARs ended JAnuARy 31, 2015 And FeBRuARy 1, 2014  
(in tHousAnds oF CAnAdiAn dollARs exCept peR sHARe AMounts)

sales
Cost of goods sold (note 7)
gross profit
selling and distribution expenses
Administrative expenses
Results from operating activities

other income (note 19)
Finance income (note 19)
Finance costs (note 19)
earnings before income taxes

income tax expense (note 11)

net earnings

earnings per share (note 20):

Basic
diluted

the accompanying notes are an integral part of these consolidated financial statements.

26

ConsolidAted stAteMents oF 
ComPRehensiVe inCome
FoR tHe yeARs ended JAnuARy 31, 2015 And FeBRuARy 1, 2014 
(in tHousAnds oF CAnAdiAn dollARs)

net earnings
other comprehensive loss

items that are or may be reclassified subsequently to net earnings:

Reclassification of realized (gain) loss on available-for-sale financial assets to net earnings

(net	of	tax	of	$639;	2014	–	$31)	(note	19)

Net	change	in	fair	value	of	available-for-sale	financial	assets	(net	of	tax	of	$557;	2014	–	$592)	
Reclassification of impairment loss on available-for-sale financial assets to net earnings

(net	of	tax	of	$127;	2014	–	$358)	(note	19)

Net	change	in	fair	value	of	cash	flow	hedges	(net	of	tax	of	$2,177;	2014	–	nil)

Foreign currency translation differences (note 16)

items that will not be reclassified to net earnings:

Actuarial	(loss)	gain	on	defined	benefit	plans	(net	of	tax	of	$692;	2014	–	$124)	(note	15)

total other comprehensive loss

total comprehensive income

the accompanying notes are an integral part of these consolidated financial statements.

Reitmans 
(CAnAdA) 
liM i t e d

2015

2014

$  939,376
372,033
567,343
507,244
47,603
12,496

$  960,397
365,458
594,939
544,448
47,385
3,106

–
8,112
3,081
17,527

4,112

6,054
7,725
3,443
13,442

2,654

$ 

13,415

$ 

10,788

$ 

0.21
0.21

$ 

0.17
0.17

2015

2014

$ 

13,415

$ 

10,788

(4,181)
(3,637)

831
6,026

(754)
(1,715)

(1,917)

(3,632)

217
(3,896)

2,341
–

29
(1,309)

373

(936)

$ 

9,783

$ 

9,852

assets
CuRRent Assets

Cash and cash equivalents (note 5)
Marketable securities (note 6)
trade and other receivables 
derivative financial asset (note 6)
income taxes recoverable
inventories (note 7)
prepaid expenses

total Current Assets

non-CuRRent Assets

property and equipment (note 8)
intangible assets (note 9)
goodwill (note 10)
deferred income taxes (note 11)
total non-Current Assets

total assets

liaBilities and shaReholdeRs’ eQUitY
CuRRent liABilities

trade and other payables (note 12)
derivative financial liability (note 6)
deferred revenue (note 13)
Current portion of long-term debt (note 14)

total Current liabilities

non-CuRRent liABilities
other payables (note 12)
deferred lease credits
long-term debt (note 14)
pension liability (note 15)

total non-Current liabilities

sHAReHoldeRs’ eQuity
share capital (note 16)
Contributed surplus
Retained earnings
Accumulated other comprehensive income (note 16)

total shareholders’ equity

ConsolidAted  
BalanCe sheets
As At JAnuARy 31, 2015 And FeBRuARy 1, 2014 
(in tHousAnds oF CAnAdiAn dollARs)

2015

2014

$  139,913
57,364
4,599
20,635
1,977
106,440
12,148
343,076

152,349
20,077
42,426
26,463
241,315

$  122,355
55,062
6,422
11,775
5,656
109,601
12,512
323,383

178,341
17,211
42,426
28,578
266,556

$  584,391

$  589,939

$ 

91,719
96
21,073
1,780
114,668

$ 

90,734
3,065
19,998
1,672
115,469

27

9,903
13,178
3,551
21,968
48,600

39,227
8,014
368,241
5,641
421,123

11,842
15,607
5,331
18,259
51,039

39,227
7,188
369,660
7,356
423,431

total liaBilities and shaReholdeRs’ eQUitY

$  584,391

$  589,939

Commitments (note 18)

the accompanying notes are an integral part of these consolidated financial statements.

on behalf of the Board,

(signed) 

Jeremy H. Reitman, director  

(signed)

John J. swidler, director

Reitmans 
(CAnAdA) 
liM i t e d

 
ConsolidAted stAteMents oF 
Changes in shaReholdeRs’ eQUitY
FoR tHe yeARs ended JAnuARy 31, 2015 And FeBRuARy 1, 2014 
(in tHousAnds oF CAnAdiAn dollARs)

note

shaRe
CaPital

ContRiBUted
sURPlUs

Retained
eaRnings

aCCUmUlated
otheR
ComPRehensiVe
inCome

total
shaReholdeRs’
eQUitY

Balance as at February 2, 2014

$ 

39,227

$ 

7,188

$  369,660

$ 

7,356

$  423,431

total comprehensive income for the year

net earnings
total other comprehensive loss

total comprehensive income for the year

Contributions by and distributions to owners
of the Company
share-based compensation costs 
dividends 

total contributions by and distributions to owners
of the Company

Balance as at January 31, 2015

Balance as at February 3, 2013

total comprehensive income for the year

net earnings
total other comprehensive income (loss)

total comprehensive income for the year

Contributions by and distributions to owners
of the Company
share-based compensation costs 
dividends 

total contributions by and distributions to owners
of the Company

17
16

17
16

28

–
–
–

–
–

–

–
–
–

826
–

826

13,415
(1,917)
11,498

–
(1,715)
(1,715)

13,415
(3,632)
9,783

–
(12,917)

(12,917)

–
–

–

826
(12,917)

(12,091)

$ 

$ 

39,227

39,227

$ 

$ 

8,014

$  368,241

6,521

$  400,480

$ 

$ 

5,641

$  421,123

8,665

$  454,893

–
–
–

–
–

–

–
–
–

667
–

667

10,788
373
11,161

–
(41,981)

(41,981)

–
(1,309)
(1,309)

–
–

–

10,788
(936)
9,852

667
(41,981)

(41,314)

Balance as at February 1, 2014

$ 

39,227

$ 

7,188

$  369,660

$ 

7,356

$  423,431

the accompanying notes are an integral part of these consolidated financial statements.

Reitmans 
(CAnAdA) 
liM i t e d

 
 
CAsH FloWs FRoM opeRAting ACtivities

net earnings 
Adjustments for:

depreciation, amortization and net impairment losses
share-based compensation costs
Amortization of deferred lease credits
deferred lease credits
pension contribution
pension expense
other income
Realized (gain) loss on sale of marketable securities
impairment loss on available-for-sale financial assets
net change in fair value of derivatives
Foreign exchange gain on cash and cash equivalents
interest and dividend income, net
interest paid
interest received
dividends received 
income tax expense

Changes in:

trade and other receivables
inventories
prepaid expenses
trade and other payables
deferred revenue

Cash from operating activities
income taxes received
income taxes paid
net cash flows from operating activities

CAsH FloWs used in investing ACtivities

purchases of marketable securities
proceeds on sale of marketable securities
proceeds on sale of trademarks
Additions to property and equipment and intangible assets
proceeds on disposal of property and equipment and intangibles
Cash flows used in investing activities

CAsH FloWs used in FinAnCing ACtivities

dividends paid
Repayment of long-term debt
Cash flows used in financing activities

FoReign exCHAnge gAin on CAsH Held in FoReign CuRRenCy
net inCReAse in CAsH And CAsH eQuivAlents
CAsH And CAsH eQuivAlents, Beginning oF tHe yeAR

ConsolidAted  
statements oF Cash FloWs
FoR tHe yeARs ended JAnuARy 31, 2015 And FeBRuARy 1, 2014 
(in tHousAnds oF CAnAdiAn dollARs)

2015

2014

$ 

13,415

$ 

10,788

54,038
826
(3,935)
1,506
(875)
1,975
–
(4,820)
958
(3,625)
(2,120)
(2,898)
(394)
904
2,473
4,112
61,540

713
3,161
364
(3,007)
1,075
63,846
6,009
(4,743)
65,112

(39,904)
33,408
1,025
(28,960)
101
(34,330)

(12,917)
(1,672)
(14,589)

1,365
17,558
122,355

63,724
667
(4,517)
3,319
(960)
2,157
(6,054)
248
2,699
(8,428)
(1,604)
(3,358)
(496)
594
3,355
2,654
64,788

(533)
(15,945)
13,432
20,929
3,701
86,372
650
(2,306)
84,716

(420)
12,500
4,329
(34,524)
–
(18,115)

(41,981)
(1,570)
(43,551)

1,679
24,729
97,626

29

CAsH And CAsH eQuivAlents, end oF tHe yeAR

$  139,913

$  122,355

supplementary cash flow information (note 26)

the accompanying notes are an integral part of these consolidated financial statements.

Reitmans 
(CAnAdA) 
liM i t e d

 
 1  reporting entitY

Reitmans (Canada) limited (the “Company”) is a company domiciled in Canada and is incorporated under the 
Canada Business Corporations Act. the address of the Company’s registered office is 155 Wellington street 
West, 40th Floor, toronto, ontario M5v 3J7. the principal business activity of the Company is the sale of 
women’s wear at retail. 

 2  Basis of presentation

a)  fiscal Year

the Company’s fiscal year ends on the saturday closest to the end of January. All references to 2015 and 
2014 represent the fiscal years ended January 31, 2015 and February 1, 2014, respectively. 

B)  statement of compliance

these consolidated financial statements have been prepared in accordance with international Financial 
Reporting standards (“iFRs”) as issued by the international Accounting standards Board (“iAsB”). Certain 
comparative figures have been reclassified to conform to the current year’s presentation.

these consolidated financial statements were authorized for issue by the Board of directors on April 1, 2015.

c)  Basis of measUrement

these consolidated financial statements have been prepared on the historical cost basis except for the 
following material items:

•	 available-for-sale	financial	assets	are	measured	at	fair	value	through	other	comprehensive	income;	

•	 the	pension	liability	is	recognized	as	the	present	value	of	the	defined	benefit	obligation	less	the	total	of	

the	fair	value	of	the	plan	assets;	and

•	 derivative	financial	instruments	are	measured	at	fair	value.

d)  fUnctional and presentation cUrrencY

30

notes to tHe 
ConsolidAted  
FinAnCiAl  
stAteMents

FoR tHe yeARs ended JAnuARy 31, 2015  
And FeBRuARy 1, 2014
(All AMounts in tHousAnds oF CAnAdiAn 
dollARs exCept peR sHARe AMounts)

e) 

these  consolidated  financial  statements  are  presented  in  Canadian  dollars,  which  is  the  Company’s 
functional currency. All financial information presented in Canadian dollars has been rounded to the 
nearest thousand, except per share amounts.

estimates, JUdgments and assUmptions
the preparation of the consolidated financial statements in accordance with iFRs requires management 
to make judgments, estimates and assumptions that affect the application of accounting policies and the 
reported amounts of assets, liabilities, the disclosure of contingent assets and contingent liabilities at the 
date of the consolidated financial statements and reported amounts of revenues and expenses during the 
period. these estimates and assumptions are based on historical experience, other relevant factors and 
expectations of the future and are reviewed regularly. Revisions to accounting estimates are recognized in 
the period in which the estimates are revised and in any future periods affected. Actual results may differ 
from these estimates.

