Annual Report | 2025
Reitmans (Canada) Limited
250 Sauvé W, Montreal, QC, H3L1Z2 | www.reitmanscanadalimited.com
Dear Shareholders,
Fiscal 2025 was an eventful year for Reitmans (Canada) Limited (“RCL”), and in several ways, it set the
stage for fiscal 2026 and the next few years. While delivering solid financial results, we made continued
progress on key initiatives on the operations side, expanded our investor relations efforts, and thoroughly
evaluated our company's strengths, challenges, and opportunities to develop a multi-year strategy
designed for our future.
Solid Financial Footing
Despite broad economic uncertainty and some consumers being more cautious this past year, we had
solid net revenues of $773.8 million and achieved a 200-basis point increase in gross profit margin, which
rose from 54.2% to 56.2%. The higher gross profit margin reflects our strong inventory management and
disciplined approach to markdowns. We also had adjusted EBITDA1 of $25.4 million and net earnings
totaling $12.1 million. We finished the year with a strong cash position, increased working capital, and no
long-term debt other than lease liabilities. Our formidable balance sheet acts as an excellent foundation
for our growth plans, which I will outline later in this letter.
A Year of Progress and Evolution
In fiscal 2025, we continued to innovate and evolve our supply chain operations, replacing existing sorters
in our Montreal distribution centre with the SORTRAK© Inventory Systems to streamline our store
inventory management. I am pleased to share that the implementation was successful and has been
completed. SORTRAK enhances our efficiency through a significant reduction in the number of touches
per item, and by making better use of our space. Importantly, this cutting-edge system ensures RCL
remains at the technological forefront of the continuously changing retail landscape.
We also made the strategic decision to streamline our operations by closing Thyme Maternity and RCL
Market in January of 2025. This decision ultimately ensures that our teams and our resources are laser-
focused on our three core brands, Reitmans, RW&CO, and PENN. Penningtons, which is key to executing
our growth plans.
250 Sauvé W, Montreal, QC, H3L1Z2 | www.reitmanscanadalimited.com
Designed for the Future
Earlier in this letter, I alluded to setting the stage for the next few years. Our ambition is to reach $1 billion2
in annual revenues by the end of fiscal 2030. Importantly, with this level of organic growth, combined with
significant operational efficiencies, we plan to grow our adjusted EBITDA1 from $25.4 million (at the end
of fiscal 2025) to between $60-$70 million by the end of fiscal 2030. We expect to reinvest approximately
$100 million in growth initiatives over the next five years to reach these targets — reflecting our
commitment to creating long-term value for our shareholders, while enhancing our competitive position in
the retail landscape. Approximately 75% of this spend is earmarked for investments in our stores, including
renovations, expansions, and new stores. The other 25% will be invested in modernization of digital
technology and overall company infrastructure.
To accomplish these targets, our strengthened leadership team is keenly fixated on executing our recently
launched new five-year strategy, anchored around three strategic pillars: Driving Accelerated Brand
Growth, Fueling Growth Through Modernization, and Igniting High Performance.
Drive Accelerated Brand Growth
Our plan begins with expanding our three exceptional brands and leveraging their ultra-loyal customer
bases. We will be investing significantly in our stores, including store renovations and expansions, as well
as selectively and strategically opening new stores.
With regards to RW&CO, we believe there is a white space in the Canadian market for elevated and
accessible menswear as well as an opportunity to further to drive our women’s offering. As such, we plan
on doubling RW&CO’s men’s business while driving double-digit growth in women’s by fiscal 2030.
By the end of fiscal 2030, under this strategic pillar, we aim to increase our square footage by roughly
10% while driving more productivity per square foot – all while maintaining a total of approximately 400
stores. Ultimately, we want to ensure we have the right store at the right place, making the right amount
of money.
250 Sauvé W, Montreal, QC, H3L1Z2 | www.reitmanscanadalimited.com
Fuel Growth Through Modernization
Although we already made good progress on the modernization front, we have further investments and
initiatives planned to streamline and improve systems and processes for faster, customer-centric
operations. Our objectives under this pillar include improving our product speed to market; enhancing our
digital experience, which will involve a newly designed front-end ecommerce storefront for all three of our
brands; and continuing to automate processes to drive efficiencies.
Ignite High Performance
Under our third strategic pillar, we look to ignite high performance across RCL and empower creativity at
the heart of our fashion business. We aim to enhance our employee value proposition by cultivating a
compelling and rewarding workplace that attracts, retains, and empowers top talent. We will elevate our
brand and market position to inspire employees, customers, and other stakeholders, including engaging
more with shareholders.
Looking Ahead
We believe our new strategy will better position RCL for robust, organic growth and profitability.
Meanwhile, we also remain sharply focused on the near-term challenges posed by the current
environment. With the threat of a trade war from the United States and a potentially damaging tariff
environment introducing economic pressures around the world, Canadian businesses and consumers
alike are responding with caution. However, many Canadians are also responding with palpable national
pride and a renewed focus on homegrown brands. In the midst of it all, I want to share with you, and the
entire RCL community, that I feel more confident than ever in the strength of our proudly Canadian brands
and our connection to our loyal Canadian customers. Additionally, with our strong and diversified supply
chain, we believe the risks posed by tariffs to be minimal to our business.
Despite the economic headwinds, it’s important to remember that RCL is part of a dynamic industry. For
those who know it well, fashion retail is fun, fast-paced, and can be so rewarding on a personal and
professional level. I know our RCL community feels inspired by this every day, and I can think of countless
anecdotes — from employees in the field to supplier partners — who share this outlook.
250 Sauvé W, Montreal, QC, H3L1Z2 | www.reitmanscanadalimited.com
As you know, RCL’s 100th birthday is right around the corner. Reflecting on this upcoming milestone, I
want to take the opportunity to invite our shareholders and community members to celebrate with us as
we stay rooted in a century of excellence but continue to design for the future. With our three unique
Canadian brands, Reitmans, RW&CO, and PENN. Penningtons, we plan to continue delivering style and
quality to Canadians everywhere, at great value, for years to come.
I believe in our team’s ability to achieve our ambitious goals and look forward to connecting with you as
we continue to make progress. On behalf of RCL, I thank you for believing in our brands and our journey.
Sincerely,
Andrea Limbardi
President and Chief Executive Officer
1 This is a Non-GAAP Financial Measure. See “Non-GAAP Financial Measures & Supplementary Financial Measures” sections in the
Management’s Discussion and Analysis for the year ended February 1, 2025.
2 See “Forward-Looking Statements” section in the Management’s Discussion and Analysis for the year ended February 1, 2025.
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following Management’s Discussion and Analysis ("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 years ended February 1, 2025
and February 3, 2024 and the notes thereto which are available on the SEDAR+ website at
www.sedarplus.ca. This MD&A is dated April 10, 2025.
All financial information contained in this MD&A and Reitmans’ audited consolidated financial
statements has been prepared in accordance with IFRS Accounting Standards as issued by the
International Accounting Standards Board (“IASB”) also referred to as Generally Accepted
Accounting Principles (“GAAP”). All monetary amounts shown in the tables in this MD&A are in
millions of Canadian dollars unless otherwise indicated, 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 10, 2025.
Unless otherwise indicated, all comparisons of results for the 13 weeks ended February 1, 2025
(“fourth quarter of 2025”) are against results for the 14 weeks ended February 3, 2024 (“fourth
quarter of 2024”) and all comparisons of results for the 52 weeks ended February 1, 2025 (“fiscal
2025”) are against the results for the 53 weeks ended February 3, 2024 (“fiscal 2024”). Selected
information is provided for the 52 weeks ended January 28, 2023 (“fiscal 2023”).
The Company’s fiscal year ends on the Saturday closest to the end of January. Fiscal 2024 includes
53 weeks instead of the normal 52 weeks. The fourth quarter of 2025 includes 13 weeks as
compared to fourth quarter of 2024 which includes 14 weeks. The inclusion of an extra week occurs
every fifth or sixth fiscal year due to the Company’s floating year-end date.
Additional
information
about
Reitmans
is
available
on
the
Company’s
website
at
www.reitmanscanadalimited.com or on the SEDAR+ website at www.sedarplus.ca.
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 and are based on several
assumptions which give rise to the possibility that actual results could differ materially from the
Company’s expectations expressed in or implied by such forward-looking statements and that the
objectives, plans, strategic priorities and business outlook may not be achieved. Consequently, the
Company cannot guarantee that any forward-looking statement will materialize, or if any of them do,
what benefits the Company will derive from them. Forward-looking statements are provided in this
MD&A for the purpose of allowing investors and others to get a better understanding of the
Company’s operating environment and management’s expectations and plans as of the date of this
MD&A. However, readers are cautioned that it may not be appropriate to use such forward-looking
statements for any other purpose. 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.
This MD&A contains forward-looking statements about the Company’s objectives, plans, goals,
expectations, aspirations, strategies, financial condition, results of operations, cash flows,
performance, prospects, opportunities and legal and regulatory matters. Specific forward-looking
statements in this MD&A include, but are not limited to, statements with respect to the Company’s
belief in its strategies and its brands and their capacity to generate long-term profitable growth plans
to meet certain financial objectives, 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. These specific forward-looking statements are
contained throughout this MD&A including those listed in the “Operating and Financial Risk
Management” section of this MD&A. Forward-looking statements are typically identified by words
such as “expect”, “anticipate”, “believe”, “foresee”, “could”, “estimate”, “goal”, “intend”, “plan”, “seek”,
“strive”, “will”, “may” and “should” and similar expressions, as they relate to the Company and its
management. Forward-looking statements are based on information currently available to
management and on estimates and assumptions, including assumptions about future economic
conditions and courses of action. Examples of material estimates and assumptions and beliefs made
by management in preparing such forward looking statements: management’s belief in its strategies
and its brands and their capacity to generate long-term profitable growth, significant sales growth in
RW&Co. both in stores and online, increased market share for both Reitmans and PENN., stability
in the current market environment, changes in laws, rules, regulations and global standards, the
Company’s competitive position in its industry, the Company’s ability to keep pace with changing
consumer preferences, the absence of public health related restrictions impacting client shopping
patterns or incremental direct costs related to health and safety measures, the Company’s ability to
execute on its capital expenditure plan, including at its distribution centre in Montreal, and the
Company’s ability to retain and recruit exceptional talent.
Numerous risks and uncertainties could cause the Company’s actual results to differ materially from
those expressed, implied or projected in the forward-looking statements, including:
•
foreign currency fluctuations, including high levels of volatility of the Canadian dollar in relation
to the US dollar;
•
changes in economic conditions, including political uncertainty, international disputes, economic
recession or changes in the rate of inflation or deflation, employment rates, interest rates,
currency exchange rates or derivative prices;
•
significant economic disruptions caused by global health risks that influence sanitary measures
(such as confinement and store closures), consumer demand and hamper the ability to get
merchandise on a timely basis;
•
changes in product costs and disruption of the Company’s supply chain such as the impact of
geopolitical developments on global trade routes;
•
heightened competition, whether from current competitors or new entrants to the marketplace;
•
the changing consumer preferences toward more e-commerce, online retailing and the
introduction of new technologies;
•
seasonality, weather and the Company’s ineffectiveness in responding to consumer trends;
•
the inability of the Company’s information technology (“IT”) infrastructure to support the
requirements of the Company’s business, or the occurrence of any internal or external security
breaches, denial of service attacks, viruses, worms and other known or unknown cyber security
or data breaches;
•
failure to realize benefits from investments in the Company’s IT systems;
•
the inability of the Company to manage inventory to minimize the impact of obsolete or excess
inventory and to control shrinkage;
•
failure to realize anticipated results, including revenue growth, anticipated cost savings or
operating efficiencies associated with the Company’s major initiatives; and
•
changes in the Company’s income, capital, property and other tax and regulatory liabilities,
including changes in tax laws, regulations or future assessments.