Following are the most important accounting policies subject to such judgments and the key sources of 
estimation uncertainty that the Company believes could have the most significant impact on the reported 
results and financial position.

KeY soUrces of estimation UncertaintY
i) 

pension plans
the  cost  of  defined  benefit  pension  plans  is  determined  by  means  of  actuarial  valuations,  which 
involve making assumptions about discount rates, future salary increases, mortality rates and the 
future increases in pensions. Because of the long-term nature of the plans, such estimates are subject 
to a high degree of uncertainty.

Reitmans 
(CAnAdA) 
liM i t e d

notes 
to tHe ConsolidAted 
FinAnCiAl stAteMents

ii)  gift cards / loYaltY points and aWards

gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are redeemed. An estimate is made of gift cards 
not expected to be redeemed based on the terms of the gift cards and historical redemption patterns. loyalty points and awards granted under 
customer loyalty programs are recognized as a separate component of revenue and are deferred at the date of initial sale. Revenue is recognized 
when the loyalty points and awards are redeemed and the Company has fulfilled its obligation. the amount of revenue deferred is measured 
based on the fair value of loyalty points and awards granted, taking into consideration the estimated redemption percentage. 

iii) 

inVentorY
inventories  are  valued  at  the  lower  of  cost  and  net  realizable  value.  estimates  are  required  in  relation  to  forecasted  sales  and  inventory 
balances. in situations where excess inventory balances are identified, estimates of net realizable values for the excess inventory are made.  
the Company has set up provisions for merchandise in inventory that may have to be sold below cost. For this purpose, the Company has 
developed assumptions regarding the quantity of merchandise sold below cost.

iV)  asset impairment

the  Company  must  assess  the  possibility  that  the  carrying  amounts  of  tangible  and  intangible  assets  (including  goodwill)  may  not  be 
recoverable. impairment testing is performed whenever there is an indication of impairment, except for goodwill and intangible assets with 
indefinite useful lives for which impairment testing is performed at least once per year. significant management estimates are required to 
determine the recoverable amount of the cash-generating unit (“Cgu”) including estimates of fair value, selling costs or the discounted future 
cash flows related to the Cgu. differences in estimates could affect whether tangible and intangible assets (including goodwill) are in fact 
impaired and the dollar amount of that impairment.

JUdgments made in relation to accoUnting policies applied
i) 

financial instrUments
the Company does not separately account for embedded u.s. dollar foreign exchange derivatives in its purchase contracts of merchandise 
from suppliers in China as the Company has determined the u.s. dollar to be commonly used in that country’s economic environment.

 3  significant accoUnting policies

31

the accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

a)  adoption of neW accoUnting policies

ifric 21 – leVies
in May 2013, the iAsB issued iFRiC Interpretation 21 – Levies, which is an interpretation of iAs 37 – Provisions, Contingent Liabilities and Contingent 
Assets. iFRiC 21 clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that 
triggers the payment of the levy. the Company implemented this standard retrospectively in the first quarter of the year ended January 31, 2015. 
there were no measurement impacts on the Company’s consolidated financial statements as a result of the adoption of iFRiC 21.

B)  Basis of consolidation

the consolidated financial statements comprise the financial statements of the Company and its subsidiaries. Control exists when the Company has 
the existing rights that give it the current ability to direct the activities that significantly affect the entities’ returns. the Company reassesses control 
on an ongoing basis. subsidiaries are consolidated from the date on which the Company obtains control until the date that such control ceases.  
the financial statements of subsidiaries are prepared with the same reporting period of the Company. the accounting policies of subsidiaries are 
aligned with the policies of the Company. All significant inter-company balances and transactions, and any unrealized income and expenses arising 
from inter-company transactions, have been eliminated in preparing the consolidated financial statements.

c)  foreign cUrrencY translation

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange 
rate at that date. other balance sheet items denominated in foreign currencies are translated into Canadian dollars at the exchange rates prevailing 
at the respective transaction dates. Revenues and expenses denominated in foreign currencies are translated into Canadian dollars at average rates 
of exchange prevailing during the period. the resulting gains or losses on translation are included in the determination of net earnings.

d)  foreign operations

the assets and liabilities of foreign operations are translated to Canadian dollars at exchange rates at the reporting date. the income and expenses of 
foreign operations are translated to Canadian dollars at exchange rates at the dates of the transactions. Foreign currency differences are recognized 
in other comprehensive income.

e)  casH and casH eQUiValents

Cash and cash equivalents consist of cash on hand, bank balances and short-term deposits with original maturities of three months or less.

Reitmans 
(CAnAdA) 
liM i t e d

f) 

financial instrUments
financial assets 
Financial assets are classified into the following categories, and depend on the purpose for which the financial assets were acquired. 

i) 

financial assets at fair ValUe tHroUgH profit or loss 
A financial asset is classified at fair value through profit or loss (“Fvtpl”) if it is classified as held for trading or is designated as such upon initial 
recognition. derivatives are also categorized as held for trading unless they are designated as hedges. upon initial recognition transaction 
costs are recognized in net earnings as incurred. Financial assets at Fvtpl are measured at fair value, and all gains and losses are recognized in 
net earnings in the period in which they arise. Assets in this category are classified as current assets if they are expected to be settled within 
12	months;	otherwise,	they	are	classified	as	non-current.	Derivative	instruments	are	recorded	at	their	fair	value	except	under	the	own	use	
exemption. Certain derivatives embedded in other contracts must also be measured at fair value. All changes in the fair value of derivatives are 
recognized in net earnings unless specific hedge criteria are met.

ii)  Held-to-matUritY financial assets 

A financial asset is classified as held-to maturity if the Company has the intent and ability to hold debt securities to maturity. Held-to-maturity  
financial  assets  are  recognized  initially  at  fair  value  plus  any  directly  attributable  transaction  costs.  subsequent  to  initial  recognition  
held-to-maturity financial assets are measured at amortized cost using the effective interest method, less any impairment losses. the Company 
currently has no financial assets classified as held-to-maturity. 

iii) 

loans and receiVaBles 
loans  and  receivables  are  financial  assets  with  fixed  or  determinable  payments  that  are  not  quoted  in  an  active  market.  such  assets  are 
recognized initially at fair value plus any directly attributable transaction costs. subsequent to initial recognition loans and receivables are 
measured at amortized cost using the effective interest method, less any impairment losses. the Company currently classifies its cash and cash 
equivalents, trade and other receivables as loans and receivables. 

iV)  aVailaBle-for-sale financial assets 

32

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale and that are not classified in any 
of the previous categories. subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses, 
are recognized in other comprehensive income and presented within equity in accumulated other comprehensive income. When an investment 
is derecognized, the cumulative gain or loss in other comprehensive income is transferred to profit or loss. the Company currently classifies its 
marketable securities as available-for-sale financial asset. 

the Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to 
receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the 
financial asset are transferred.

financial liaBilities
i) 

financial liaBilities at fair ValUe tHroUgH profit or loss 
Financial liabilities at Fvtpl are initially recognized at fair value and are re-measured at each reporting date with any changes therein recognized 
in net earnings. the Company currently has no financial liabilities at Fvtpl. 

ii)  otHer financial liaBilities 

other financial liabilities are recognized initially at fair value less any directly attributable transaction costs. subsequent to initial recognition 
other financial liabilities are measured at amortized cost using the effective interest method. the Company currently classifies trade and other 
payables and long-term debt as other financial liabilities. 

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company 
has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. 
the Company derecognizes a financial liability when its contractual obligations are discharged or cancelled or expired.

deriVatiVe financial instrUments and Hedging relationsHips
the Company enters into derivative financial instruments to hedge its foreign exchange risk exposures. on initial designation of the hedge,  
the Company formally documents the relationship between the hedging instruments and hedged items, including the risk management objectives 
and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship. 
the Company makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments 
are expected to be “highly effective” in offsetting the changes in the cash flows of the respective hedged items during the period for which the 
hedge is designated, and whether the actual results of the effectiveness of each hedge are within a range of 80–125 percent. For a cash flow hedge 
of a forecasted transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could 
ultimately affect reported net earnings.

33

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED32

derivatives are recognized initially at fair value, and attributable transaction costs are recognized in net earnings as incurred. subsequent to initial 
recognition, derivatives are measured at fair value, and changes therein are accounted for as described below. 

casH floW Hedges
When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated 
with a recognized asset or liability or a highly probable forecasted transaction that could affect net earnings, the effective portion of changes in 
the fair value of the derivative is recognized in other comprehensive income and presented in accumulated other comprehensive income in equity.  
the amount recognized in other comprehensive income is removed and included in net earnings under the same line item in the consolidated 
statement  of  earnings  and  comprehensive  income  as  the  hedged  item,  in  the  same  period  that  the  hedged  cash  flows  affect  net  earnings.  
Any ineffective portion of changes in the fair value of the derivative is recognized immediately in net earnings. if the hedging instrument no longer 
meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued 
prospectively.  the  cumulative  gain  or  loss  previously  recognized  in  other  comprehensive  income  remains  in  accumulated  other  comprehensive 
income  until  the  forecasted  transaction  affects  profit  or  loss.  if  the  forecasted  transaction  is  no  longer  expected  to  occur,  then  the  balance  in 
accumulated other comprehensive income is recognized immediately in net earnings. When the hedged item is a non-financial asset, the amount 
recognized in other comprehensive income is transferred to net earnings in the same period that the hedged item affects net earnings. 

otHer deriVatiVes
When a derivative financial instrument is not designated in a qualifying hedge relationship, all changes in its fair value are recognized immediately 
in net earnings. the changes in the fair value of foreign exchange contracts not eligible for hedge accounting are included in cost of goods sold. 
derivative financial instruments are not used for trading or speculative purposes.

g)  propertY and eQUipment

items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures 
that are directly attributable to the acquisition of the asset, including any costs directly attributable to bringing the asset to a working condition for 
its intended use. purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When  parts  of  an  item  of  property  and  equipment  have  different  useful  lives,  they  are  accounted  for  as  separate  items  (major  components)  
of property and equipment.

33

depreciation is recognized in net earnings on a straight-line basis over the estimated useful lives of each component of an item of property and 
equipment. land is not depreciated. leasehold improvements are depreciated over the lesser of the estimated useful life of the asset and the lease 
term. Assets not in service include expenditures incurred to-date for equipment not yet available for use. depreciation of assets not in service begins 
when they are ready for their intended use. depreciation is calculated over the depreciable amount, which is the cost of an asset, less its residual value.

the estimated useful lives for the current and comparative periods are as follows:

Buildings
Fixtures and equipment 
leasehold improvements

10 to 50 years
3 to 20 years
6.7 to 10 years

depreciation methods, useful lives and residual values are reviewed at each annual reporting date and adjusted prospectively, if appropriate.

gains and losses on disposal of items of property and equipment are recognized in net earnings.