This is not an exhaustive list of the factors that may affect the Company’s forward-looking
statements. Other risks and uncertainties not presently known to the Company or that the Company
presently believes are not material could also cause actual results or events to differ materially from
those expressed in its forward-looking statements. Additional risks and uncertainties are discussed
in the Company’s materials filed with the Canadian securities regulatory authorities from time to time.
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.
NON-GAAP FINANCIAL MEASURES & SUPPLEMENTARY FINANCIAL MEASURES
This MD&A makes reference to certain non-GAAP measures. These measures are not recognized
measures under IFRS and do not have a standardized meaning prescribed by IFRS. They are
therefore unlikely to be comparable to similar measures presented by other companies. Rather,
these measures are provided as additional information to complement IFRS measures by providing
further understanding of the Company’s results of operations from management’s perspective.
Accordingly, these measures should not be considered in isolation nor as a substitute for the
Company’s analysis of its financial information reported under IFRS.
NON-GAAP FINANCIAL MEASURES
This MD&A discusses the following non-GAAP financial measures: adjusted earnings before
interest, taxes, depreciation and amortization (“Adjusted EBITDA”) and working capital. This MD&A
also indicates Adjusted EBITDA as a percentage of net revenues and is considered a non-GAAP
financial ratio. Net revenues represent the sale of merchandise less discounts and returns (“net
sales”) and includes shipping fees charged to customers on e-commerce orders. The intent of
presenting Adjusted EBITDA is to provide additional useful information to investors and analysts.
Adjusted EBITDA is currently defined as net earnings before depreciation, amortization, net
impairment of non-financial assets, interest expense, interest income, income tax expense/recovery,
net pension settlement costs, contract termination costs, loss on foreign currency translation
differences reclassified to net earnings, pension curtailment gain, and adjusted for the impact of
certain items, including a deduction of interest expense and depreciation relating to leases
accounted for under IFRS 16, Leases. 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 this metric for this purpose. Management
believes that Adjusted EBITDA as a percentage of net revenues indicates how much liquidity is
generated for each dollar of net revenues. The exclusion of interest income and expenses, other
than interest expense related to lease liabilities as explained hereafter, eliminates the impact on
earnings derived from non-operational activities. The exclusion of depreciation, amortization and net
impairment losses, other than depreciation related to right-of-use assets as explained hereafter,
eliminates the non-cash impact, and the exclusion of net pension settlement costs, contract
termination costs, loss on foreign currency translation differences reclassified to net earnings and
pension curtailment gain presents the results of the on-going business. Under IFRS 16, Leases, the
characteristics of some leases result in lease payments being recognized in net earnings in the
period in which the performance or use occurs while other leases are recorded as right-of-use assets
with a corresponding lease liability recognized, which results in depreciation of those assets and
interest expense from those liabilities. Management is presenting its Adjusted EBITDA to reflect the
payments of its store and equipment lease obligations on a consistent basis. As such, the initial add-
back of depreciation of right-of-use assets and interest on lease obligations are removed from the
calculation of Adjusted EDITDA, as this better reflects the operational cash flow impact of its leases.
Working capital is defined as current assets less current liabilities. Management believes that
working capital provides information that is helpful to understand the financial condition of the
Company. Due to the seasonality of the Company’s business, it is more relevant to compare the
working capital position at the same point in time.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The tables below provide a reconciliation of net earnings to Adjusted EBITDA and the composition
of working capital:
Fourth quarter of
Fiscal
2025
2024
2025
2024
Net (loss) earnings
$ (4.2)
$
0.0
$ 12.1
$ 14.8
Depreciation, amortization and net impairment
losses on property and equipment, and
intangible assets
3.5
3.9
14.4
14.2
Depreciation on right-of-use assets
10.2
9.9
39.4
34.3
Interest expense on lease liabilities
2.5
2.4
10.0
7.6
Interest income
(1.6)
(1.9)
(5.8)
(5.2)
Income tax (recovery) expense
(2.0)
(0.3)
3.8
5.3
Net pension settlement costs1
1.2
-
0.4
-
Contract termination costs2
0.5
-
0.5
-
Loss on foreign currency translation
differences reclassified to net earnings
-
-
-
1.0
Pension curtailment gain
-
-
-
(0.9)
Rent impact from IFRS 16, Leases3
(12.7)
(12.3)
(49.4)
(41.9)
Adjusted EBITDA
$ (2.6)
$
1.7
$ 25.4
$ 29.2
Adjusted EBITDA as % of Net Revenues
(1.3)%
0.8%
3.3%
3.7%
1 Net pension settlement costs represent a settlement loss of $0.8 million and windup-related administration costs of $0.4 million for
the fourth quarter of 2025; windup-related administration costs of $0.4 million for fiscal 2025.
2 Contract termination costs relate to one-time contract termination costs on discontinued projects recognized in selling, general
and administrative expenses.
3 Rent Impact from IFRS 16, Leases is comprised as follows;
For the fourth quarter of
Year to date fiscal
2025
2024
2025
2024
Depreciation on right-of-use assets
$ 10.2
$
9.9
$ 39.4
$ 34.3
Interest expense on lease liabilities
2.5
2.4
10.0
7.6
Rent impact from IFRS 16, Leases
$ 12.7
$ 12.3
$ 49.4
$ 41.9
As at February
1, 2025
As at February
3, 2024
Current assets
$322.1
$259.9
Current liabilities
156.4
105.5
Working capital
$165.7
$154.4
SUPPLEMENTARY FINANCIAL MEASURES
The Company uses a key performance indicator (“KPI”), comparable sales, to assess store
performance and sales growth. The Company engages in an omnichannel approach in connecting
with its customers by appealing to their shopping habits through either online or store channels. This
approach allows customers to shop online for home delivery or to pick up in store, purchase in any
of our store locations or ship to home from another store when the products are unavailable in a
particular store. Due to customer cross-channel behavior, the Company reports a single comparable
sales metric, inclusive of store and e-commerce channels. Comparable sales are defined as net
sales generated by stores that have been continuously open during both of the periods being
compared and include e-commerce net sales. The comparable sales metric compares the same
calendar days for each period. Although this KPI is expressed as a ratio, it is a supplementary
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 comparable sales in
evaluating the performance of stores and online net sales and considers it useful in helping to
determine what portion of new net sales has come from sales growth and what portion can be
attributed to the opening of new stores. Comparable sales is a measure widely used amongst
retailers and is considered useful information for both investors and analysts. Comparable sales
should not be considered in isolation or used in substitute for measures of performance prepared in
accordance with IFRS.
OVERVIEW
The Company has a single reportable segment that derives its revenue primarily from the sale of
women’s specialty apparel to consumers through its retail banners. The Company’s stores are
primarily located in malls and retail power centres across Canada while also offering e-commerce
website shopping for all of its banners. The online channels provide customers convenience,
selection and ease of purchase, while enhancing customer loyalty and continuing to build the brands.
The Company currently operates under the following banners:
The Reitmans banner, founded in 1926, operates stores averaging 4,700 sq. ft. and is Canada’s
leading specialty fashion destination. With a strong online presence and store locations across the
country, Reitmans customers account for over one-third of Canadian women. Reitmans ambition is
to offer a feel-good and inclusive space featuring on-trend styles in the most extensive size range,
from 0-22.
PENN. is Canada's premiere destination for plus-size fashion, ranging from sizes 14 to 32. Through
championing body diversity and size inclusivity, the brand believes that women deserve to
experience the freedom that comes with feeling confident in their clothing. PENN. operates stores
averaging 5,800 sq. ft. in power centres across Canada.
RW&CO. operates stores averaging 4,600 sq. ft. in premium locations in major shopping malls as
well as on their e-commerce site. Specializing in menswear and womenswear, the brand delivers
versatile, well-crafted collections and exceptional brand experiences to an open and inclusive brand
community.
RETAIL BANNERS
Number of
stores at
February
3, 2024
Q1
Openings
Q1
Closings
Q2
Openings
Q2
Closings
Q3
Openings
Q3
Closings
Q4
Openings
Q4
Closings
Number of
stores at
February
1, 2025
Reitmans
226
1
-
-
(3)
-
(1)
3
(4)
222
PENN.
86
-
(1)
1
(1)
2
(1)
2
(2)
86
RW&CO.
81
-
(1)
-
-
1
-
1
-
82
Total stores
393
1
(2)
1
(4)
3
(2)
6 (6)
390
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
Fiscal 2025
Fiscal 2024
Fiscal 2023
Total stores at end of fiscal year
390
393
406
Net revenues
$ 773.8
$ 794.7
$ 803.3
Gross profit
435.0
431.0
451.4
Gross profit %
56.2%
54.2%
56.2%
Earnings before income taxes
15.9
20.1
45.6
Net earnings
12.1
14.8
77.7
Earnings per share
Basic
0.25
0.30
1.59
Diluted
0.24
0.30
1.59
Total current assets
322.1
259.9
265.9
Total assets
574.1
490.8
444.5
Total current liabilities
156.4
105.5
122.9
Total non-current liabilities
121.3
106.3
60.8
The Canadian retail marketplace reflects consumers shopping behaviours that include in-store
purchases and online shopping. The Company’s omnichannel strategy includes investing in both
store locations and e-commerce. While most of the Company’s capital investments were focused on
store locations during fiscal 2025, the Company has invested in and will continue to invest in
improvements in its distribution centre and technology to enhance the customers’ online and in-store
experiences. The Company is well positioned in an omnichannel shopping environment with a store
portfolio that is located in highly desirable malls and power centres across Canada supported by a
competitive e-commerce offering.
Due to the significance of merchandise acquired using U.S. dollars, the value of the Canadian dollar
vis-à-vis the U.S. dollar is a significant factor that can impact profitability of the Company’s retail
operations. A focus on improved sourcing practices and reducing costs, while maintaining a value
proposition for customers, along with managing foreign exchange market risks allows the Company
to mitigate the negative impact. As described under the section titled “Foreign Exchange Contracts”,
the Company enters into foreign exchange forward contracts to hedge a portion of its exposure to
fluctuations in the value of the U.S. dollar, generally up to twelve months in advance and it continues
to use spot purchases of U.S. dollars to meet its merchandise commitments.
Net Revenues
In fiscal 2023, the Company benefitted from increased customer traffic in stores and higher average
transaction value, and less markdowns and promotional discounting contributed to the increase in
net revenues. Net revenues were exceptional, due to the lifting of government-imposed temporary
lockdowns, as the Company leveraged pent-up customer demand for work and social gathering
apparel and successfully drove compelling marketing campaigns.
In fiscal 2024, the Company believes that higher interest rates and inflation overall compared to fiscal
2023 negatively impacted consumer spending during fiscal 2024. Decreased customer traffic both
in stores and on-line, a decrease of 13 retail stores, lower average transaction values and increased
markdowns and promotional discounting contributed to the decrease in net revenues.
In fiscal 2025, continued decreases in customer traffic in-store and on-line have contributed to overall
decrease in net revenues. The Company limited its use of markdowns and promotional activity in
fiscal 2025 to drive net revenues, and despite the gradual decrease in interest rates and inflation,
customer spending remained limited.
Gross Profit
Overall, the Company’s gross profit over the past three fiscal years have been primarily impacted by
the value of the Canadian dollar in relation to the U.S. dollar and promotional and markdown
activities. In fiscal 2025, the Company limited its markdowns and promotional activity resulting in an
increased gross profit, despite one less week of operations as compared with fiscal 2024.