H)  goodWill

goodwill  is  measured  at  the  acquisition  date  as  the  fair  value  of  the  consideration  transferred  less  the  net  identifiable  assets  of  the  acquired 
company or business activities. goodwill is not amortized and is carried at cost less accumulated impairment losses.

i) 

intangiBle assets
intangible assets are comprised of software and acquired trademarks and their useful lives are assessed to be either finite or indefinite. 

intangible assets that are acquired by the Company and have finite useful lives are measured at cost less accumulated amortization and accumulated 
impairment losses. Amortization is calculated over the cost of the asset less its residual value. Amortization is recognized in net earnings on 
a straight-line basis over the estimated useful lives of the intangible assets. Amortization of intangible assets not in service begins when they are 
ready for their intended use. intangible assets with finite lives are assessed for impairment whenever there is an indication that the intangible asset 
may be impaired.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDthe estimated useful lives for the current and comparative periods are as follows:

software

3 to 5 years

Amortization methods, useful lives and residual values are reviewed at each annual reporting date and adjusted prospectively, if appropriate.

intangible assets with indefinite useful lives are not subject to amortization and are tested for impairment annually or more frequently if events or 
changes in circumstances indicate the asset may be impaired. the useful life of an intangible asset with an indefinite useful life is reviewed annually 
to determine whether the indefinite life assessment continues to be supportable. if not, the change in the useful life assessment from indefinite to 
finite is made on a prospective basis. trademarks are considered to have indefinite useful lives.

J) 

leased assets
leases are classified as either operating or finance, based on the substance of the transaction at inception of the lease. Classification is re-assessed 
if the terms of the lease are changed.

34

K) 

 l) 

leases in which a significant portion of the risks and rewards of ownership are not assumed by the Company are classified as operating leases. 
the Company carries on its operations in premises under leases of varying terms, which are accounted for as operating leases. payments under 
an operating lease are recognized in net earnings on a straight-line basis over the term of the lease. When a lease contains a predetermined fixed 
escalation of the minimum rent, the Company recognizes the related rent expense on a straight-line basis and, consequently, records the difference 
between the recognized rental expense and the amounts payable under the lease as deferred rent, which is included in trade and other payables on 
the balance sheet. Contingent (sales-based) rentals are recognized in net earnings in the period in which they are incurred.

tenant allowances are recorded as deferred lease credits and amortized as a reduction of rent expense over the term of the related leases.

inVentories
Merchandise inventories are measured at the lower of cost, determined on an average basis, and net realizable value. Costs include the cost of 
purchase, transportation costs that are directly incurred to bring inventories to their present location and condition, and certain distribution centre 
costs related to inventories. the Company estimates net realizable value as the amount that inventories are expected to be sold, in the ordinary 
course of business, less the estimated costs necessary to make the sale, taking into consideration fluctuations of retail prices due to seasonality. 

impairment
i) 

non-financial assets
All non-financial assets are reviewed at each reporting date for indications that the carrying amount may not be recoverable. When there is 
evidence of impairment, an impairment test is carried out. goodwill is tested for impairment at least annually at the year-end reporting date, and 
whenever there is an indication that the asset may be impaired. For the purpose of impairment testing, assets that cannot be tested individually are 
grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows 
of other assets or groups of assets (defined as “cash-generating unit” or “Cgu”). impairment losses recognized in respect of Cgus are allocated 
first to reduce the carrying amount of any goodwill allocated to the Cgu, and then to reduce the carrying amount of the other assets in the Cgu.

An impairment loss is recognized in net earnings if the carrying amount of an asset or its related Cgu exceeds its estimated recoverable 
amount. the recoverable amount is the higher of the value-in-use and the fair value less costs to sell. the value-in-use is the present value of 
estimated future cash flows, using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks 
specific to the asset or Cgu. the fair value less costs to sell is the amount for which an asset or Cgu can be sold in a transaction under normal 
market conditions between knowledgeable and willing contracting parties, less costs to sell.

For  the  purpose  of  impairment  testing  of  property  and  equipment,  each  store  is  managed  at  the  corporate  level,  with  internal  reporting 
organized to measure performance of each retail store. Management has determined that its cash generating units are identifiable at the 
individual retail store level since the assets devoted to and cash inflows generated by each store are separately identifiable and independent 
of each other.

For the purposes of impairment testing, goodwill acquired in a business combination is allocated to the Cgus that are expected to benefit 
from the synergies of the combination. this allocation reflects the lowest level at which goodwill is monitored for internal reporting purposes.

the  Company’s  corporate  assets  do  not  generate  separate  cash  inflows.  if  there  is  an  indication  that  a  corporate  asset  may  be  impaired,  
then the recoverable amount is determined for the Cgus to which the corporate asset belongs.

An  impairment  loss  in  respect  of  goodwill  is  not  reversed.  in  respect  of  other  assets,  an  impairment  loss  is  reversed  if  there  has  been  a  
change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying 
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss 
had been recognized. 

35

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED34

ii) 

financial assets
For an investment in an equity security, a significant or prolonged decline in its fair value below cost is objective evidence of impairment. 
impairment losses on available-for-sale financial assets are recognized by reclassifying losses accumulated in accumulated other comprehensive 
income to net earnings. the cumulative loss that is reclassified from accumulated other comprehensive income is the difference between the 
acquisition cost and the current fair value, less any impairment losses recognized previously in net earnings.

Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognized in other comprehensive income.

m)  emploYee Benefits

i) 

pension Benefit plans
the Company maintains a contributory defined benefit plan (“plan”) that provides benefits to Reitmans (Canada) limited (the “employer”) 
executive employees based on length of service and average earnings in the best five consecutive years of employment. Contributions are made 
by the plan members and employer. A pension Committee, as appointed under the provisions of the plan, is responsible for the administration 
of the plan. All the investments of the plan are deposited with RBC investors services trust, which acts as the custodian of the assets entrusted 
to it. the investment manager of the plan’s investments is sei investments Canada Company. the Company also sponsors a supplemental 
executive Retirement plan (“seRp”) for certain senior executives, which is neither registered nor pre-funded. the costs of these retirement 
benefit plans are determined periodically by independent actuaries. 

Benefits are also given to employees through defined contribution plans administered by the Federal and Québec governments. Company 
contributions to these plans are recognized in the periods when the services are rendered.

the Company’s net liability in respect of defined benefits is calculated separately for each plan by estimating the amount of future benefits that 
plan members have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. 

defined benefit obligations are actuarially calculated annually by a qualified actuary as at the reporting date. the actuarial valuations are 
determined  based  on  management’s  best  estimate  of  the  discount  rate,  the  rate  of  compensation  increase,  retirement  rates,  termination 
rates and mortality rates. the discount rate used to value the net defined benefit obligation for accounting purposes is based on the yield on a 
portfolio of Corporate AA bonds denominated in the same currency in which the benefits are expected to be paid and with terms to maturity 
that, on average, match the terms of the defined benefit plan obligations.

35

the fair value of plan assets is deducted from the defined benefit obligation to arrive at the net liability. plan assets are measured at fair value 
as at the reporting date. past service costs arising from plan amendments are recognized in net earnings in the period that they arise. 

Remeasurements of the net defined benefit liability, which comprise actuarial gains or losses, the return on plan assets, excluding interest, 
and the effect of the asset ceiling, if any, are recognized in other comprehensive income in the period in which they arise and subsequently 
reclassified from accumulated other comprehensive income to retained earnings.

pension expense consists of the following:

•	 the	cost	of	pension	benefits	provided	in	exchange	for	Plan	members’	services	rendered	in	the	period;

•	 net	interest	expense	(income)	on	the	net	defined	benefit	liability	(asset)	for	the	period	by	applying	the	discount	rate	used	to	measure	the	
net defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any 
changes	in	the	net	defined	benefit	liability	(asset)	during	the	period	as	a	result	of	contributions	and	benefit	payments;

•	 past	service	costs;	and

•	 gains	or	losses	on	settlements	or	curtailments.

expenses related to defined contribution plans are recognized in net earnings in the periods in which they occur. 

ii) 

sHort-term emploYee Benefits
short-term employee benefit obligations, which include wages, salaries, compensated absences and bonuses, are measured on an undiscounted 
basis and are expensed as the related service is provided.

A liability is recognized for the amount expected to be paid under short-term cash bonuses or profit-sharing plans if the Company has a 
present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be 
estimated reliably.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDiii)  sHare-Based compensation

some employees receive part of their compensation in the form of share-based payments which are recognized as an employee expense, with 
a corresponding increase to contributed surplus in equity, over the period that the employees unconditionally become entitled to the awards. 
the  Company  accounts  for  share-based  compensation  using  the  fair  value  based  method.  Compensation  expense  is  measured  at  the  fair 
value  at  the  date  of  grant  and  the  fair  value  of  each  award  is  recognized  over  its  respective  vesting  period,  which  is  normally  five  years.  
the amount recognized as an expense is adjusted to reflect the number of awards for which the related service conditions are expected to be met.

n)  proVisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, 
and it is probable that an outflow of economic benefits will be required to settle the obligation. if the effect of the time value of money is material, 
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value 
of money and the risks specific to the liability. Where discounting is used, the unwinding of the discount is recognized as finance cost.

o)  reVenUe

Revenue is recognized from the sale of merchandise when a customer purchases and takes delivery of the merchandise. Reported sales are net of 
returns and estimated possible returns and exclude sales taxes.

gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are redeemed. An estimate is made of gift cards not 
expected to be redeemed based on the terms of the gift cards and historical redemption patterns.

loyalty points and awards granted under customer loyalty programs are recorded as deferred revenue at the date of initial sale. Revenue is recognized 
when the loyalty points and awards are redeemed and the Company has fulfilled its obligation. the amount of revenue deferred is measured based 
on the fair value of loyalty points and awards granted, taking into consideration the estimated redemption percentage.

p) 

finance income and finance costs
Finance  income  comprises  interest  and  dividend  income,  realized  gains  on  sale  of  marketable  securities,  as  well  as  foreign  exchange  gains.  
Finance  costs  comprise  interest  expense,  realized  losses  on  sale  of  marketable  securities,  as  well  as  foreign  exchange  losses.  interest  income  is 
recognized on an accrual basis and interest expense is recorded using the effective interest method. dividend income is recognized when the right 
to receive payment is established. Foreign exchange gains and losses are reported on a net basis. Changes in the fair value of derivatives not eligible 
for hedge accounting previously presented as part of finance income or finance costs have been reclassified to cost of goods sold.

36

Q) 

income tax
income tax expense comprises current and deferred taxes. Current income taxes and deferred income taxes are recognized in net earnings except 
for items recognized directly in equity or in other comprehensive income. 

the Company’s income tax expense is based on tax rules and regulations that are subject to interpretation and require estimates and assumptions 
that may be challenged by taxation authorities. Current income tax is the expected tax payable or receivable on the taxable income or loss for the 
period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to taxes payable in respect of previous years. 
the Company’s estimates of current income tax assets and liabilities are periodically reviewed and adjusted as circumstances warrant, such as for 
changes to tax laws and administrative guidance, and the resolution of uncertainties through either the conclusion of tax audits or expiration of 
prescribed time limits within the relevant statutes. the final results of government tax audits and other events may vary materially compared to 
estimates and assumptions used by management in determining the income tax expense and in measuring current income tax assets and liabilities.

deferred income tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting 
purposes and the amounts used for taxation purposes. deferred income tax assets and liabilities are measured using enacted or substantively 
enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. 
the effect on deferred income tax assets and liabilities of a change in tax rates is included in net earnings in the period that includes the enactment 
date, except to the extent that it relates to an item recognized either in other comprehensive income or directly in equity in the current or in a 
previous period. 

the Company only offsets income tax assets and liabilities if it has a legally enforceable right to offset the recognized amounts and intends either 
to settle on a net basis, or to realize the asset and settle the liability simultaneously.