During fiscal 2024, gross profit decreased compared to fiscal 2023 due to higher markdowns and
promotional activity combined with the continued weakness of the Canadian dollar resulting in higher
merchandise costs as virtually all merchandise payments are settled in U.S. dollars, whereas, during
fiscal 2023, the comparable strength of the Canadian dollar had resulted in lower merchandise costs.
In fiscal 2023, the Company’s gross profit increased over fiscal 2022 due to higher sales, lower
promotional discounting and lower overall supply chain costs, partially offset by an unfavorable
foreign exchange impact on U.S. dollar denominated purchases included in cost of goods sold.
Summary
During the past three years, despite the tough inflationary and interest rate market conditions, and a
gradual decrease in the value of the Canadian dollar in relation to the U.S. dollar, the Company
continued to maintain its gross profit as a percentage of net revenues and generate positive net
earnings.
In fiscal 2023, the Company leveraged pent-up demand for work and social gathering apparel, and
successfully drove compelling marketing campaigns that led to a 47.6% increase in store traffic and an
8.9% increase in e-commerce traffic year over year. In fiscal 2024, higher interest rates and inflation
overall compared to fiscal 2023 negatively impacted consumer spending resulting in a decrease in net
revenues, gross profit and net earnings. Despite the continuation of tough economic and market
conditions in fiscal 2025, the Company generated gross profit of $435.0 million ($431.0 million in fiscal
2024) and net earnings of $12.1 million ($14.8 million in fiscal 2024).
The Company increased its working capital1 position by $11.3 million, from $154.4 million as at the end
of fiscal 2024 to $165.7 million as at the end of fiscal 2025. The Company had no long-term debt (other
than lease liabilities). As at February 1, 2025, included in the Company’s current assets is cash of
$158.1 million (February 3, 2024 - $116.7 million) and the Company had no drawings on its revolving
credit facility for the past two fiscal years.
1 This is a Non-GAAP Financial Measure. See section entitled “Non-GAAP Financial Measures & Supplementary Financial Measures” for a
reconciliation of this measure.
As at the end of fiscal 2025, inventory levels were higher as compared to the end of fiscal 2024 primarily
due to a higher number of merchandise units related to the upcoming spring selling season. As at the
end of fiscal 2024, inventory levels were lower as compared to the end of fiscal 2023 due primarily to a
lower number of stores in the Company’s store network, and a lower number of merchandise units on
hand compared to the end of fiscal 2023. As at the end of fiscal 2023, inventory levels were higher as
compared to the end of fiscal 2022 due primarily to higher merchandise costs and a higher number of
merchandise units in order to meet the anticipated customer demand in the spring selling season.
The Company’s capital expenditures, on a cash basis, were $10.7 million in fiscal 2023, $17.7 million
in fiscal 2024 and $31.2 million in fiscal 2025. In fiscal 2025, the Company increased its spending
primarily on new stores, store renovations, modernization of its distribution centre capabilities, store-
level point-of-sales hardware and corporate hardware and software investments.
OPERATING RESULTS FOR FISCAL 2025 COMPARED TO FISCAL 2024
Fiscal 2025
Fiscal 2024
$ Change
% Change
Net revenues
$
773.8
$
794.7
$
(20.9)
(2.6)%
Cost of goods sold
338.8
363.7
(24.9)
(6.8)%
Gross profit
435.0
431.0
4.0
0.9%
Gross profit %
56.2%
54.2%
Selling, general and administrative
expenses1
417.2
408.1
9.1
2.2%
Results from operating activities
17.8
22.9
(5.1)
(22.3)%
Net finance costs
(1.9)
(2.8)
0.9
32.1%
Earnings before income taxes
15.9
20.1
(4.2)
(20.9)%
Income tax expense
(3.8)
(5.3)
1.5
28.3%
Net earnings
$
12.1
$
14.8
$
(2.7)
(18.2)%
Adjusted EBITDA2
$
25.4
$
29.2
$
(3.8)
(13.0)%
Earnings per share:
Basic
Diluted
$
0.25
0.24
$
0.30
0.30
$
(0.05)
(0.06)
(16.7)%
(20.0)%
1 In order to align to presentation in the industry, previously captioned selling, distribution and administrative expenses for fiscal 2024
are now captioned as selling, general and administrative expenses.
2 This is a Non-GAAP Financial Measure. See section entitled “Non-GAAP Financial Measures and Supplementary Financial
Measures” for reconciliations of these measures.
Net Revenues
Net revenues for fiscal 2025 decreased by $20.9 million, or 2.6%, to $773.8 million. Comparable
sales1, which include e-commerce net sales, decreased 0.6% during the fiscal 2025. The decrease
in net revenues was primarily due to a decrease of three retail stores and one additional week of net
revenues of $10.0 million in fiscal 2024. The decrease in comparable sales was primarily due to the
decrease in e-commerce net revenues, partially offset by increased sales dollars per transaction at
retail stores, despite three less retail stores compared to fiscal 2024. Higher interest rates and
inflation overall that negatively impacted consumer spending during fiscal 2024 remained prevalent
in fiscal 2025.
The breakdown of net revenues was as follows:
Fiscal 2025
Fiscal 2024
$ Change
% Change
Retail stores
$ 571.5
73.9%
$
576.9
72.6%
$
(5.4)
(0.9)%
E-commerce
202.3
26.1%
217.8
27.4%
(15.5)
(7.1)%
Net revenues
$ 773.8
100.0%
$
794.7
100.0%
$ (20.9)
(2.6)%
1 This is a supplementary financial measure. See section entitled “Supplementary Financial Measures”.
Gross Profit
Gross profit for fiscal 2025 increased $4.0 million to $435.0 million as compared with $431.0 million
for fiscal 2024, despite the decrease in net revenues and the inclusion of a 53rd week (instead of the
normal 52 weeks) in fiscal 2024 of $5.5 million. Gross profit as a percentage of net revenues for
fiscal 2025 increased to 56.2% from 54.2% for fiscal 2024. The increase both in gross profit and as
a percentage of net revenues is primarily attributable to fewer markdowns and promotional activity
in fiscal 2025. The foreign exchange impact from U.S. dollar denominated purchases included in
cost of goods sold remained consistent year-over-year from fiscal 2024 to fiscal 2025.
Selling, General and Administrative Expenses
Total selling, general and administrative expenses of $417.2 million for fiscal 2025 increased by $9.1
million or 2.2%, as compared to fiscal 2024 primarily attributable to the following:
• the majority of previous preferential rent arrangements have been renewed at closer to market
lease rates resulting in an increase of $5.1 million on depreciation on right-of-use assets in fiscal
2025;
• a $3.6 million increase in software expenses from Company’s investment in cloud service
providers and e-commerce initiatives;
• despite the reduction in the number of retail stores from 393 to 390 in fiscal 2025, store operating
costs increased primarily due to higher store personnel costs;
• a $1.2 million increase in performance incentive plan expense in fiscal 2025 for meeting certain
performance targets;
• a $0.4 million increase in administration costs related to the windup and settlement of the
Company’s defined benefit pension plan;
• $0.5 million related to contract termination costs on discontinued projects;
• a $0.9 million non-recuring pension curtailment gain recognized in fiscal 2024;
partially offset by,
• selling, general and administrative expenses of $4.4 million attributed to the additional week of
operations included in fiscal 2024;
• a decrease in e-commerce shipping costs due primarily to a decrease in online orders fulfilled
during fiscal 2025 as compared to fiscal 2024.
Net Finance Costs
Net finance costs were $1.9 million for fiscal 2025 as compared to $2.8 million for fiscal 2024. The
decrease of $0.9 million is primarily attributable to a $0.6 million increase in interest income earned
on funds held with a Canadian financial institution, $1.6 million higher foreign exchange gain and a
$1.0 million loss on foreign currency translation differences from the wind-up of a foreign operation
for fiscal 2024, partially offset by higher interest expense of $2.4 million related to lease liabilities.
Income Taxes
Income tax expense for fiscal 2025 amounted to $3.8 million for an effective tax rate of 23.7% as
compared with 26.4% for fiscal 2024. The effective tax rate for fiscal 2025 was primarily impacted
by the difference in tax rate related to the operations of a foreign subsidiary and non-deductible
permanent differences.
Net Earnings
Net earnings for fiscal 2025 was $12.1 million ($0.25 basic and $0.24 diluted earnings per share) as
compared with $14.8 million ($0.30 basic and diluted earnings per share) for fiscal 2024. The
decrease in net earnings of $2.7 million is primarily attributable to the increase in selling, general and
administrative expenses, as noted above.
Adjusted EBITDA
Adjusted EBITDA for the fiscal 2025 was $25.4 million as compared to $29.2 million for fiscal 2024.
The decrease of $3.8 million is primarily attributable to the increase in selling, general and
administrative expenses, as noted above.
OPERATING RESULTS FOR THE FOURTH QUARTER OF 2025 COMPARED TO THE FOURTH
QUARTER OF 2024
Fourth Quarter
of 2025
Fourth Quarter
of 2024
$ Change
% Change
Net revenues
$
204.8
$
221.0
$
(16.2)
(7.3)%
Cost of goods sold
98.6
106.1
(7.5)
(7.1)%
Gross profit
106.2
114.9
(8.7)
(7.6)%
Gross profit %
51.9%
52.0%
Selling, general and administrative
expenses1
112.6
114.4
(1.8)
(1.6)%
Results from operating activities
(6.4)
0.5
(6.9)
n/a
Net finance income (costs)
0.2
(0.7)
0.9
n/a
Loss before income taxes
(6.2)
(0.2)
(6.0)
n/a
Income tax recovery
2.0
0.2
1.8
n/a
Net (loss) earnings
$
(4.2)
$
0.0
$
(4.2)
n/a
Adjusted EBITDA2
$
(2.6)
$
1.7
$
(4.3)
n/a
Earnings per share:
Basic
$
(0.08)
$
0.00
$
(0.08)
n/a
Diluted
(0.08)
0.00
(0.08)
n/a
1 In order to align to presentation in the industry, previously captioned selling, distribution and administrative expenses for Fiscal 2024
are now captioned as selling, general and administrative expenses.
2 This is a Non-GAAP Financial Measure. See section entitled “Non-GAAP Financial Measures and Supplementary Financial
Measures” for reconciliations of these measures.
Net Revenues
Net revenues for the fourth quarter of 2024 decreased by $16.2 million, or 7.3%, to $204.8 million
compared to the fourth quarter of fiscal 2024, which included an additional week of net revenues of
$10.0 million. Comparable sales1, which include e-commerce net sales, decreased 0.2% during the
fourth quarter of 2025. The decrease in net revenues and comparable sales was primarily due to
fewer retail stores, less e-commerce traffic and higher markdowns and promotional activity.
The breakdown of net revenues was as follows:
Fourth Quarter of 2025
Fourth Quarter of 2024
$ Change
% Change
Retail stores
$ 141.6
69.2%
$
150.3
68.0%
$
(8.7)
(5.8)%
E-commerce
63.2
30.8%
70.7
32.0%
(7.5)
(10.6)%
Net revenues
$ 204.8
100.0%
$
221.0
100.0%
$ (16.2)
(7.3)%
1 This is a supplementary financial measure. See section entitled “Supplementary Financial Measures”.
Gross Profit
Gross profit for the fourth quarter of 2025 decreased $8.7 million to $106.2 million as compared with
$114.9 million for the fourth quarter of 2024, which included an additional week of gross profit of $5.5
million. Gross profit as a percentage of net revenues for the fourth quarter of 2024 decreased to
51.9% from 52.0% for the fourth quarter of 2024. The decrease in gross profit and decrease in gross
profit as a percentage of net revenues is primarily due to increased markdowns and promotional
activity, and an unfavorable foreign exchange impact of $1.7 million on U.S. dollar denominated
purchases as compared with the fourth quarter of fiscal 2024.