A deferred income tax asset is recognized to the extent that it is probable that future taxable profits will be available against which they can  
be utilized. deferred income tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the  
related tax benefit will be realized.

deferred income tax assets and liabilities are recognized on the consolidated balance sheet under non-current assets or liabilities, irrespective of the 
expected date of realization or settlement.

37

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED36

r)  earnings per sHare

the Company presents basic and diluted earnings per share (“eps”) data for its shares.

Basic eps is calculated by dividing the net earnings of the Company by the weighted average number of Class A non-voting and Common shares 
outstanding during the period. 

diluted eps is determined by adjusting the weighted average number of shares outstanding to include additional shares issued from the assumed 
exercise of share options, if dilutive. the number of additional shares is calculated by assuming that the proceeds from such exercises, as well as the 
amount of unrecognized share-based compensation, are used to purchase Class A non-voting shares at the average market share price during the 
reporting period.

s) 

sHare capital
Class A non-voting shares and Common shares are classified as equity. incremental costs directly attributable to the issue of these shares and share 
options are recognized as a deduction from equity, net of any tax effects.

When share capital recognized as equity is purchased for cancellation, the amount of the consideration paid, which includes directly attributable 
costs, net of any tax effects, is recognized as a deduction from equity. the excess of the purchase price over the carrying amount of the shares is 
charged to retained earnings.

t)  neW standards and interpretations not Yet adopted

A number of new standards, and amendments to standards and interpretations, are not yet effective for the year ended January 31, 2015 and have 
not been applied in preparing these consolidated financial statements. new standards and amendments to standards and interpretations that are 
currently under review include:

ifrs 9 – financial instrUments
on  July  24,  2014  the  iAsB  issued  the  complete  iFRs  9  (iFRs  9  (2014)).  iFRs  9  (2014)  introduces  new  requirements  for  the  classification  and 
measurement of financial assets. under iFRs 9 (2014), financial assets are classified and measured based on the business model in which they are 
held and the characteristics of their contractual cash flows. 

the standard introduces additional changes relating to financial liabilities. it also amends the impairment model by introducing a new “expected 
credit loss” model for calculating impairment.

iFRs  9  (2014)  also  includes  a  new  general  hedge  accounting  standard  which  aligns  hedge  accounting  more  closely  with  risk  management.  
this new standard does not fundamentally change the types of hedging relationships or the requirement to measure and recognize ineffectiveness, 
however it will provide more hedging strategies that are used for risk management to qualify for hedge accounting and introduce more judgment to 
assess the effectiveness of a hedging relationship.

37

special transitional requirements have been set for the application of the new general hedging model.

the mandatory effective date of iFRs 9 is for annual periods beginning on or after January 1, 2018 and must be applied retrospectively with some 
exemptions. early adoption is permitted. the restatement of prior periods is not required and is only permitted if information is available without 
the use of hindsight.

the Company plans to early adopt iFRs 9 for its fiscal year beginning on February 1, 2015. the adoption of iFRs 9 is not expected to result 
in any measurement adjustments to financial assets and financial liabilities, and is not expected to result in any changes in the eligibility for 
hedge accounting and the accounting for the derivative financial instruments designated as effective hedging instruments at the transition date.  
the Company is also reviewing its significant accounting policies for financial instruments, derivative financial instruments and hedging relationships 
to align them with iFRs 9.

ifrs 15 – reVenUe from contracts WitH cUstomers
in  May  2014,  the  iAsB  issued  iFRs  15,  Revenue from Contracts with Customers (IFRS 15).  the  standard  contains  a  single  model  that  applies  
to contracts with customers and two approaches to recognizing revenue: at a point in time or over time. the model features a contract-based 
five-step analysis of transactions to determine whether, how much and when revenue is recognized. new estimates and judgmental thresholds 
have been introduced, which may affect the amount and/or timing of revenue recognized. the new standard applies to contracts with customers. 
it does not apply to insurance contracts, financial instruments or lease contracts, which fall in the scope of other iFRss. iFRs 15 becomes effective 
for annual periods beginning on or after January 1, 2017. early adoption is permitted. 

the Company is currently assessing the impact of the new standard on its consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDdisclosUre initiatiVe: amendments to ias 1
on  december  18,  2014  the  iAsB  issued  amendments  to  iAs  1  Presentation of Financial Statements  as  part  of  its  major  initiative  to  improve 
presentation and disclosure in financial reports (the “disclosure initiative”). the amendments are effective for annual periods beginning on or 
after  January  1,  2016. early  adoption  is  permitted. the  Company  is  currently  assessing  the  impact  of  the  new  standard  on  its  consolidated  
financial statements.

annUal improVements to ifrs (2010–2012) and (2011–2013) cYcles
on december 12, 2013 the iAsB issued narrow-scope amendments to a total of nine standards as part of its annual improvements process.  
Most amendments will apply prospectively for annual periods beginning on or after July 1, 2014. the Company is currently assessing the impact 
of the amendments on its consolidated financial statements. 

 4  fair ValUe measUrement

When measuring the fair value of an asset or liability the Company uses observable market data whenever available. Fair values are classified within the 
fair value hierarchy based on the lowest level input that is significant to the fair value measurement as a whole, as follows: 

•	

•	

•	

Level	1:	quoted	prices	(unadjusted)	in	active	markets	for	identical	assets	or	liabilities;

Level	2:	inputs	other	than	quoted	prices	included	within	Level	1	that	are	observable	for	the	asset	or	liability,	either	directly	(i.e.,	as	prices)	or	indirectly	
(i.e.,	derived	from	prices);	and

Level	3:	inputs	for	the	asset	or	liability	that	are	not	based	on	observable	market	data	(unobservable	inputs).

Fair value estimates are made at a specific point in time, using available information about the asset or liability. these estimates are subjective in nature and 
often cannot be determined with precision. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. 
When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

38

a)  financial assets

the Company has determined that the carrying amount of its short-term financial assets approximates fair value at the reporting date due to the 
short-term maturity of these instruments. the fair value of the Company’s available-for-sale financial assets is determined by reference to their 
quoted closing prices in active markets at the reporting date, which is considered a level 1 input in the fair value hierarchy.

B)  non-deriVatiVe financial liaBilities

the fair value of the Company’s long-term debt bearing interest at a fixed rate, which is determined for disclosure purposes, is calculated using the 
present value of future payments of principal and interest discounted at the current market rates of interest available to the Company for the same 
or similar debt instruments with the same remaining maturity, which is considered level 2 input in the fair value hierarchy.

c)  deriVatiVe financial instrUments

the fair value of foreign currency option contracts is determined through a standard option valuation technique used by the counterparty based 
on level 2 inputs.

 5  casH and casH eQUiValents

Cash on hand and with banks
short-term deposits, bearing interest at 0.8% (February 1, 2014 – 0.9%)

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$  106,917
32,996
$  139,913

$ 

19,224
103,131
$  122,355

39

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED38

 6  financial instrUments

accoUnting classification and fair ValUes
the following table shows the carrying amounts and fair values of the financial assets and financial liabilities, including their levels in the fair value 
hierarchy. it does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a 
reasonable approximation of the fair value. the Company has determined that the fair value of its current financial assets and liabilities (other than those 
included below) approximates their respective carrying amounts as at the reporting dates because of the short-term nature of those financial instruments.

CaRRYing amoUnt

FaiR ValUe

JanUaRY 31, 2015

FaiR ValUe
thRoUgh
PRoFit oR loss

FaiR ValUe oF
hedging
instRUments

aVailaBle-
FoR-sale

otheR
FinanCial
liaBilities

total

leVel 1

leVel 2

total

Financial assets
measured at fair value
derivative financial asset
Marketable securities

Financial liabilities
measured at fair value
derivative financial
liability

Financial liabilities not
measured at fair value
long-term debt

$  12,191
–
$ 

$ 
$ 

8,444
–

–
$ 
$  57,364

$ 
$ 

–
–

$  20,635
$  57,364

–
$ 
$  57,364

$  20,635
–
$ 

$  20,635
$  57,364

$ 

$ 

(2)

$ 

(94)

$ 

–

$ 

–

$ 

(96)

$ 

–

$ 

(96)

$ 

(96)

–

$ 

–

$ 

–

$ 

(5,331)

$ 

(5,331)

$ 

–

$ 

(5,621)

$ 

(5,621)

39

CaRRYing amoUnt

FaiR ValUe

FeBRUaRY 1, 2014

FaiR ValUe
thRoUgh 
PRoFit oR loss

aVailaBle-
FoR-sale

otheR
FinanCial
liaBilities

total

leVel 1

leVel 2

total

Financial assets measured
at fair value
derivative financial asset
Marketable securities

Financial liabilities measured 
at fair value
derivative financial liability

Financial liabilities not measured  
at fair value
long-term debt

$ 
$ 

11,775
–

$ 
$ 

–
55,062

$ 
$ 

–
–

$ 
$ 

11,775
55,062

$ 
$ 

–
55,062

$ 
$ 

11,775
–

$ 
$ 

11,775
55,062

$ 

(3,065)

$ 

–

$ 

–

$ 

(3,065)

$ 

–

$ 

(3,065)

$ 

(3,065)

$ 

–

$ 

–

$ 

(7,003) $ 

(7,003)

$ 

–

$ 

(7,462)

$ 

(7,462)

there were no transfers between levels of the fair value hierarchy for the years ended January 31, 2015 and February 1, 2014.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDderiVatiVe financial instrUments 
during the year, the Company entered into transactions with its bank whereby it entered into forward contracts, purchased call options and sold put 
options, all on the u.s. dollar. these foreign exchange contracts extend over a period not exceeding twelve months. purchased call options and sold put 
options expiring on the same date have the same strike price.

details of the foreign exchange contracts outstanding for the years ended January 31, 2015 and February 1, 2014 are as follows: 

aVeRage
stRike PRiCe

notional
amoUnt in
U.s. dollaRs

JanUaRY 31, 2015
deRiVatiVe
FinanCial
asset

deRiVatiVe
FinanCial
liaBilitY

net

$ 
$ 
$ 

$ 
$ 

1.183
1.188
1.188

$ 
$ 
$ 

69,500
23,000
11,500

1.081
1.081

$ 
64,000
$  128,000

$ 

$ 

6,292
2,152
–

12,191
–
20,635

$ 

$ 

–
–
(94)

–
(2)
(96)

$ 

$ 

6,292
2,152
(94)

12,191
(2)
20,539

aVeRage
stRike PRiCe

notional
amoUnt in
U.s. dollaRs

FeBRUaRY 1, 2014
deRiVatiVe
FinanCial
 asset

deRiVatiVe
FinanCial
liaBilitY

net

$ 
$ 

1.070
1.070

$  212,000
$  364,000

$ 

$ 

11,775
–
11,775

$ 

$ 

–
(3,065)
(3,065)

$ 

$ 

11,775
(3,065)
8,710

Foreign exchange contracts 
designated as cash flow hedges:
Forwards
Call options purchased
put options sold 

Foreign exchange contracts classified at FVtPl 1 :
Call options purchased
put options sold 

40

Foreign exchange contracts classified at FVtPl 1 :
Call options purchased
put options sold 

1  Held as economic hedges.

 7  inVentories

during the year ended January 31, 2015, inventories recognized as cost of goods sold amounted to $363,350 (February 1, 2014 – $354,547). in addition, 
$8,683 (February 1, 2014 – $10,911) of inventory write-downs as a result of net realizable value being lower than cost were recognized in cost of goods 
sold, and no inventory write-downs recognized in previous periods were reversed. 

included in cost of goods sold is an amount of $10,921 for the year ended January 31, 2015 (February 1, 2014 – $12,455) representing realized and 
unrealized gains on foreign exchange contracts not eligible for hedge accounting.