Selling, General and Administrative Expenses
Total selling, general and administrative expenses of $112.6 million for the fourth quarter of 2025
decreased by $1.8 million or 1.6%, as compared to the fourth quarter of 2024, primarily attributable
to the following:
• decreased selling, general and administrative expenses of $4.4 million attributed to the additional
week of operations included in the fourth quarter of fiscal 2024;
• a decrease of $1.8 million in e-commerce shipping costs due to a decrease in online orders
fulfilled during the fourth quarter of 2025;
partially offset by,
• a $1.5 million increase in software expenses from Company’s investment in cloud service
providers and e-commerce initiatives;
• a $1.2 million increase in pension costs related to additional administrative costs and a
settlement loss related to the windup and dissolution of the pension plan in the fourth quarter of
fiscal 2025;
• $0.5 million related to contract termination costs on discontinued projects;
• an increase in depreciation on right-of-use assets of $0.3 million due to the majority of previous
preferential rent arrangements being renewed at closer to market lease rates.
Net Finance Income (Costs)
Net finance income was $0.2 million for the fourth quarter of 2025 as compared to net finance costs
of $0.7 million for the fourth quarter of 2024. The increase of $0.9 million in net finance income is
primarily attributable to a higher foreign exchange gain of $1.4 million on U.S. denominated net
monetary assets, partially offset by a $0.3 million decrease in interest income earned on funds held
with a Canadian financial institution for the fourth quarter of 2025.
Income Taxes
Income tax recovery for the fourth quarter of 2025 amounted to $2.0 million as compared with $0.2
million for the fourth quarter of fiscal 2024. The effective tax rate for the fourth quarter of 2025 and
2024 was primarily impacted by the difference in tax rate related to the operations of a foreign
subsidiary and non-deductible permanent differences.
Net (Loss) Earnings
The Company recognized a net loss of $4.2 million for the fourth quarter of 2025 ($0.08 basic and
diluted loss per share) as compared with net earnings of nil ($0.00 basic and diluted earnings per
share) for the fourth quarter of 2024. The decrease in net earnings of $4.2 million is primarily
attributable to the decrease in gross profit, as noted above.
Adjusted EBITDA
Adjusted EBITDA for the fourth quarter of 2025 was $(2.6) million as compared to $1.7 million for
the fourth quarter of 2024. The decrease of $4.3 million is primarily attributable to the decrease in
gross profit, as noted above.
FOREIGN EXCHANGE CONTRACTS
The Company imports a majority of its merchandise purchases from foreign vendors, with lead times
in some cases extending twelve months. The Company enters into foreign exchange forward
contracts to hedge a portion of its exposure to fluctuations in the value of the U.S. dollar, generally
up to twelve months in advance. The Company’s policy is to satisfy up to 80% of projected U.S.
dollar denominated merchandise purchases in any given fiscal year by way of foreign exchange
forward contracts, with any additional requirements being met through spot U.S. dollar purchases.
Details of the foreign exchange contracts outstanding, all of which are designated as cash flow
hedges, are as follows:
Average
Strike Price
Notional
Amount in
U.S. Dollars
Derivative
Financial
Asset
Derivative
Financial
Liability
Net
February 1, 2025
$ 1.347
$ 134.0
$
12.3
$
-
$ 12.3
February 3, 2024
$ 1.328
$
90.0
$
1.4
$
-
$
1.4
SUMMARY OF QUARTERLY RESULTS
The results of operations for any quarter are not necessarily indicative of the results of operations for
the fiscal year. The table below presents selected consolidated financial data for the eight most recently
completed quarters. All references to “2025” are to the Company’s fiscal year ended February 1, 2025
and “2024” are to the Company’s fiscal year ended February 3, 2024.
1 During the fourth quarter of 2025, net loss includes a pension settlement loss of $1.2 million.
2 During the third quarter of 2025, net earnings include a pension settlement gain of $0.8 million.
3 During the second quarter of 2024, net earnings include a pension curtailment gain of $0.9 million.
OUTLOOK
The Company plans to reach $1 billion in annual net revenues and Adjusted EBITDA1 of $60-70 million
by the end of fiscal 20302. The Company expects to invest over $100 million over the next five years
on capital projects focused on growth, including expanded and optimized stores and modernized
operations.
1 This is a Non-GAAP Financial Measure. See section entitled “Non-GAAP Financial Measures & Supplementary Financial Measures for
a reconciliation of these measures.
2 See “Forward-Looking Statements”.
Fourth Quarter
Third Quarter
Second Quarter
First Quarter
2025
2024
2025
2024
2025
2024
2025
2024
Net revenues
$ 204.8
$ 221.0
$ 187.7
$ 193.4
$ 215.5
$ 214.6
$ 165.7
$ 165.7
Net (loss) earnings
(4.2)1
0.0
2.12
5.3
15.8
13.43
(1.5)
(3.8)
(Loss) earnings per share
Basic
$ (0.08)1
$
0.00
$
0.042
$
0.11
$
0.32
$
0.273
$ (0.03)
$ (0.08)
Diluted
(0.08)1
0.00
0.042
0.11
0.32
0.273
(0.03)
(0.08)
BALANCE SHEET
Selected line items from the Company’s consolidated balance sheets as at February 1, 2025 and
February 3, 2024 are presented below:
2025
2024
$ Change
% Change
Cash
$ 158.1
$ 116.7
$
41.4
35.5%
Trade and other receivables
6.1
3.5
2.6
74.3%
Derivative financial asset
12.3
1.4
10.9
n/a
Inventories
132.9
122.0
10.9
8.9%
Prepaid expenses and other assets
12.7
16.3
(3.6)
(22.1)%
Property and equipment & intangible assets
90.8
71.2
19.6
27.5%
Right-of-use assets
140.1
131.5
8.6
6.5%
Pension asset
-
1.1
(1.1)
(100.0)%
Deferred income taxes
21.1
27.0
(5.9)
(21.9)%
Trade and other payables
109.7
61.8
47.9
77.5%
Deferred revenue
12.4
11.9
0.5
4.2%
Income taxes payable
0.2
0.4
(0.2)
(50.0)%
Lease liabilities (current and non-current)
155.4
137.6
17.8
12.9%
Changes at February 1, 2025 as compared to February 3, 2024 were primarily due to the following:
•
cash increased $41.4 million primarily due to cash generated from operations, the timing of
payments to certain vendors due to increased payment terms and the timing of lease payments
based on the due date of the 1st day of the calendar month;
• trade and other receivables increased primarily due to higher credit card receivables as at
February 1, 2025 as compared to as at February 3, 2024;
• derivative financial asset increased due to the mark-to-market adjustment on foreign exchange
forward contracts outstanding as at February 1, 2025 compared to February 3, 2024;
• the increase in inventories is largely attributable to a higher quantity of merchandise for the
upcoming spring selling season as at February 1, 2025 compared to February 3, 2024;
• the decrease of $3.6 million in prepaid expenses and other assets is primarily due to the decrease
in deposits paid to merchandise-related suppliers;
• property and equipment & intangible assets increased by $19.6 million. During fiscal 2025, $31.2
million had been spent primarily on new stores, store renovations, distribution centre enhancements
and store point-of-sale hardware and software investments. Depreciation and amortization of $13.2
million and a net impairment of $1.2 million on property and equipment and intangible assets were
recognized in fiscal 2025 ($13.2 million of depreciation and amortization and a net impairment of
$1.0 million on property and equipment and intangible assets were recognized in fiscal 2024);
• right-of-use assets represent the right-to-use the retail stores and certain equipment over their
lease terms. Right-of-use assets increased by a net $8.6 million primarily due to longer-term lease
renewals signed during fiscal 2025. Depreciation and amortization of $39.4 million was recognized
in fiscal 2025 ($34.3 million of depreciation and amortization was recognized in fiscal 2024). No
impairment charges were recognized in fiscal 2025 and fiscal 2024;
• pension asset decreased by $1.1 million due to the windup and dissolution of the Company’s
defined benefit pension plan effective June 30, 2024. As at February 1, 2025, all obligations
related to the windup had been settled.
• deferred incomes taxes decreased by $5.9 million primarily due to the utilization of losses carried
forward and the net reversal of deductible temporary differences. Deferred income tax assets are
generated from temporary differences and operating losses carried forward relating to Canadian
operations;
• trade and other payables increased by $47.9 million primarily due to the timing of payments
related to trade, sales tax and personnel-related liabilities (including performance incentive plan
awards), and the increase of payment terms with certain merchandise-related suppliers;
• income taxes payable consists of estimated net tax liabilities of a foreign subsidiary. The
decrease of $0.4 million in income taxes payable is primarily due to timing of tax payments;
• lease liabilities represent the present value of the Company’s obligations to make lease payments
for its store and equipment leases. During fiscal 2025, lease liabilities increased by lease
additions of $49.5 million and interest expense of $10.0 million, offset by payments of $40.3
million and lease terminations of $1.4 million.
OPERATING RISK MANAGEMENT
Economic Environment
Economic factors that influence 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.
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. Presently, there is no effective barrier to entry into the Canadian apparel retailing
marketplace by any potential competitor, foreign or domestic, as witnessed by additional foreign
retailers continuing to expand into the Canadian marketplace. Additionally, Canadian consumers
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. The Company’s stores,
located throughout Canada, offer affordable fashions to consumers. The Company also offers an e-
commerce alternative for shoppers through each of the banner’s websites. The e-commerce retail
landscape is highly competitive with both domestic and foreign competition. The Company continues
to invest in its e-commerce websites and social media channels to drive consumers to its websites
and believes that it is positioned well to compete in this environment.
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. global supply chain delays, natural disaster,
system failures, destruction or major damage by fire), could materially delay or impair the Company’s
ability to replenish its stores on a timely, cost-efficient basis or satisfy e-commerce demand causing
a loss of sales and potential dissatisfaction amongst its customers, which could have a significant
effect on the results of operations.
Loyalty Programs
The Company’s loyalty programs are a valuable offering to customers and provide a key marketing
tool for the business. The marketing, promotional and other business activities related to possible
changes to the loyalty programs must be well managed and coordinated to preserve positive
customer perception. Any failure to successfully manage the loyalty programs may negatively affect
the Company’s reputation and financial performance.
Leases
All of the Company’s stores are held under leases, most of which can be renewed for additional
terms at the Company’s option. Any factor that would have the effect of impeding or affecting, in a
material way, the Company’s ability to lease prime locations, re-lease and/or renovate existing
profitable locations, or delay the Company’s ability to close undesirable locations could adversely
affect the Company’s operations.
Consumer Shopping Patterns
Changes in customer shopping patterns could affect sales. Many of the Company’s stores are
located in enclosed shopping malls. The ability to sustain or increase the level of sales depends in
part on the continued popularity of malls as shopping destinations and the ability of malls, tenants
and other attractions to generate a high volume of customer traffic. Many factors that are beyond the
control of the Company may decrease mall traffic, including economic downturns, closing of anchor
department stores, weather, concerns of terrorist attacks, restrictions on customer capacity in stores
resulting from future pandemic health protocols, construction and accessibility, alternative shopping
formats such as e-commerce, discount stores and lifestyle centres, among other factors. Any
changes in consumer shopping patterns could adversely affect the Company’s financial condition
and operating results.
Natural Disasters, Adverse Weather, Pandemic Outbreaks, Boycotts and Geopolitical Events
The occurrence of one or more natural disasters, such as earthquakes and hurricanes, unusually
adverse weather, pandemic outbreaks, boycotts and geopolitical events, such as civil unrest in
countries in which suppliers are located and acts of terrorism, or similar disruptions could materially
adversely affect the Company’s business and financial results. Furthermore, the impact of any such
events on its business and financial results could be exacerbated if they occur during the Company’s
peak selling seasons.