41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED40

 8  propertY and eQUipment

Cost
Balance at February 3, 2013
Additions
disposals
effect in movement in exchange rate
Balance at February 1, 2014

Balance at February 2, 2014
Additions
disposals
Balance at January 31, 2015

accumulated depreciation and impairment losses
Balance at February 3, 2013
depreciation 
impairment loss
Reversal of impairment loss
disposals
effect in movement in exchange rate
Balance at February 1, 2014

Balance at February 2, 2014
depreciation 
impairment loss
Reversal of impairment loss
disposals
Balance at January 31, 2015

net carrying amounts
At February 1, 2014
At January 31, 2015

land

BUildings

FixtURes and
eQUiPment

leasehold
imPRoVements

total

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

5,860
–
–
–
5,860

5,860
–
–
5,860

–
–
–
–
–
–
–

–
–
–
–
–
–

5,860
5,860

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

53,149
267
(4,818)
–
48,598

48,598
58
(3,023)
45,633

22,467
2,459
–
–
(4,818)
–
20,108

20,108
2,011
–
–
(3,023)
19,096

28,490
26,537

$  166,756
16,659
(35,819)
166
$  147,762

$  147,762
13,029
(29,718)
$  131,073

$ 

$ 

$ 

$ 

$ 
$ 

85,936
24,026
1,378
–
(35,819)
32
75,553

75,553
20,871
1,849
(574)
(29,689)
68,010

72,209
63,063

$  189,730
14,512
(39,702)
–
$  164,540

$  164,540
10,933
(35,285)
$  140,188

$  101,961
24,691
6,583
(775)
(39,702)
–
92,758

$ 

92,758
19,528
6,427
(201)
(35,213)
83,299

$ 

$ 

$ 
$ 

$  415,495
31,438
(80,339)
166
$  366,760

$  366,760
24,020
(68,026)
$  322,754

$  210,364
51,176
7,961
(775)
(80,339)
32
$  188,419

$  188,419
42,410
8,276
(775)
(67,925)
$  170,405

41

71,782
56,889

$  178,341
$  152,349

during the year, the Company tested for impairment certain items of property and equipment for which there were indications that their carrying 
amounts may not be recoverable and recognized an impairment loss of $8,276 (February 1, 2014 – $7,961). the impairment related to the property 
and equipment is due to the reduction in profitability at individual retail store locations (cash-generating units). A reversal of impairment occurs when 
previously impaired individual retail store locations see increased profitability. When determining the value in use of a retail location, the Company 
develops a discounted cash flow model for each Cgu. the duration of the cash flow projections for individual Cgus varies based on the remaining 
useful life of the significant asset within the Cgu. sales forecasts for cash flows are based on actual operating results, industry’s expected growth rates 
and management’s experiences. the recoverable amounts of the Cgus tested for impairment were based on their value-in-use which was determined 
using a pre-tax discount rate of 11% (February 1, 2014 – 13%). during the year, $775 of impairment losses were reversed following an improvement 
in the profitability of certain Cgus (February 1, 2014 – $775). 

depreciation  expense  and  net  impairment  losses  for  the  year  have  been  recorded  in  selling  and  distribution  expenses  for  an  amount  of  $48,515  
(February  1,  2014  –  $56,697)  and  in  administrative  expenses  for  an  amount  of  $1,396  (February  1,  2014  –  $1,665)  in  the  consolidated  statements  
of earnings.

property and equipment includes an amount of $2,055 (February 1, 2014 – $1,802) that is not being depreciated. depreciation will begin when the assets 
are available for use.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED 9  intangiBle assets 

Cost
Balance at February 3, 2013
Additions 
disposals
effect in movement in exchange rates
Balance at February 1, 2014

Balance at February 2, 2014
Additions 
disposals
Balance at January 31, 2015

accumulated amortization and impairment losses
Balance at February 3, 2013
Amortization
impairment loss
disposals
effect in movement in exchange rates
Balance at February 1, 2014

42

Balance at February 2, 2014
Amortization
impairment loss
disposals
Balance at January 31, 2015

net carrying amounts
At February 1, 2014
At January 31, 2015

soFtWaRe

tRademaRks

total

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

28,916
3,351
(7,425)
1
24,843

24,843
6,993
(3,575)
28,261

10,191
4,738
125
(7,425)
3
7,632

7,632
3,999
128
(3,575)
8,184

17,211
20,077

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

499
–
–
–
499

499
–
–
499

–
–
499
–
–
499

499
–
–
–
499

–
–

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 
$ 

29,415
3,351
(7,425)
1
25,342

25,342
6,993
(3,575)
28,760

10,191
4,738
624
(7,425)
3
8,131

8,131
3,999
128
(3,575)
8,683

17,211
20,077

during the year, the Company tested for impairment certain items of intangible assets for which there were indications that their carrying amounts may 
not be recoverable and recognized an impairment loss of $128 (February 1, 2014 – $624). For the year ended January 31, 2015, the impairment related 
to the intangible assets is attributable to the discontinuation of a banner whereas for the year ended February 1, 2014, the impairment related to the 
intangible assets is primarily due to the discontinuation of the thyme Maternity u.s. shop-in-shop operations.

the amortization of intangibles has been recorded in selling and distribution expenses for an amount of $3,466 (February 1, 2014 – $4,433) and in 
administrative expenses for an amount of $661 (February 1, 2014 – $929) in the consolidated statements of earnings.

software includes an amount of $7,247 (February 1, 2014 – $8,892) that is not being amortized. Amortization will begin when the software is put into service.

10  goodWill

goodwill acquired through business combinations was allocated to the groups of Cgus, being the Addition elle and thyme Maternity banners, based 
on the expected future benefits to be derived. the carrying amount of goodwill as at January 31, 2015 and February 1, 2014 was attributed as follows: 
$38,183 to Addition elle and $4,243 to thyme Maternity. 

in assessing whether goodwill is impaired, the carrying amount of the groups of Cgus (including goodwill) is compared to their recoverable amount. 
the recoverable amounts of the groups of Cgus are based on the higher of the value in use and fair value less costs to sell. the Company performed the 
annual impairment review for goodwill as at January 31, 2015 and February 1, 2014. the estimated recoverable amounts of the Addition elle and thyme 
Maternity banner Cgus as at January 31, 2015 were based on the fair value less costs of disposal (February 1, 2014 – based on value in use) and exceeded 
the carrying amounts of the groups of Cgus. As a result, there was no impairment identified. there is no reasonable possible change in assumptions that 
would cause the carrying amount to exceed the estimated recoverable amount.

43

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED42

As at January 31, 2015, the fair value less costs of disposal of the Addition elle and thyme Maternity banner Cgus was based on a market earnings 
multiple  applied  to  normalized  earnings  for  both  the  Addition  elle  and  thyme  Maternity  banner  Cgus.  the  market  earnings  multiple  was  based  on 
external sources for comparable companies operating in similar industries. normalized earnings were based on management’s assessment of market 
trends taking into account historical data from internal and external sources. these assumptions are considered to be level 3 in the fair value hierarchy. 

As at February 1, 2014, the value-in-use of the Addition elle and thyme Maternity banner Cgus was determined by discounting the future cash flows 
generated from the continuing use of the respective Cgu. Management’s key assumptions for cash flow projections were based on the most recent 
annualized operating results and budget projections for the coming year, assuming a series of cash flows in perpetuity with a growth rate of nil. projected 
cash flows were discounted using a pre-tax rate of 12.5% for both the Addition elle and thyme Maternity banner Cgus. the discount rate represents  
a  weighted  average  cost  of  capital  (WACC)  for  comparable  companies  operating  in  similar  industries,  based  on  publicly  available  information. 
the WACC is an estimate of the overall required rate of return on an investment for both debt and equity owners and serves as the basis for developing 
an  appropriate  discount  rate.  determination  of  the  WACC  requires  separate  analysis  of  the  cost  of  equity  and  debt,  and  considers  a  risk  premium 
based  on  an  assessment  of  risks  related  to  the  projected  cash  flows  of  the  Cgu.  the  pre-tax  rate  used  for  discounting  cash  flows  was  based  on  a 
risk-free rate, equity risk premium adjusted for betas of comparable publicly traded companies, an unsystematic risk premium, after-tax cost of debt 
based on corporate bond yields and the capital structure of the Company. these assumptions are considered to be level 3 in the fair value hierarchy.

11  income tax

income tax expense
the Company’s income tax expense is comprised as follows:

Current tax expense
Current period
Adjustment in respect of prior years
Current tax expense

deferred tax expense
deferred tax expense (recovery) prior to adjustment
Changes in tax rates
deferred tax expense (recovery)
total income tax expense

income tax recognized in otHer compreHensiVe income

Cash flow hedges
Available-for-sale financial assets
defined benefit plan actuarial 
(losses) gains

JanUaRY 31, 2015

tax
ReCoVeRY
 (exPense)

$ 

$ 

(2,177)
1,069

692
(416)

$ 

$ 

FoR the YeaRs ended

net oF
 tax

6,026
(6,987)

(1,917)
(2,878)

BeFoRe
 tax

–
(1,541)

497
(1,044)

$ 

$ 

BeFoRe
 tax

8,203
(8,056)

(2,609)
(2,462)

$ 

$ 

43

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

$ 

$ 

$ 

2,439
(26)
2,413

1,699
–
1,699
4,112

FeBRUaRY 1, 2014

 tax
ReCoVeRY 
 (exPense)

–
203

(124)
79

$ 

$ 

$ 

$ 

$ 

4,708
1
4,709

(1,955)
(100)
(2,055)
2,654

net oF 
tax

–
(1,338)

373
(965)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDreconciliation of effectiVe tax rate

earnings before income taxes
income tax using the Company’s statutory tax rate
Changes in tax rates
non-deductible expenses and other adjustments
tax exempt income
Adjustment in respect of prior years

recognized deferred tax assets and liaBilities
deferred tax assets and liabilities are attributable to the following: 

JanUaRY 31, 2015

FeBRUaRY 1, 2014

FoR the YeaRs ended

$ 

$ 

17,527
4,651
–
115
(653)
(1)
4,112

26.54%
0.00%
0.66%
(3.73%)
(0.01%)
23.46%

$ 

$ 

13,442
3,631
(100)
24
(902)
1
2,654

27.01%
(0.74%)
0.18%
(6.71%)
0.00%
19.74%

assets

liaBilities

net

JanUaRY 31, 2015

FeBRUaRY 1, 2014

JanUaRY 31, 2015

FeBRUaRY 1, 2014

JanUaRY 31, 2015

FeBRUaRY 1, 2014

property, equipment and intangible assets
Marketable securities
inventories 
trade and other payables 
derivative financial asset
pension liability
tax benefit of losses carried forward
other