These events could result in physical damage to one or more of the Company’s properties, increases
in fuel or other energy prices, the temporary or permanent closure of its distribution centre or of one
or more of its stores, delays in opening new stores, the temporary lack of an adequate workforce in
a market, the temporary or long-term disruption in the supply of products from some local and
overseas suppliers, the temporary disruption in the transportation of goods from overseas, delays in
the delivery of goods to the distribution centre or stores, the temporary reduction in the availability
of products in stores, the temporary reduction of store traffic and disruption to information systems.
These factors could materially adversely affect the Company’s business and financial results.
Outbreaks of pandemics in the future can have an impact on consumer shopping patterns and
behaviors, cause supply chain disruptions and result in government-imposed containment protocols
that would have negative consequences to the Company.
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 continues to undertake investments in new IT systems to improve the
operating effectiveness of the organization. Failure to successfully migrate from legacy systems to
new IT systems or a significant disruption in or the hacking of the Company’s IT systems in general
could result in a lack of accurate data or the inability of management to effectively manage day-to-
day operations of the business or achieve its operational objectives, causing significant disruptions
to the business and potential financial losses. The Company also depends on relevant and reliable
information to operate its business. As the volume of data being generated and reported continues
to increase across the Company, data accuracy, quality and governance are required for effective
decision-making.
Failure to successfully adopt or implement appropriate processes to support the new IT systems, or
failure to effectively leverage or convert data from one system to another, may preclude the
Company from optimizing its overall performance and could result in inefficiencies and duplication
in processes, which in turn could adversely affect the reputation, operations or financial performance
of the Company. Failure to realize the anticipated strategic benefits including revenue growth,
anticipated cost savings or operating efficiencies associated with the new IT systems could adversely
affect the reputation, operations or financial performance of the Company.
Laws and Regulations
The Company is structured in a manner that management considers most effective to conduct its
business. The Company is subject to material and adverse changes in government regulation that
might affect 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
production of raw materials and the manufacturing of merchandise by our suppliers, 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 and other audits from various government and regulatory agencies
on an ongoing basis. As a result, from time to time, authorities may disagree with the positions and
conclusions taken by the Company. Laws could be amended or interpretations of current laws could
change, any of which events could lead to penalties and reassessments, which could have a material
impact on the Company’s financial position, operating results or cash flows in future periods.
Environmental, Social, Governance, (“ESG”) or Sustainability Responsibilities
Investors, shareholders, customers and employees have focused increasingly on the environmental,
social and governance ("ESG") practices of companies, including those associated with climate
change. If the Company’s ESG practices fall short of stakeholder expectations and as they continue
to evolve, our brand, reputation and employee retention may be negatively impacted. As such, the
possibility exists that stakeholders may not be satisfied with the Company’s ESG practices or the
speed of their adoption. The Company could also incur additional costs and require additional
resources to monitor, report, and comply with various ESG expectations and requirements. Also, the
Company’s failure, or perceived failure to do so could negatively impact our reputation, employee
retention, and the willingness of our clients and suppliers to do business with the Company. The
Company has established an ESG team to develop its ESG strategies.
Merchandise Sourcing
Virtually all of the Company’s merchandise is private label. On an annual basis, the Company directly
imports over 90% of its merchandise, largely from Asia. Although most of the raw material used in
the manufacturing of our merchandise is sourced from China, there is a variety of alternative
international manufacturing sources for virtually all of the Company’s merchandise and, in fiscal
2025, no supplier represented more that 10% of the Company’s purchases (in dollars or units). 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. Future supply chain issues could have negative financial
consequences to the Company.
The Company is committed towards responsible business standards and ethical sourcing principles.
The Company continues to make efforts to conduct its business in accordance with ethical business
practices and in compliance with the laws of the countries in which its suppliers operate. The
Company has sourcing guidelines and other business practices to help ensure that its suppliers do
not engage in child or forced labour practices and that they comply with applicable laws and
regulations. However, as independent third parties are not under the control of the Company, there
is no guarantee that Company’s suppliers will not undertake actions in violation of the Company’s
guidelines, or applicable laws and regulations, that may adversely impact the Company’s reputation.
Consequently, the Company reserves the right to terminate its relationship with any supplier, and
will not initiate a relationship with any prospective supplier where material social and labour
compliance risks have been identified. When instances of non-compliance are identified with its
suppliers, the Company requires that immediate action be taken to correct the situation; otherwise,
the supplier will be prohibited from doing business with the Company. This may have an adverse
effect on the Company’s financial results, by increasing costs and potentially causing delays in
delivery.
Cyber Security, Privacy and Protection of Personal Information
The Company is subject to various laws regarding the protection of personal information of its
customers 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 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.
The Company depends on the uninterrupted operation of its IT systems, networks and services
including internal and public internet sites, data hosting and processing facilities, cloud-based
services and hardware, such as point-of-sale processing at stores, to operate its business. In the
ordinary course of business, the Company collects, processes, transmits and retains confidential,
sensitive and personal information (“Confidential Information”) regarding the Company and its
employees, vendors, customers and credit card holders. Some of this Confidential Information is
held and managed by third party service providers. As with other large and prominent companies,
the Company is regularly subject to cyber attacks and such attempts are occurring more frequently,
are constantly evolving in nature and are becoming more sophisticated.
The Company has implemented security measures, including employee training, monitoring and
testing, maintenance of protective systems and contingency plans, to protect and to prevent
unauthorized access of Confidential Information and to reduce the likelihood of disruptions to its IT
systems. The Company also has security processes, protocols and standards that are applicable to
its third-party service providers. Despite these measures, all of the Company’s information systems,
including its back-up systems and any third party service provider systems that it employs, are
vulnerable to damage, interruption, disability or failures due to a variety of reasons, including physical
theft, fire, power loss, computer and telecommunication failures or other catastrophic events, as well
as from internal and external security breaches, denial of service attacks, viruses, worms and other
known or unknown disruptive events.
The Company or its third-party service providers may be unable to anticipate, timely identify or
appropriately respond to one or more of the rapidly evolving and increasingly sophisticated means
by which computer hackers, cyber terrorists and others may attempt to breach the Company’s
security measures or those of our third-party service providers’ information systems. As cyber threats
evolve and become more difficult to detect and successfully defend against, one or more cyber
threats might defeat the Company’s security measures or those of its third-party service providers.
Moreover, employee error or malfeasance, faulty password management or other irregularities may
result in a breach of the Company’s or its third-party service providers’ security measures, which
could result in a breach of employee, customer or credit card holder privacy or Confidential
Information.
If the Company does not allocate and effectively manage the resources necessary to build and
sustain reliable IT infrastructure, fails to timely identify or appropriately respond to cyber security
incidents, or the Company’s or its third-party service providers’ information systems are damaged,
destroyed, shut down, interrupted or cease to function properly, the Company’s business could be
disrupted and the Company could, among other things, be subject to: transaction errors; processing
inefficiencies; the loss of existing customers or failure to attract new customers; the loss of sales;
the loss or unauthorized access to Confidential Information or other assets; the loss of or damage
to intellectual property or trade secrets; damage to its reputation; litigation; regulatory enforcement
actions; violation of privacy, security or other laws and regulations; and remediation costs.
Legal Proceedings
In the ordinary course of business, the Company is involved in and potentially subject to legal
proceedings. The proceedings may involve landlords, suppliers, customers, regulators, tax
authorities or other persons. The potential outcome of legal proceedings and claims is uncertain and
could result in a material adverse effect on the Company’s reputation, operations or financial
condition or performance.
Merchandising, Electronic Commerce and Disruptive Technologies
The Company may have inventory that customers do not want or need, is not reflective of current
trends in customer tastes, habits or regional preferences, is priced at a level customers are not willing
to pay or is late in reaching the market. In addition, the Company’s operations, specifically inventory
levels, sales, volume and product mix, are impacted to some degree by seasonality, including certain
holiday periods in the year. If merchandising efforts are not effective or responsive to customer
demand, it could adversely affect the Company’s financial performance.
Customers expect innovative concepts and a positive customer online experience, including a user-
friendly website, safe and reliable processing of payments and a well-executed merchandise pick up
or delivery process. If systems are damaged or cease to function properly, capital investment may
be required. The Company is also vulnerable to various additional uncertainties associated with e-
commerce including website downtime and other technical failures, changes in applicable federal
and provincial regulations, security breaches, and consumer privacy concerns. If these technology-
based systems do not function effectively, the Company’s ability to grow its e-commerce business
could be adversely affected. The Company’s omnichannel strategy entails digital customer
experience investments, but there can be no assurances that the Company will be able to recover
the related costs incurred.
The retail landscape demands an efficient and seamless digitally influenced shopping experience.
The emergence of disruptive technologies and the effect of increasing digital advances could have
an impact on the physical space requirements of retail businesses. Although the importance of a
retailer’s physical presence has been demonstrated, the size requirements and locations may be
subject to further disruption. Any failure to adapt the business models to recognize and manage this
shift in a timely manner could adversely affect the Company’s operations or financial performance.
Key Management and Ability to Attract and/or Retain Key Personnel
The Company’s success depends upon the continued contributions of key management, some of
whom have unique talents and experience and would be difficult to replace in the short term. The
loss or interruption of the services of a key executive could have a negative effect on the Company
during the transitional period that would be required for a successor to assume the responsibilities
of the key management position. The Company’s success will also depend on the ability to attract
and retain other key personnel. The Company may not be able to attract or retain these employees,
which could negatively affect the business.
FINANCIAL RISK MANAGEMENT
The Company is exposed to a number of financial risks, including those associated with financial
instruments, which have the potential to affect its operating and financial performance. The Company
may periodically use derivative instruments to offset certain of these risks. The Company’s policies
and guidelines prohibit the use of any derivative instrument for trading or speculative purposes. The
fair value of derivative instruments is subject to changing market conditions that could adversely
affect the financial performance of the Company.
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 and interest rate 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 trade and other receivables. The Company limits
its exposure to credit risk with respect to cash by dealing with major Canadian financial institutions.
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. Due to the
nature of the Company’s activities and the low credit risk of the Company’s trade and other
receivables as at February 1, 2025 and February 3, 2024, expected credit loss on these financial
assets is not significant.
As at February 1, 2025, the Company’s maximum exposure to credit risk for these financial
instruments was as follows:
Cash
$
158.1
Trade and other receivables
6.1
$
164.2
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. Cash flows provided by operations and
funds available from the revolving credit facility will be sufficient to meet the Company’s operational
requirements and financial obligations. The majority of trade and other payables are payable within
twelve months.
For fiscal 2025, the Company realized net earnings of $12.1 million. As at February 1, 2025, the
Company’s current assets total $322.1 million and current liabilities total $156.4 million. The
Company has a senior secured revolving credit facility with a Canadian financial institution for an
amount of up to $50.0 million. As of February 1, 2025, no amount was drawn under the revolving
credit facility (February 3, 2024 - nil). Refer to Note 10 in the audited consolidated financial
statements for fiscal 2025.
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 forward contracts, normally not to exceed twelve months,
and U.S. dollar spot rate purchases. 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. The Company enters into
certain qualifying foreign exchange contracts that it designated as cash flow hedging instruments.
This results in the effective portion of the changes in fair value for qualifying hedging instruments,
being recorded as a component of other comprehensive income, until it is recognized as a cost of
inventory or reclassified to net earnings upon transfer from Accumulated Other Comprehensive
Income.
The Company has performed a sensitivity analysis on its U.S. dollar denominated financial
instruments, which consist principally of cash of U.S.$23.1 million, trade and other receivables of
U.S. $0.1 million and trade payables of U.S. $19.8 million to determine how a change in the U.S.
dollar exchange rate would affect net earnings. On February 1, 2025, a 10% 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 $0.4 million increase or decrease, respectively, in
the Company’s net earnings for fiscal 2025.
The Company has performed a sensitivity analysis on its derivative financial instruments (which are
all designated as cash flow hedges), to determine how a change in the U.S. dollar exchange rate
would impact other comprehensive income. On February 1, 2025, a 5% 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 $6.5 million decrease or $6.7 million increase, respectively, in the Company’s other
comprehensive income for fiscal 2025.
Interest Rate Risk
Interest rate risk exists in relation to the Company’s cash and its revolving credit facility. Market
fluctuations in interest rates impacts the Company’s earnings with respect to interest earned on cash
that are invested mainly with major Canadian financial institutions and interest paid on outstanding
balances of the revolving credit facility.
The Company has performed a sensitivity analysis on interest rate risk related to interest income
earned on its cash as at February 1, 2025 to determine how a change in interest rates would impact
net earnings. For fiscal 2025, the Company earned interest income of $5.8 million on its cash. An
increase or decrease of 100 basis points in the average interest rate earned during the year would
have resulted in a $0.9 million increase or decrease, respectively, in the Company’s net earnings.
This analysis assumes that all other variables, in particular foreign currency rates, remain constant.
The Company did not incur interest expense on its revolving credit facility for fiscal 2025.
LIQUIDITY, CASH FLOWS AND CAPITAL RESOURCES
The Company primarily uses funds for working capital requirements and capital expenditures. As at
February 1, 2025, compared to February 3, 2024, the Company increased its working capital1
position by $11.3 million with current assets of $322.1 million (February 3, 2024 - $259.9 million) and
current liabilities of $156.4 million (February 3, 2024 - $105.5 million) and no long-term debt (other
than lease liabilities). As at February 1, 2025, included in the Company’s current assets is cash of
$158.1 million (February 3, 2024 - $116.7 million). Cash is held in interest bearing accounts mainly
with a major Canadian financial institution.
The Company has a senior secured revolving credit facility with a Canadian financial institution of up to
$50.0 million. If and when necessary, this committed facility is used to finance the ongoing operations
of the Company. No amount was drawn under the revolving credit facility as at February 1, 2025 and
February 3, 2024.
In fiscal 2025, the Company invested $31.2 million in capital expenditures. The Company expects to
invest approximately $30.0 million in capital expenditures in fiscal 2026. The Company’s capital
allocation strategy focuses on three main investment areas:
1. Store renovations to ensure the existing network of retail stores remains current and relevant,
and in new retail stores as suitable locations are identified;
2. Technology, by continuing to upgrade systems by migrating legacy systems to modern cloud
service providers and the omnichannel network, including in-store point-of-sale systems and
ecommerce digital capabilities;
3. Distribution centre improvements, including upgrading, optimizing and automating distribution
capabilities.
1 This is a Non-GAAP Financial Measure. See section entitled “Non-GAAP Financial Measures & Supplementary Financial Measures” for a
reconciliation of this measure.
FINANCIAL COMMITMENTS
The following table sets forth the Company’s financial commitments as at February 1, 2025:
Contractual Obligations
Total
Within
1 year
2 to 4
years
5 years
and over
Trade and other payables
$ 109.7
$ 109.7
$
-
$
-
Lease obligations1
185.9
44.4
92.2
49.3
Purchase obligations2
120.5
108.5
11.4
0.6
Other service contracts
4.4
2.3
2.1
-
Total contractual obligations
$ 420.5
$ 264.9
$ 105.7
$
49.9
1 Represents the undiscounted minimum lease payments for leases of retail locations and office equipment.
2 Includes amounts pertaining to agreements to purchase goods or services that are enforceable and legally binding on the Company.
Subsequent to February 1, 2025, the Board of Directors of the Company approved the adoption of
a Deferred Share Unit (“DSU”) plan available to non-employee members of the Board of Directors.
In accordance with the DSU plan, the number of DSUs granted by the Board of Directors is based
on the market value of the Company’s Class A non-voting shares for the five-trading day-period
ending the day before the grant date. DSUs become redeemable for cash at the time when an eligible
Director ceases to be a Director of the Company for an amount based on the market value of the
Company’s Class A non-voting shares at the redemption date.
OUTSTANDING SHARE DATA
At April 10, 2025, 13,440,000 Common shares and 35,998,789 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. As at April 10, 2025, the Company has a total of
2,560,119 share options outstanding at a weighted average exercise price of $2.12. 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.
On July 31, 2024, the Company received approval the TSX Venture Exchange to proceed with a
normal course issuer bid (“NCIB”). Under the NCIB, the Company may acquire up to an aggregate
of 3,283,582 Class A non-voting shares of the Company (“Shares”) over the 12-month period
commencing on August 5, 2024, and ending on August 4, 2025, representing approximately 10% of
the public float of the Shares. Additionally, under the NCIB, the Company may not acquire more than
2% of the public float of the Shares, representing 718,326 Shares, in any 30-day period.
In connection with the NCIB, the Company entered into an automatic share purchase plan (“ASPP”)
with a designated broker to facilitate the purchase of Shares under the NCIB during times when the
Company would ordinarily not be permitted to purchase Shares during self-imposed blackout
periods. During fiscal 2025, under the NCIB and ASPP, the Company purchased for cancellation
181,900 Shares for an aggregate cash consideration of $0.5 million.
As at February 1, 2025, a financial liability of $2.2 million representing the maximum value of Shares
authorized to be repurchased by the designated broker under the ASPP during self-imposed
blackout periods was recognized in trade and other payables. Subsequent to February 1, 2025,
under the terms and conditions of the NCIB, the Company purchased for cancellation 136,300
Shares for an aggregate cash consideration of $0.3 million.
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 forward contracts with maturities generally not exceeding twelve months and are
normally designated as cash flow hedges.
Details of the foreign exchange contracts outstanding as at February 1, 2025 and February 3, 2024
are included in the “Foreign Exchange Contracts” section of this MD&A.
RELATED PARTY TRANSACTIONS
Transactions with Key Management Personnel
Key management personnel are those persons (both executive and non-executive) who have the
authority and responsibility for planning, directing and controlling the activities of the entity - directly
or indirectly. 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 are
considered key management personnel. The members of the Board of Directors participate in the
share option plan, as described in Note 14 to the audited consolidated financial statements for fiscal
2025.
During fiscal 2025, the Company incurred $2.7 million (fiscal 2024 - $2.6 million) in compensation
expenses for key management personnel consisting of salaries, directors’ fees and short-term
benefits.
Other Related-Party Transactions
The Company incurred $0.2 million in fiscal 2025 (fiscal 2024 - $0.3 million) for legal services
rendered by a law firm connected to a member of the Board of Directors.
These transactions are recorded at the amount of consideration paid as established and agreed to
by the related parties.
FINANCIAL INSTRUMENTS
The Company uses its cash resources and its credit facilities to fund ongoing working capital needs
along with capital expenditures. Financial instruments that are exposed to concentrations of credit
risk consist primarily of cash and trade and other receivables. The Company reduces this risk by
dealing only with highly-rated counterparties, normally major Canadian financial institutions.
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.
For further disclosure of the Company’s financial instruments, their classification, their impact on
financial statements, and determination of fair value refer to Note 22 of the audited consolidated
financial statements for fiscal 2025.
CRITICAL ACCOUNTING 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. Management has made significant judgments in
connection with the Company’s reported assets, liabilities, revenue and expenses, and on the related
disclosures, using estimates and assumptions, which are subject to significant uncertainties.
Accordingly, actual results could differ materially from those estimates and assumptions made by
management.
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
Pension Plan
The cost of the Company’s defined benefit pension plan is determined by means of actuarial
valuations, which involve making assumptions about discount rates, future salary increases and
mortality rates. Because of the long-term nature of the plans, such estimates are subject to a high
degree of uncertainty.
Gift Cards
Gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are
redeemed. Breakage is an estimate of the amount of gift cards that will never be redeemed. If the
Company expects to be entitled to a breakage amount for the gift cards, it recognizes the expected
breakage amount as revenue in proportion to the pattern of rights exercised by the customer. The
breakage rate is reviewed on an ongoing basis and is estimated based on historical redemption
patterns.
Inventories
Inventories are comprised of finished goods and 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. The Company has developed assumptions regarding the quantity of
merchandise to be sold below cost based on historical pattern of sales. In addition, as part of
inventory valuations, provisions are accrued for inventory shrinkage for lost or stolen items based
on historical trends from actual physical inventory counts.
Impairment of Non-Financial Assets
The Company must assess the possibility that the carrying amounts of tangible and intangible assets
may not be recoverable. Impairment testing is performed whenever there is an indication of
impairment. 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 property and
equipment, right-of use assets and intangible assets are in fact impaired and the dollar amount of
that impairment.
Leases
In determining the carrying amount of right-of-use assets and lease liabilities, the Company is
required to estimate the incremental borrowing rate specific to each leased asset if the interest rate
implicit in the lease is not readily determinable. Management determines the incremental borrowing
rate of each leased asset by incorporating the Company's creditworthiness, the security, term and
value of the underlying leased asset, and the economic environment in which the leased asset
operates. The incremental borrowing rates are subject to change.
Critical Judgments in Applying Accounting Policies
Operating Segments
The Company uses judgment in assessing the criteria used to determine the aggregation of
operating segments. In order to identify the Company’s reportable segments, the Company uses the
process outlined in IFRS 8, Operating Segments, 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. As at February 1, 2025, the
Company’s operating segments, before aggregation, have been identified as the Company’s three
brands: Reitmans, PENN. and RW&CO.
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 CODM reviews the profitability of the banner as a whole, which includes both the
store and e-commerce channels. This is consistent with the omni-channel strategy adopted by the
Company whereby customers can shop seamlessly in retail stores and online. The Company has
aggregated its operating segments into one reportable segment because of their similar economic
characteristics, customers (mainly female) and nature of products (mainly women’s specialty
apparel). The similarity in economic characteristics reflects the fact that the Company’s operating
segments operate mainly in the women apparel business, primarily in Canada and are therefore
subject to the same economic market pressures. The Company’s operating segments are subject to
similar competitive pressures such as price and product innovation and assortment from existing
competitors and new entrants into the marketplace. The operating segments also share centralized,
common functions such as distribution and information technology.
Leases
Management exercises judgment in determining the appropriate lease term on a lease-by-lease
basis. Management considers all facts and circumstances that create an economic incentive to
exercise a renewal option or to not exercise a termination option, including investments in major
leaseholds and store performances. The periods covered by renewal options are only included in
the lease term if management is reasonably certain to renew.
Management considers reasonably certain to be a high threshold. Changes in the economic
environment or changes in the retail industry may influence management’s assessment of lease
term, and any changes in management’s estimate of lease terms may have a material impact on the
Company’s consolidated balance sheets and consolidated statements of earnings.
Deferred tax assets
Deferred tax assets are recognized only to the extent it is considered probable that those assets will
be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse
and a judgment using significant assumptions, including sales growth rates, as to whether there will
be sufficient future taxable profits available against which they can be utilized.
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS NOT YET ADOPTED IN FISCAL
2025
New amendments to standards and interpretations not yet effective for fiscal 2025 for which earlier
adoption was permitted have not been applied in preparing the audited consolidated financial
statements for fiscal 2025. The amendments to standards and interpretations that are currently under
review:
• Presentation and Disclosure in Financial Statements (IFRS 18)
Further information on this modification can be found in Note 3 of the audited consolidated financial
statements for fiscal 2025.