44

$ 

$ 

21,395
530
–
3,525
–
5,829
1,844
–
33,123

$ 

$ 

21,253
207
–
4,012
–
4,845
2,037
–
32,354

cHanges in deferred tax Balances dUring tHe Year

BalanCe
FeBRUaRY 2, 
2013

ReCognized in
net eaRnings

ReCognized
in otheR
ComPRehensiVe
inCome

$ 

$ 

19,326
(354)
(1,490)

3,636

–
4,639

693
(6)
26,444

$ 

$ 

1,927
358
61

376

(2,311)
330

1,344
(30)
2,055

$ 

$ 

–
203
–

–

–
(124)

–
–
79

property, equipment
and intangible assets
Marketable securities
inventories 
trade and other

payables 

derivative financial
asset

pension liability
tax benefit of losses
carried forward

other

$ 

$ 

$ 

$ 

–
–
1,205
–
5,449
–
–
6
6,660

$ 

$ 

–
–
1,429
–
2,311
–
–
36
3,776

$ 

$ 

21,395
530
(1,205)
3,525
(5,449)
5,829
1,844
(6)
26,463

BalanCe
FeBRUaRY 1, 
2014

ReCognized in
net eaRnings

ReCognized
in otheR
ComPRehensiVe
inCome

21,253
207
(1,429)

4,012

(2,311)
4,845

2,037
(36)
28,578

$ 

$ 

142
(746)
224

(487)

(961)
292

(193)
30
(1,699)

$ 

$ 

–
1,069
–

–

(2,177)
692

–
–
(416)

$ 

$ 

$ 

$ 

21,253
207
(1,429)
4,012
(2,311)
4,845
2,037
(36)
28,578

BalanCe
JanUaRY 31, 
2015

21,395
530
(1,205)

3,525

(5,449)
5,829

1,844
(6)
26,463

45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED44

12  trade and otHer paYaBles

trade payables
non-trade payables due to related parties
other non-trade payables
personnel liabilities
payables relating to premises
provision for sales returns

less non-current portion

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

49,577
40
9,502
27,201
14,576
726
101,622
9,903
91,719

$ 

$ 

49,593
55
10,878
25,566
15,777
707
102,576
11,842
90,734

the non-current portion of trade and other payables, which is included in payables relating to premises, represents the portion of deferred rent to be 
amortized and other payables beyond the next twelve months.

13  deferred reVenUe

loyalty points and awards granted under loyalty programs
unredeemed gift cards

14  long-term deBt 

Mortgage payable
less current portion

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

8,735
12,338
21,073

$ 

$ 

7,198
12,800
19,998

45

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

5,331
1,780
3,551

$ 

$ 

7,003
1,672
5,331

the mortgage, bearing interest at 6.40%, is payable in monthly instalments of principal and interest of $172. it is due november 2017 and is secured by 
the Company’s distribution centre having a carrying value of $15,378 (February 1, 2014 – $16,354).

As at January 31, 2015, principal repayments on long-term debt are as follows:

Within 1 year
Within 2 years
Within 3 years

$ 

$ 

1,780
1,896
1,655
5,331

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED15  pension liaBilitY

the following tables present reconciliations of the pension obligations, the plan assets and the funded status of the retirement benefit plans:

fUnded statUs

as at January 31, 2015
plan
seRp
total

as at February 1, 2014
plan
seRp
total

FaiR ValUe oF
Plan assets

deFined BeneFit
oBligation

Pension asset
(liaBilitY)

$ 

$ 

$ 

$ 

21,340
–
21,340

18,544
–
18,544

$ 

$ 

$ 

$ 

$ 

$ 

$ 

$ 

21,594
21,714
43,308

18,238
18,565
36,803

$ 

$ 

$ 

$ 

(254)
(21,714)
(21,968)

306
(18,565)
(18,259)

FeBRUaRY 1, 2014
seRP

total

16,799
103
674
–
140
1,376

(720)
(130)
323
18,565

–
–
–
130
–
(130)
–
–

$ 

$ 

$ 

$ 

33,991
1,008
1,387
146
(263)
2,675

(1,496)
(968)
323
36,803

16,432
1,413
658
960
146
(968)
(97)
18,544

47

46

movement in the present value of
the defined benefit obligation
defined benefit obligation, 
beginning of year
Current service cost
interest cost
employee contributions
Actuarial (gain) / loss – experience
Actuarial loss – demographic assumptions
Actuarial loss / (gain) – 
financial assumptions

Benefits paid
past service costs
defined benefit obligation, end of year

movement in the fair value of
plan assets
Fair value of plan assets, beginning of year
Return on plan assets
interest income on plan assets
employer contributions
employee contributions
Benefits paid
plan administration costs
Fair value of plan assets, end of year

Plan

JanUaRY 31, 2015
seRP

FoR the YeaRs ended

total

Plan

$ 

$ 

$ 

$ 

18,238
857
817
103
(744)
94

2,635
(406)
–
21,594

18,544
1,775
802
631
103
(406)
(109)
21,340

$ 

$ 

$ 

$ 

18,565
193
801
–
5
64

2,330
(244)
–
21,714

–
–
–
244
–
(244)
–
–

$ 

$ 

$ 

$ 

36,803
1,050
1,618
103
(739)
158

4,965
(650)
–
43,308

18,544
1,775
802
875
103
(650)
(109)
21,340

$ 

$ 

$ 

$ 

17,192
905
713
146
(403)
1,299

(776)
(838)
–
18,238

16,432
1,413
658
830
146
(838)
(97)
18,544

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDFor the year ended January 31, 2015, the net defined benefit obligation can be allocated to the plans’ participants as follows:

•	

•	

•	

Active	plan	participants	60%	(February	1,	2014	–	69%)

Retired	plan	members	28%	(February	1,	2014	–	24%)

Deferred	plan	participants	12%	(February	1,	2014	–	7%)

the defined benefit pension plan assets are held in trust and consisted of the following assets categories, which are not based on quoted market prices 
in an active market:

JanUaRY 31, 2015

FeBRUaRY 1, 2014

FoR the YeaRs ended

46

equity securities

Canadian – pooled funds
Foreign – pooled funds

total equity securities
debt securities – fixed income pooled funds
Cash and cash equivalents
total

the Company’s pension expense was as follows:

Pension costs recognized in
net earnings
Current service cost
net interest cost on net pension liability
plan administration costs
past service cost
pension expense

$ 

$ 

Plan

857
15
109
–
981

JanUaRY 31, 2015
seRP

$ 

$ 

193
801
–
–
994

$ 

$ 

$ 

$ 

6,717
5,981
12,698
8,238
404
21,340

32%
28%
60%
38%
2%
100%

FoR the YeaRs ended

total

Plan

1,050
816
109
–
1,975

$ 

$ 

905
55
97
–
1,057

$ 

$ 

$ 

$ 

103
674
–
323
1,100

6,174
5,185
11,359
6,833
352
18,544

33%
28%
61%
37%
2%
100%

FeBRUaRY 1, 2014
seRP

total

47

pension expense is recognized in administrative expenses in the consolidated statements of earnings.

the following table presents the change in the actuarial gains and losses recognized in other comprehensive income:

Plan

JanUaRY 31, 2015
seRP

FoR the YeaRs ended

total

Plan

FeBRUaRY 1, 2014
seRP

Cumulative loss in retained earnings 
at the beginning of the year

loss (gain) recognized during the year
Cumulative loss in retained earnings 
at the end of the year

loss (gain) recognized during the year
net of tax

$ 

1,436
210

$ 

4,151
2,399

$ 

1,646

$ 

6,550

$ 

$ 

$ 

5,587
2,609

$ 

2,729
(1,293)

$ 

3,355
796

8,196

$ 

1,436

$ 

4,151

1,917

$ 

$ 

$ 

$ 

$ 

1,008
729
97
323
2,157

total

6,084
(497)

5,587

(373)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDactUarial assUmptions
principal actuarial assumptions used were as follows:

Accrued benefit obligation:

discount rate
salary increase
Mortality

employee benefit expense:

discount rate
salary increase

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

4.30%
5.00%
CpM-Rpp 2014
public (projected
generationally using
scale A1-2014)

3.40%
5.00%
2014 Private 
sector Canadian
Pensioner’s mortality
table (projected 
generationally using
scale B) adjusted 
 for pension size

4.30%
5.00%

4.00%
5.00%

sensitiVitY of KeY actUarial assUmptions
the following table outlines the key assumptions for the years ended January 31, 2015 and February 1, 2014 and the sensitivity of a 1% change in each 
of these assumptions on the defined benefit plan obligations and the net defined benefit plan costs.

the sensitivity analysis provided in the table is hypothetical and should be used with caution. the sensitivities of each key assumption have been calculated 
independently of any changes in other key assumptions. Actual experience may result in changes in a number of key assumptions simultaneously. Changes in  
one factor may result in changes in another, which could amplify or reduce the impact of such assumptions.

48

Plan

JanUaRY 31, 2015
seRP

FoR the YeaRs ended

total

Plan

FeBRUaRY 1, 2014
seRP

total

(decrease) increase in defined
benefit obligation
discount rate
impact of increase of 1%
impact of decrease of 1%
salary increase
impact of increase of 1%
impact of decrease of 1%
lifetime expectancy
impact of increase of 1 year in
expected lifetime of plan members

$ 
$ 

$ 
$ 

$ 

(2,906)
3,358

1,081
(1,030)

569

$ 
$ 

$ 
$ 

$ 

(2,571)
2,916

172
(171)

$ 
$ 

$ 
$ 

(5,477)
6,274

1,253
(1,201)

570

$ 

1,139

$ 
$ 

$ 
$ 

$ 

(2,354)
2,703

907
(864)

502

$ 
$ 

$ 
$ 

$ 

(2,209)
2,508

211
(209)

470

$ 
$ 

$ 
$ 

$ 

(4,563)
5,211

1,118
(1,073)

972

overall return in the capital markets and the level of interest rates affect the funded status of the Company’s pension plans. Adverse changes with respect 
to pension plan returns and the level of interest rates from the date of the last actuarial valuation may have an adverse effect on the funded status of the 
retirement benefit plans and on the Company’s results of operations.

the Company expects $750 in employer contributions to be paid to the plan and $300 to the seRp in the year ended January 30, 2016. the weighted 
average durations of the plan and seRp are each approximately 14.0 years at January 31, 2015 (February 1, 2014 – 13.0 years).

the Company measures its accrued benefit obligations and the fair value of plan assets for accounting purposes at year-end. the most recent actuarial 
valuation for funding purposes was as of december 31, 2013 and the next required valuation will be as of december 31, 2014.

49

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED48

16  sHare capital and otHer components of eQUitY

the change in share capital for each of the periods listed was as follows:

Common shares
Balance at beginning and end of the year

Class a non-voting shares
Balance at beginning and end of the year

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

nUmBeR
oF shaRes
(in 000’s)

CaRRYing
amoUnt

nUmBeR
oF shaRes
(in 000’s)

CaRRYing
amoUnt

13,440

$ 

482

13,440

$ 

482

51,146

38,745

51,146

38,745

total share capital

64,586

$ 

39,227

64,586

$ 

39,227

aUtHorized sHare capital
the Company has authorized for issuance an unlimited number of Common shares and Class A non-voting shares. Both Common shares and Class A 
non-voting shares have no par value. All issued shares are fully paid.

the Common shares and Class A non-voting shares of the Company rank equally and pari passu with respect to the right to receive dividends and upon 
any distribution of the assets of the Company. However, in the case of share dividends, the holders of Class A non-voting shares shall have the right to 
receive Class A non-voting shares and the holders of Common shares shall have the right to receive Common shares.

issUance of class a non-Voting sHares
during the year ended January 31, 2015, there were no Class A non-voting shares issued as a result of the exercise of vested options arising from the 
Company’s share option program (February 1, 2014 – nil).

49

pUrcHase of sHares for cancellation
For the year ended January 31, 2015, the Company did not purchase any shares under a normal course issuer bid approved in december 2013  
(February 1, 2014 – nil). 

in december 2014, the Company received approval from the toronto stock exchange to proceed with a normal course issuer bid. under the bid,  
the Company may purchase up to 3,511,815 Class A non-voting shares of the Company, representing 10% of the public float of the issued and outstanding 
Class A non-voting shares as at december 5, 2014. the bid commenced on december 18, 2014 and may continue to december 17, 2015. no Class A  
non-voting shares were purchased under this new program.

accUmUlated otHer compreHensiVe income (“aoci”)
AoCi is comprised of the following:

Balance at February 3, 2013
total oCi included in AoCi
Balance at February 1, 2014

Balance at February 2, 2014
total oCi included in AoCi
Balance at January 31, 2015

aVailaBle-FoR- 
sale FinanCial
assets

$ 

$ 

$ 

$ 

8,665
(1,338)
7,327

7,327
(6,987)
340

FoReign
CURRenCY
tRanslation
diFFeRenCes

Cash FloW
hedges

total  aoCi

$ 

$ 

$ 

$ 

–
29
29

29
(754)
(725)

$ 

$ 

$ 

$ 

–
–
–

–
6,026
6,026

$ 

$ 

$ 

$ 

8,665
(1,309)
7,356

7,356
(1,715)
5,641

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDdiVidends
the following dividends were declared and paid by the Company:

Common shares and Class A non-voting shares
dividends per share

17  sHare-Based paYments

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 
$ 

12,917
0.20

$ 
$ 

41,981
0.65

a)  description of tHe sHare-Based paYment arrangements

the Company has a share option plan that provides that up to 10% of the Class A non-voting shares outstanding, from time to time, may be issued 
pursuant to the exercise of options granted under the plan to key management and employees. the granting of options and the related vesting period, 
which is normally up to 5 years, are at the discretion of the Board of directors and the options have a maximum term of 10 years. the exercise price 
payable for each Class A non-voting share covered by a share option is determined by the Board of directors at the date of grant, but may not be 
less than the closing price of the Company’s shares on the trading day immediately preceding the effective date of the grant.

B)  measUrement of tHe sHare-Based paYment arrangements

the fair values of the employee share options are measured based on the Black-scholes valuation model. Measurement inputs include share price 
on measurement date, exercise price of the share option, expected volatility (based on weighted average historic volatility adjusted for changes 
expected due to publicly available information), weighted average expected life of the share option (based on historic experience and general option 
holder behaviour), expected dividends, and risk-free interest rate (based on government bonds). 

c)  disclosUre of eQUitY-settled sHare option plan
Changes in outstanding share options were as follows:

50

outstanding, at beginning of year
granted
Forfeited
expired
outstanding, at end of year
options exercisable, at end of year

JanUaRY 31, 2015

FeBRUaRY 1, 2014

FoR the YeaRs ended

oPtions
(in 000’s)

2,090
1,557
(596)
–
3,051
1,657

Weighted
aVeRage
exeRCise PRiCe

$ 

$ 
$ 

14.43
6.00
11.23
–
10.75
13.12

oPtions
(in 000’s)

2,420
–
(240)
(90)
2,090
1,255

Weighted
aVeRage
exeRCise PRiCe

$ 

$ 
$ 

14.53
–
14.69
16.59
14.43
14.53

For the year ended January 31, 2015 and February 1, 2014, no share options were exercised. 

For the year ended January 31, 2015, the Company granted 1,557,000 share options (2014 – nil), the cost of which will be expensed over their 
vesting period based on their estimated fair values on the date of the grant, determined using the Black-scholes option pricing model. Compensation 
cost related to share option awards granted during the year ended January 31, 2015 under the fair value based approach was calculated using the 
following assumptions:

expected option life
Risk-free interest rate
expected stock price volatility
Average dividend yield
Weighted average fair value of options granted
share price at grant date

1,557,000 oPtions
gRanted JUne 16, 2014

6.3 years
1.79%
32.38%
3.33%
1.38
6.00

$ 
$ 

51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED50

the following table summarizes information about share options outstanding at January 31, 2015:

Range of exercise Prices

$6.00
$11.68 – $12.62
$14.50 – $18.26

d)  emploYee expense

oPtions oUtstanding

oPtions exeRCisaBle

nUmBeR 
oUtstanding
(in 000’s)

1,341
140
1,570
3,051

Weighted
aVeRage
Remaining
ContRaCtUal
liFe

9.25 years
7.01
3.69
6.29 years

Weighted
aVeRage
exeRCise PRiCe 

nUmBeR 
exeRCisaBle
(in 000’s)

Weighted
aVeRage
exeRCise PRiCe

$ 

$ 

6.00
11.95
14.70
10.75

268
80
1,309
1,657

$ 

$ 

6.00
12.15
14.64
13.12

For the year ended January 31, 2015, the Company recognized compensation costs of $826 relating to share-based payment arrangements 
($667 for the year ended February 1, 2014), with a corresponding credit to contributed surplus.

18  commitments

As at January 31, 2015, financial commitments for minimum lease payments under operating leases for retail stores, offices, automobiles and equipment, 
as well as amounts pertaining to agreements to purchase goods or services that are enforceable and legally binding on the Company, exclusive of 
additional amounts based on sales, taxes and other costs are payable as follows:

Within 1 year
Within 2 years
Within 3 years
Within 4 years
Within 5 years
subsequent years
total

stoRe and oFFiCe
oPeRating
leases

$ 

94,516
78,689
62,481
48,229
33,829
58,628
$  376,372

PURChase
oBligations

$  112,396
203
203
77
–
–
$  112,879

otheR
oPeRating
leases

3,943
2,980
2,500
2,407
1,582
–
13,412

$ 

$ 

total

$  210,855
81,872
65,184
50,713
35,411
58,628
$  502,663

51

the Company leases retail stores and offices under operating leases. the leases have varying terms, escalation clauses and renewal rights. generally, 
the leases run for a period that does not exceed 10 years, with options to renew that do not exceed 5 years, if at all. the majority of the leases require 
additional payments for the cost of insurance, taxes, maintenance and utilities. Certain rental agreements include contingent rent, which is generally 
based on revenue exceeding a minimum amount. 

For the year ended January 31, 2015, $171,894 was recognized as an expense in net earnings with respect to operating leases ($177,904 for the year ended 
February 1, 2014), of which $169,554 ($175,542 for the year ended February 1, 2014) represents minimum lease payments and additional rent charges 
and $2,340 ($2,362 for the year ended February 1, 2014) represents contingent rents.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED19  otHer income, finance income and finance costs

recognized in net earnings

dividend income from available-for-sale financial assets
interest income from loans and receivables 
Foreign exchange gain
Realized gain on disposal of available-for-sale financial assets
Finance income 

interest expense – mortgage 
impairment loss on available-for-sale financial assets
Foreign exchange loss
Realized loss on disposal of available-for-sale financial assets
Finance costs

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

2,298
994
–
4,820
8,112

394
958
1,729
–
3,081

$ 

3,481
621
3,623
–
7,725

496
2,699
–
248
3,443

net finance income recognized in net earnings 

$ 

5,031

$ 

4,282

there was no other income recorded for the year ended January 31, 2015. For the year ended February 1, 2014, other income comprises a gain on sale of 
intellectual property rights of $5,745 and $309 of proceeds from the settlement of a trademark dispute.

20  earnings per sHare

52

the calculation of basic and diluted earnings per share is based on net earnings for the year ended January 31, 2015 of $13,415 ($10,788 for the year 
ended February 1, 2014).

the number of shares (in thousands) used in the earnings per share calculation is as follows:

Weighted average number of shares per basic earnings per share calculations
Weighted average number of shares per diluted earnings per share calculations

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

64,586
64,586

64,586
64,586

As at January 31, 2015, a total of 3,051,000 (February 1, 2014 – 2,090,000) share options were excluded from the calculation of diluted earnings per share 
as these options were deemed to be anti-dilutive.

the average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for 
the period during which the options were outstanding.

21  related parties

transactions WitH KeY management personnel
key management personnel are those persons who have the authority and responsibility for planning, directing and controlling the activities of the 
entity – directly or indirectly. the definition of key management personnel includes directors (both executive and non-executive). the Board of directors, 
which includes the Chief executive officer and president, has the responsibility for planning, directing and controlling the activities of the Company and 
is considered key management personnel. the directors participate in the share option plan, as described in note 17.

53

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED52

Compensation expense for key management personnel is as follows:

salaries, directors’ fees and short-term benefits
share-based compensation costs

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$ 

$ 

2,134
176
2,310

$ 

$ 

1,993
338
2,331

otHer related-partY transactions
the Company leases two retail locations which are owned by companies controlled by the major shareholders of the Company. For the year ended 
January 31, 2015, the rent expense under these leases was, in the aggregate, $223 (February 1, 2014 – $204).

the Company incurred $384 in the year ended January 31, 2015 (February 1, 2014 – $560) with professional service firms connected to outside directors 
of the Company for fees in conjunction with general legal advice and other consultation.

these transactions are recorded at the amount of consideration paid as established and agreed to by the related parties.

22  personnel expenses 

Wages, salaries and employee benefits
expenses related to defined benefit plans
share-based compensation costs

23  credit facilitY

FoR the YeaRs ended

JanUaRY 31, 2015

FeBRUaRY 1, 2014

$  243,213
1,975
826
$  246,014

$  248,952
2,157
667
$  251,776

53

At January 31, 2015, the Company had unsecured operating lines of credit available with Canadian chartered banks to a maximum of $100,000 or its 
u.s. dollar equivalent. As at January 31, 2015, $29,984 (February 1, 2014 – $30,270) of the operating lines of credit were committed for documentary 
and standby letters of credit.

24  gUarantees

the Company has granted irrevocable standby letters of credit, issued by highly-rated financial institutions, to third parties to indemnify them in the 
event the Company does not perform its contractual obligations. As at January 31, 2015, the maximum potential liability under these guarantees was 
$5,007 (February 1, 2014 – $5,019). the standby letters of credit mature at various dates during the year ending January 30, 2016. the contingent portion 
of the guarantee is recorded when the Company considers it probable that a payment relating to the guarantee has to be made to the other party of the 
contract or guarantee. the Company has recorded no liability with respect to these guarantees as the Company does not expect to make any payments 
for these items. 