ADOPTION OF NEW ACCOUNTING POLICIES
The new accounting policies set out below have been adopted in the audited consolidated financial
statements for fiscal 2025:
• Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
Further information on these new accounting policies can be found in Note 3 of the audited
consolidated financial statements for fiscal 2025.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.
KPMG LLP
Tour KPMG
600, de Maisonneuve Blvd West, Suite 1500
Montréal, QC H3A 0A3
Canada
Telephone 514 840 2100
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Reitmans (Canada) Limited
Opinion
We have audited the consolidated financial statements of Reitmans (Canada) Limited (the "Entity"),
which comprise:
•
the consolidated balance sheets as at February 1, 2025 and February 3, 2024
•
the consolidated statements of earnings for the years then ended
•
the consolidated statements of comprehensive income for the years then ended
•
the consolidated statements of changes in shareholders’ equity for the years then ended
•
the consolidated statements of cash flows for the years then ended
•
and notes to the consolidated financial statements, including a summary of material accounting
policy information
(Hereinafter referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects,
the consolidated financial position of the Entity as at February 1, 2025 and February 3, 2024, and
its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board.
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the "Auditor’s Responsibilities for
the Audit of the Financial Statements" section of our auditor’s report.
We are independent of the Entity in accordance with the ethical requirements that are relevant to
our audit of the financial statements in Canada and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Page 2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements for the year ended February 1, 2025. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
We have determined the matter described below to be the key audit matter to be communicated in
our auditor’s report.
Assessment of the Existence and Accuracy of Inventories
Description of the matter
We draw attention to Note 2 (e) (iii), Note 3 (g) and Note 4 in the financial statements. As at
February 1, 2025, the Company’s inventory balance is $132,877 thousands. Inventories are
comprised of finished goods and are measured at the lower of cost, determined on a weighted
average cost 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.
Why the matter is a key audit matter
We identified assessment of the existence and accuracy of inventories as a key audit matter given
the magnitude of the inventories balance and due to the audit effort involved in testing the
inventory that is held in numerous locations.
How the matter was addressed in the audit
The primary procedures we performed to address this key audit matter included the following:
We evaluated the design and tested the operating effectiveness of certain controls over the Entity’s
inventory process, including controls over the physical inventory counts at the distribution centre
and at retail stores and over the weighted average cost.
We tested inventory purchases to validate the existence and accuracy of the inventory cost by
using computer assisted techniques to match purchase orders to invoices, to shipping reports and
to disbursements.
For a selection of items, we observed the Entity’s physical cycle inventory counts at the distribution
centre and at a selection of retail stores near year-end and we performed test counts which we
compared to the Entity’s accounting records.
Page 3
Other Information
Management is responsible for the other information. Other information comprises the information
included in Management’s Discussion and Analysis filed with the relevant Canadian Securities
Commissions.
Our opinion on the financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit and remain alert
for indications that the other information appears to be materially misstated.
We obtained the information included in Management’s Discussion and Analysis filed with the
relevant Canadian Securities Commissions as at the date of this auditor’s report. If, based on the
work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in the auditor’s report.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS Accounting Standards as issued by the International Accounting Standards
Board, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, management is responsible for assessing the Entity’s ability
to continue as a going concern, disclosing as applicable, matters related to going concern and
using the going concern basis of accounting unless management either intends to liquidate the
Entity or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Entity’s financial reporting
process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion.
Page 4
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of the financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we
exercise professional judgment and maintain professional skepticism throughout the audit.
We also:
•
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit 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.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by management.
•
Conclude on the appropriateness of management's use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Entity's ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Entity to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
•
Communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
*CPA auditor, public accountancy permit No. A128528
Page 5
•
Provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business units within the group as a basis for forming an
opinion on the group financial statements. We are responsible for the direction, supervision and
review of the audit work performed for the purposes of the group audit. We remain solely
responsible for our audit opinion.
•
Determine, from the matters communicated with those charged with governance, those matters
that were of most significance in the audit of the financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless
law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our auditor’s report
because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
The engagement partner on the audit resulting in this auditor’s report is Marie Valcourt.
Montréal, Canada
April 10, 2025
REITMANS (CANADA) LIMITED
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended February 1, 2025 (52 weeks) and February 3, 2024 (53 weeks)
(in thousands of Canadian dollars except per share amounts)
Notes
2025
2024(1)
Net revenues
21
$
773,804
$
794,688
Cost of goods sold
4
338,766
363,684
Gross profit
435,038
431,004
Selling, general and administrative expenses
417,198
408,079
Results from operating activities
17,840
22,925
Finance income
16
8,024
5,820
Finance costs
16
(9,963)
(8,606)
Earnings before income taxes
15,901
20,139
Income tax expense
9
(3,762)
(5,324)
Net earnings
$
12,139
$
14,815
Earnings per share:
17
Basic
$
0.25
$
0.30
Diluted
0.24
0.30
(1) For the year ended February 3, 2024, selling and distribution expenses of $357,772 and administrative expenses of $50,307 were
combined to present selling, general and administrative expenses of $408,079 in order to align with presentation in the industry.
The adjustments had no effect on results from operating activities or on net earnings.
The accompanying notes are an integral part of these consolidated financial statements.
REITMANS (CANADA) LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the years ended February 1, 2025 (52 weeks) and February 3, 2024 (53 weeks)
(in thousands of Canadian dollars)
Notes
2025
2024
Net earnings
$
12,139
$
14,815
Other comprehensive income
Items that may be reclassified subsequently to net earnings:
Cash flow hedges (net of tax of $2,522; 2024 - $307)
13
7,002
851
Loss on foreign currency translation differences reclassified to net
earnings
13,16
-
1,044
Items that will not be reclassified to net earnings:
Net actuarial (loss) gain on defined benefit plan (net of tax of
$116; 2024 - $94)
8
(321)
260
Total other comprehensive income
6,681
2,155
Total comprehensive income
$
18,820
$
16,970
The accompanying notes are an integral part of these consolidated financial statements.
REITMANS (CANADA) LIMITED
CONSOLIDATED BALANCE SHEETS
As at February 1, 2025 and February 3, 2024
(in thousands of Canadian dollars)
Notes
2025
2024
ASSETS
CURRENT ASSETS
Cash
$ 158,116
$ 116,653
Trade and other receivables
6,088
3,542
Derivative financial asset
22
12,286
1,382
Inventories
4
132,877
122,025
Prepaid expenses and other assets
12,714
16,341
Total Current Assets
322,081
259,943
NON-CURRENT ASSETS
Property and equipment
5
89,126
69,609
Intangible assets
6
1,639
1,566
Right-of-use assets
7
140,120
131,457
Pension asset
8
-
1,149
Deferred income taxes
9
21,120
27,026
Total Non-Current Assets
252,005
230,807
TOTAL ASSETS
$ 574,086
$ 490,750
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade and other payables
11
$ 109,671
$
61,754
Deferred revenue
12
12,398
11,939
Income taxes payable
191
445
Current portion of lease liabilities
7
34,145
31,329
Total Current Liabilities
156,405
105,467
NON-CURRENT LIABILITIES
Lease liabilities
7
121,252
106,265
Total Non-Current Liabilities
121,252
106,265
SHAREHOLDERS' EQUITY
Share capital
13
29,108
28,292
Contributed surplus
11,456
11,207
Retained earnings
248,012
238,668
Accumulated other comprehensive income
13
7,853
851
Total Shareholders' Equity
296,429
279,018
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 574,086
$ 490,750
The accompanying notes are an integral part of these consolidated financial statements.
On behalf of the Board,
(signed) Stephen F. Reitman, Director
(signed) Bruce J. Guerriero, Director
REITMANS (CANADA) LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the years ended February 1, 2025 (52 weeks) and February 3, 2024 (53 weeks)
(in thousands of Canadian dollars)
Notes
Share Capital
Contributed
Surplus
Retained
Earnings
Accumulated Other
Comprehensive
Income (loss)
Total
Shareholders’
Equity
Balance as at February 4, 2024
$
28,292
$ 11,207
$ 238,668
$
851
$ 279,018
Net earnings
-
-
12,139
-
12,139
Total other comprehensive income (loss)
8,13
-
-
(321)
7,002
6,681
Total comprehensive income for the year
-
-
11,818
7,002
18,820
Share options exercised
13
958
(267)
-
-
691
Share repurchase program under ASPP
13
(142)
-
(2,474)
-
(2,616)
Share-based compensation costs
14
-
516
-
-
516
Total contributions by owners of the
Company
816
249
(2,474)
-
(1,409)
Balance as at February 1, 2025
$
29,108
$ 11,456
$ 248,012
$
7,853
$ 296,429
Balance as at January 29, 2023
$
27,406
$ 10,871
$ 223,593
$
(1,044)
$ 260,826
Net earnings
-
-
14,815
-
14,815
Total other comprehensive income
8,13
-
-
260
1,895
2,155
Total comprehensive income for the year
-
-
15,075
1,895
16,970
Share options exercised
13
886
(243)
-
-
643
Share-based compensation costs
14
-
579
-
-
579
Total contributions by owners of the
Company
886
336
-
-
1,222
Balance as at February 3, 2024
$
28,292
$ 11,207
$ 238,668
$
851
$ 279,018
The accompanying notes are an integral part of these consolidated financial statements.
REITMANS (CANADA) LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended February 1, 2025 (52 weeks) and February 3, 2024 (53 weeks)
(in thousands of Canadian dollars)
Notes
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings
$
12,139
$
14,815
Adjustments for:
Depreciation, amortization and net impairment losses on property and
equipment, and intangible assets
5,6
14,378
14,203
Depreciation on right-of-use assets
7
39,364
34,314
Share-based compensation costs
14
516
579
Net change in transfer of realized gain on cash flow hedges to inventory
(1,379)
(224)
Foreign exchange gain
(8,361)
(1,714)
Loss on foreign currency translation differences reclassified to net
earnings
13,16
-
1,044
Interest on lease liabilities
7,16
9,963
7,562
Interest income
16
(5,783)
(5,200)
Income tax expense
9
3,762
5,324
64,599
70,703
Changes in:
Trade and other receivables
(2,744)
126
Inventories
4
(10,852)
20,277
Prepaid expenses and other assets
3,627
(1,839)
Trade and other payables
11
42,991
(20,539)
Pension asset
8
712
(795)
Deferred revenue
12
459
(2,161)
98,792
65,772
Interest received
5,981
4,773
Income taxes paid
(516)
(1,017)
Net cash flows from operating activities
104,257
69,528
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to property and equipment and intangible assets
5,6,20
(31,193)
(17,702)
Cash flows used in investing activities
(31,193)
(17,702)
CASH FLOWS USED IN FINANCING ACTIVITIES
Release of restricted cash
-
2,808
Payment of lease liabilities
7,20
(40,254)
(43,352)
Purchase of Class A non-voting shares for cancellation
13
(464)
-
Proceeds from issuance of share capital
13
691
643
Cash flows used in financing activities
(40,027)
(39,901)
FOREIGN EXCHANGE GAIN ON CASH HELD IN FOREIGN
CURRENCY
8,426
1,724
NET INCREASE IN CASH
41,463
13,649
CASH, BEGINNING OF THE YEAR
116,653
103,004
CASH, END OF THE YEAR
$
158,116
$
116,653
Supplementary cash flow information (note 20)
The accompanying notes are an integral part of these consolidated financial statements.
REITMANS (CANADA) LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended February 1, 2025 (52 weeks) and February 3, 2024 (53 weeks)
(all amounts in thousands of Canadian dollars except per share amounts)
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 Company’s issued and outstanding common and
Class A shares are listed on Toronto Stock Venture Exchange under the symbol “RET.V” and “RET-A.V”,
respectively. The principal business activity of the Company is the sale of women’s wear.