25  operating segments

in order to identify the Company’s reportable segments, the Company uses the process outlined in iFRs 8, which includes the identification of the Chief 
operating decision Maker (“CodM”), being the Chief executive officer, the identification of operating segments and the aggregation of operating segments. 
the Company’s operating segments, before aggregation, have been identified as the Company’s six banners: Reitmans, penningtons, Addition elle,  
RW & Co., thyme Maternity, and smart set. each operating segment is reviewed by the CodM in reviewing their profitability so that the information 
can be used to ensure adequate resources are allocated to that part of the Company’s operations. the Company has aggregated its operating segments 
into one reportable segment, because the operating segments have similar economic characteristics and derive revenue mainly from the sale of ladies’ 
specialty apparel to customers.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED26  sUpplementarY casH floW information

non-cash transactions:

Additions to property and equipment and intangible assets included in trade and other payables

$ 

3,645

$ 

1,592

JanUaRY 31, 2015

FeBRUaRY 1, 2014

27  financial risK management

the Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and 
controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market 
conditions and the Company’s activities. disclosures relating to the Company’s exposure to risks, in particular credit risk, liquidity risk, foreign currency 
risk, interest rate risk and equity price risk are provided below.

credit risK
Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations. the Company’s 
financial instruments that are exposed to concentrations of credit risk are primarily cash and cash equivalents, marketable securities, trade and other 
receivables and foreign currency option contracts. the Company limits its exposure to credit risk with respect to cash and cash equivalents and foreign 
currency forwards and option contracts by dealing with Canadian financial institutions. Marketable securities consist of preferred shares of highly-rated 
Canadian public companies. the Company’s trade and other receivables consist primarily of credit card receivables from the last few days of the fiscal year, 
which are settled within the first days of the next fiscal year. 

As at January 31, 2015, the Company’s maximum exposure to credit risk for these financial instruments was as follows:

54

Cash and cash equivalents
Marketable securities
trade and other receivables
derivative financial asset

$ 

$ 

139,913
57,364
4,599
20,635
222,511

liQUiditY risK
liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. the Company’s approach to managing liquidity 
risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet liabilities when due. the contractual maturity of the majority of 
trade and other payables is within twelve months. As at January 31, 2015, the Company had a high degree of liquidity with $197,277 in cash and cash 
equivalents, and marketable securities. in addition, the Company has unsecured credit facilities of $100,000 subject to annual renewals. the Company 
has  financed  its  store  expansion  through  internally-generated  funds  and  its  unsecured  credit  facilities  are  used  to  finance  seasonal  working  capital 
requirements for u.s. dollar merchandise purchases. the Company’s long-term debt consists of a mortgage bearing interest at 6.40%, due november 2017, 
which is secured by the Company’s distribution centre.

foreign cUrrencY risK 
the Company purchases a significant amount of its merchandise with u.s. dollars and as such significant volatility in the u.s. dollar vis-à-vis the 
Canadian dollar can have an adverse impact on the Company’s gross margin. the Company has a variety of alternatives that it considers to manage 
its foreign currency exposure on cash flows related to these purchases. this includes, but is not limited to, various styles of foreign currency option or 
forward contracts, not to exceed twelve months, and spot rate purchases. A foreign currency option contract represents an option or obligation to buy 
a foreign currency from a counterparty. A forward foreign exchange contract is a contractual agreement to buy or sell a specified currency at a specific 
price and date in the future. effective in the fourth quarter of fiscal 2015, the Company entered into certain qualifying foreign exchange contracts  
that  it  designated  as  cash  flow  hedging  instruments  under international  Accounting standard  39  (“iAs  39”). this  has  resulted  in  mark-to-market 
foreign exchange adjustments, for qualifying hedged instruments, being recorded as a component of other comprehensive income. For the year ended 
January 31, 2015, the Company satisfied its u.s. dollar requirements primarily through spot rate purchases and foreign exchange option contracts.

55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITED54

the Company has performed a sensitivity analysis on its u.s. dollar denominated financial instruments, which consist principally of cash and cash equivalents 
of $14,398 and trade payables of $24,694 to determine how a change in the u.s. dollar exchange rate would impact net earnings. on January 31, 2015,  
a 1% rise or fall in the Canadian dollar against the u.s. dollar, assuming that all other variables, in particular interest rates, had remained the same, 
would have resulted in a $100 decrease or increase, respectively, in the Company’s net earnings for the year ended January 31, 2015.

the Company has performed a sensitivity analysis on its derivative financial instruments, a series of call and put options on u.s. dollars and forward 
contracts, to determine how a change in the u.s. dollar exchange rate would impact net earnings and other comprehensive income. on January 31, 2015, 
a 1% rise or fall in the Canadian dollar against the u.s. dollar, assuming that all other variables had remained the same, would have resulted in a 
$514 decrease or a $508 increase, respectively, in the Company’s net earnings and would have resulted in a $862 decrease or increase in the Company’s 
other comprehensive income for the year ended January 31, 2015.

interest rate risK
interest rate risk exists in relation to the Company’s cash and cash equivalents. Market fluctuations in interest rates impacts the Company’s earnings  
with respect to interest earned on cash and cash equivalents that are invested mainly in short term deposits with major Canadian financial institutions. 
the Company has unsecured borrowing and working capital credit facilities available up to an amount of $100,000 or its u.s. dollar equivalent that it 
utilizes for documentary and standby letters of credit, and the Company funds the drawings on these facilities as the payments are due.

the Company has performed a sensitivity analysis on interest rate risk at January 31, 2015 to determine how a change in interest rates would impact 
net earnings. For the year ended January 31, 2015, the Company earned interest income of $994 on its cash and cash equivalents. An increase or 
decrease of 25 basis points in the average interest rate earned during the year would have increased net earnings by $98 or decreased net earnings by 
$50, respectively. this analysis assumes that all other variables, in particular foreign currency rates, remain constant.

eQUitY price risK 
equity price risk arises from available-for-sale equity securities. the Company monitors the mix of equity securities in its investment portfolio based on 
market expectations. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the 
Chief executive officer.

the  Company  has  performed  a  sensitivity  analysis  on  equity  price  risk  at  January  31,  2015,  to  determine  how  a  change  in  the  market  price  of  the 
Company’s marketable securities would impact other comprehensive income. the Company’s equity investments consist principally of preferred shares of 
Canadian public companies. the Company believes that changes in interest rates influence the market price of these securities. A 5% increase or decrease 
in the market price of the securities at January 31, 2015, would result in a $2,532 increase or decrease, respectively, in other comprehensive income for 
the year ended January 31, 2015. the Company’s equity securities are subject to market risk and, as a result, the impact on other comprehensive income 
may ultimately be greater than that indicated above.

55

28  capital management

the Company’s objectives in managing capital are:

•	

•	

•	

to	ensure	sufficient	liquidity	to	enable	the	internal	financing	of	capital	projects	thereby	facilitating	its	expansion;

to	maintain	a	strong	capital	base	so	as	to	maintain	investor,	creditor	and	market	confidence;	and

to	provide	an	adequate	return	to	shareholders.

the Company’s capital is composed of long-term debt, including the current portion and shareholders’ equity. the Company’s primary uses of capital 
are to finance increases in non-cash working capital along with capital expenditures for new store additions, existing store renovation projects and office 
and  distribution  centre  improvements. the  Company  currently  funds  these  requirements  out  of  its  internally-generated  cash  flows. the  Company’s  
long-term debt constitutes a mortgage on the distribution centre facility. the Company maintains unsecured operating lines of credit that it uses to 
satisfy commitments for u.s. dollar denominated merchandise purchases. the Company does not have any long-term debt, other than the mortgage 
related to the distribution centre, and therefore net earnings generated from operations are available for reinvestment in the Company or distribution to 
the Company’s shareholders. the Board of directors does not establish quantitative return on capital criteria for management, but rather promotes year 
over year sustainable profitable growth. on a quarterly basis, the Board of directors also reviews the level of dividends paid to the Company’s shareholders 
and monitors the share repurchase program activities. the Company does not have a defined share repurchase plan and decisions are made on a specific 
transaction basis and depend on market prices and regulatory restrictions. the Company is not subject to any externally imposed capital requirements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSREiTmaNS (CANADA) LIMITEDdiReCtoRs
daVid J. kassie
samUel minzBeRg
daniel RaBinoWiCz

oFFiCeRs

CORPORATE
JeRemY h. Reitman
Chairman and  
Chief executive officer

stePhen F. Reitman
president

WalteR lamothe
president, Retail and  
Chief operating officer

eRiC Williams, CPa, Ca
vice-president – Finance and 
Chief Financial officer

alain mURad
vice-president –  
legal and secretary 

diane aRChiBald
vice-president – store design  
and development

nathalie BélangeR
vice-president – eCommerce 

leta BRidgeman
vice-president – global sourcing

domeniC CaRBone
vice-president –  
distribution and logistics

denis gagnon
vice-president – Retail systems

isaBelle oliVa
vice-president – Human Resources

allen F. RUBin
vice-president – operations

saUl sChiPPeR
vice-president – Real estate 

danielle VallièRes
vice-president – global sourcing

RiChaRd Wait, CPa, Cga
vice-president – Comptroller

JeRemY h. Reitman
stePhen F. Reitman 
hoWaRd stotland

John J. sWidleR
RoBeRt s. VineBeRg

Banners
nadia CeRantola
president – Reitmans

JaCQUeline taRdiF
senior vice-president –  
Reitmans and smart set

sYlVain FoRest
vice-president –  
Reitmans and smart set

loRa tisi
president – RW & Co.

Jean-FRançois FoRtin
vice-president – RW & Co.

alain lessaRd
vice-president – RW & Co.

Rita mcadam
vice-president – RW & Co.

Jeannie VondJidis-milleR
vice-president – Reitmans

JeFF Ronald
vice-president – RW & Co.

CaRl Janzen
president – penningtons

Jonathan Plens
president – thyme Maternity

maRia BligoURas
vice-president – penningtons

soPhie gagnon
vice-president – thyme Maternity

CathY CoCkeRton
vice-president – penningtons 

Roxane liBoiRon
vice-president – thyme Maternity

PeRRin WolFson
vice-president – thyme Maternity

ginette haRnois
vice-president – penningtons

Rhonda sandleR
vice-president – penningtons

JaniCe leCleRC
president – Addition elle

RiChaRd dUmont
vice-president – Addition elle

RoslYn gRineR
vice-president – Addition elle

gisella Plastina
vice-president – Addition elle

steFanie RaVenda
vice-president – Addition elle

56

diReCtoRs  
And 
oFFiCeRs

Reitmans 
(CAnAdA) 
liM i t e d

CoRPoRate   
inFoRMAtion

administRation oFFiCe 
250 sauvé street West  
Montreal, Québec  H3l 1Z2
telephone: 
Fax: 
e-mail:   
Corporate Website:  

514-384-1140
514-385-2669
info@reitmans.com
reitmanscanadalimited.com

RegisteRed oFFiCe
155 Wellington street West, 40th Floor 
toronto, ontario  M5v 3J7 
telephone: 
Fax: 

416-863-0900
416-863-0871

tRansFeR agent and RegistRaR
Computershare investor services inc.  
Montreal, toronto, Calgary, vancouver

Une version française de ce rapport peut 
être obtenue en écrivant au secrétaire de  
Reitmans (Canada) limitée  
250, RUe saUVé oUest 
montRéal, QUéBeC  h3l 1z2

stoCk sYmBols
tHe toRonto stoCk exCHAnge
Common 
Class A non-voting 

Ret
Ret.A

ReitMAns
penningtons
Addition elle
RW & Co.
tHyMe
sMARt set

design And pRoduCtion: 
CoMMuniCAtions MARilyn gelFAnd inC.