2. BASIS OF PRESENTATION
a) Fiscal Year
The Company’s fiscal year ends on the Saturday closest to the end of January. Under an accounting
convention common in the retail industry, the Company follows a 52-week reporting cycle, which
periodically necessitates a fiscal year of 53 weeks. The year ended February 3, 2024 included 53 weeks
instead of the normal 52 weeks. The inclusion of an extra week occurs every fifth or sixth fiscal year due
to the Company’s floating year-end date. All references to 2025 and 2024 represent the 52 weeks ended
February 1, 2025 and 53 weeks ended February 3, 2024, respectively.
b) Statement of Compliance
These consolidated financial statements have been prepared in accordance with IFRS Accounting
Standards as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were authorized for issue by the Board of Directors on April 10,
2025.
c) Basis of Measurement
These consolidated financial statements have been prepared on the historical cost basis except for the
following material items:
• lease liabilities are initially measured at the present value of the lease payments that are not paid at the
lease commencement date;
• the pension asset is recognized as the present value of the defined benefit obligation less the fair value
of the plan assets;
• liabilities for cash-settled share-based payment arrangements are measured in accordance with IFRS
2, Share-Based Payment; and
• derivative financial instruments measured at fair value.
d) Functional and Presentation Currency
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 and strike price amounts.
e) Estimates, Judgments and Assumptions
The preparation of the consolidated financial statements in accordance with IFRS Accounting Standards
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 Plan
The cost of the defined benefit pension plan is determined by means of actuarial valuations, which
involve making assumptions about discount rates, future salary increases and mortality rates.
Because of the long-term nature of the plans, such estimates are subject to a high degree of
uncertainty.
(ii)
Gift Cards
Gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are
redeemed. Breakage is an estimate of the amount of gift cards that will never be redeemed. If the
Company expects to be entitled to a breakage amount for the gift cards, it recognizes the expected
breakage amount as revenue in proportion to the pattern of rights exercised by the customer. The
breakage rate is reviewed on an ongoing basis and is estimated based on historical redemption
patterns.
(iii)
Inventories
Inventories are comprised of finished goods and 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. The Company has developed assumptions regarding the quantity of
merchandise to be sold below cost based on historical pattern of sales.
(iv)
Impairment of Non-Financial Assets
The Company must assess the possibility that the carrying amounts of tangible and intangible assets
may not be recoverable. Impairment testing is performed whenever there is an indication of
impairment. 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 property and
equipment, right-of-use assets and intangible assets are in fact impaired and the dollar amount of
that impairment.
(v)
Leases
In determining the carrying amount of right-of-use assets and lease liabilities at lease inception and
for lease modifications, the Company is required to estimate the incremental borrowing rate specific
to each leased asset if the interest rate implicit in the lease is not readily determinable. Management
determines the incremental borrowing rate of each leased asset by incorporating the Company's
creditworthiness, the security, term and value of the underlying leased asset, and the economic
environment in which the leased asset operates. The incremental borrowing rates are subject to
change.
Critical Judgments in Applying Accounting Policies
(vi)
Operating Segments
The Company uses judgment in assessing the criteria used to determine the aggregation of operating
segments. In order to identify the Company’s reportable segments, the Company uses the process
outlined in IFRS 8, Operating Segments, 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 three brands: Reitmans, PENN. and RW & CO.
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 CODM reviews the profitability of the banner as a whole, which includes both the
store and e-commerce channels. This is consistent with the omni-channel strategy adopted by the
Company whereby customers can shop seamlessly in retail stores and online. The Company has
aggregated its operating segments into one reportable segment because of their similar economic
characteristics, customers (mainly female) and nature of products (mainly women’s apparel). The
similarity in economic characteristics reflects the fact that the Company’s operating segments
operate mainly in the women apparel business, primarily in Canada and are therefore subject to the
same economic market pressures. The Company’s operating segments are subject to similar
competitive pressures such as price and product innovation and assortment from existing
competitors and new entrants into the marketplace. The operating segments also share centralized,
common functions such as distribution and information technology.
(vii) Leases
Management exercises judgment in determining the appropriate lease term on a lease-by-lease basis.
Management considers all facts and circumstances that create an economic incentive to exercise a
renewal option or to not exercise a termination option, including investments in major leaseholds
and store performances. The periods covered by renewal options are only included in the lease term
if management is reasonably certain to renew.
Management considers reasonably certain to be a high threshold. Changes in the economic
environment or changes in the retail industry may influence management’s assessment of lease term,
and any changes in management’s estimate of lease terms may have a material impact on the
Company’s consolidated balance sheets and consolidated statements of earnings.
(viii) Deferred tax assets
Deferred tax assets are recognized only to the extent it is considered probable that those assets will
be recoverable. This involves an assessment of when those deferred tax assets are likely to reverse
and a judgment using significant assumptions, including sales growth rates, as to whether there will
be sufficient future taxable profits available against which they can be utilized.
3. MATERIAL ACCOUNTING POLICIES
The material accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, except as described below for the adoption of new accounting policies:
a) Adoption of new accounting policies
Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
On January 23, 2020, the IASB issued Presentation of Financial Statements (Amendments to IAS 1). The
amendments are effective for annual periods beginning on or after January 1, 2024. Early adoption is
permitted. These amendments clarify the classification of liabilities as current or non-current. The
amendments remove the requirement for a right to defer settlement or rollover of a liability for at least
twelve months to be unconditional. Instead, such a right must exist at the end of the reporting period and
have substance. The adoption of these amendments did not have any impact on the Company’s
consolidated financial statements.
b) New standards and interpretations not yet adopted
Presentation and Disclosure in Financial Statements (IFRS 18)
On April 9, 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements to
improve reporting of financial performance. IFRS 18 replaces IAS 1 Presentation of Financial Statements.
The standard introduces new required subtotals in the statement of earnings and disclosure requirements
for management-defined performance measures. IFRS 18 applies for annual reporting periods beginning
on or after January 1, 2027. Early adoption is permitted. The Company is currently evaluating the impact
from the adoption of IFRS 18 on its consolidated financial statements.
c) Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its
subsidiaries. The Company has no subsidiaries representing individually more than 10% of the total
consolidated assets and 10% of the consolidated net sales of the Company.
d) Property and Equipment
Items of property and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses. 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.
The estimated useful lives for the current and comparative period are as follows:
Buildings
10 to 50 years
Fixtures and equipment
3 to 20 years
Leasehold improvements
over the lesser of estimated useful
life and the lease term
Depreciation methods, useful lives and residual values are reviewed at each annual reporting date and
adjusted prospectively, if appropriate.
Disposals of property and equipment include write-offs from store closures and for fully depreciated items.
e) Intangible Assets
Intangible assets consist of software with estimated useful lives of 3 to 5 years for the current and
comparative period. Amortization methods, useful lives and residual values are reviewed at each annual
reporting date and adjusted prospectively, if appropriate.
Disposals of intangible assets include write-offs for fully depreciated items.
Configuration or customization costs incurred under cloud computing agreements that do not meet the
criteria for capitalization are recognized as an expense.
f) Leases
The Company recognizes a right-of-use asset and a lease liability based on the present value of future lease
payments when the leased asset is available for use by the Company. The lease payments include fixed
and in-substance fixed payments and variable lease payments that depend on an index or rate, less any
lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease
or the lessee’s incremental borrowing rate. Generally, the Company uses the lessee’s incremental
borrowing rate for its present value calculations. Lease payments are discounted over the lease term, which
includes the fixed term and renewal options that the Company is reasonably certain to exercise. Lease
payments are allocated between the lease liability and a finance cost, which is recognized in finance costs
over the lease term in the consolidated statements of earnings.
Lease payments for assets that are exempt through the short-term exemption and variable payments not
based on an index or rate are recognized in selling, general and administrative expenses as incurred. Lease
incentives received for variable payment leases are deferred and amortized as a reduction in recognized
variable rent expenses over the term of the related leases.
Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment
losses, and adjusted for any re-measurement of lease liabilities. Cost is calculated as the initial
measurement of the lease liability plus any initial direct costs and any lease payments made at or before
the commencement date. Right-of-use assets are depreciated on a straight-line basis over the shorter of the
lease term or the useful life.
g) Inventories
Merchandise inventories are measured at the lower of cost, determined on a weighted average-cost-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 center 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.
h) Impairment of 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. 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”).
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 and right-of-use assets, each store is
managed at the corporate level, with internal reporting organized to measure the 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.
The Company’s corporate assets do not generate separate cash inflows. Corporate assets are tested for
impairment at the minimum grouping of CGUs to which the corporate assets can be reasonably and
consistently allocated. 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 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.
i) Employee Benefits
(i) Pension Plans
Defined Benefit Plan
The Company maintained a contributory defined benefit plan (“Plan”) that provided 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 were made by the
Plan members and the Employer. A Pension Committee, as appointed under the provisions of the
Plan, was responsible for the administration of the Plan. All the investments of the Plan were
deposited with RBC Investors Services Trust, which acted as the custodian of the assets entrusted to
it. The investment manager of the Plan’s investments was SEI Investments Canada Company.
The Company’s net pension asset was calculated by deducting from the fair value of plan assets the
discounted estimated amount of future benefits that members had earned in the current and prior
periods (defined benefit obligations).
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 Canadian dollars, which is
the currency that the benefits are to be paid and with terms to maturity that, on average, match the
terms of the defined benefit plan obligations.
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 pension asset, 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.
Net defined benefit asset that can be recognized is limited to the total of any unrecognized past service
costs and the present value of economic benefits available in the form of future refunds from the Plan
or reductions in future contributions to the Plan (the “asset ceiling”). To calculate the present value
of economic benefits, consideration is given to minimum funding requirements that apply to the Plan.
Where it is anticipated that the Company will not be able to recover the value of the net defined
benefit asset, after considering minimum funding requirements for future services, the net defined
benefit asset is reduced to the amount of the asset ceiling. The impact of the asset ceiling is recognized
in other comprehensive income.
Defined Contribution Plans
The Company maintains a defined contribution plan for certain eligible employees whereby the
Company contributes fixed amounts into a registered plan. Benefits are also given to employees
through defined contribution plans administered by the Federal and Québec governments. The
Company’s contributions to these plans are recognized in the periods when the services are rendered.
(ii) Share-Based Compensation
Share options (equity-settled)
Share options are equity settled share-based payments. The fair value of each tranche of service-
condition options granted is measured separately at the grant date using a Black-Scholes option
pricing model. Each tranche of service and market conditions share options is measured separately
at the grant date using the Monte Carlo model pricing model. Estimating fair value requires
determining the most appropriate inputs to the valuation model including making assumptions for
the expected life, volatility, risk-free interest rate and dividend yield. Compensation cost is expensed
over the award's respective vesting period which is normally up to four 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. Compensation expense is recognized in net earnings with a corresponding
increase in contributed surplus. Any consideration paid by the holders of the options on the exercise
of share options is credited to share capital. Upon the exercise of share options, the corresponding
amounts previously credited to contributed surplus are transferred to share capital.
Performance Share Units and Deferred Share Units(cash-settled)
The Company has a Performance Share Units (“PSUs”) plan entitling executives and key
management to a cash payment. On April 10, 2025, the Board of Directors of the Company also
approved the adoption of a Deferred Share Unit (“DSU”) plan available to non-employee members
of the Board of Directors entitling an eligible Director to a cash payment when they cease to be a
Director of the Company. A liability is recognized for the services acquired and is recorded at fair
value based on the share price of the Company’s Common shares in other non-current payables,
except for the current portion recorded in trade and other payables, with a corresponding expense
recognized in employee benefits expense in selling general and administrative expenses. The amount
recognized as an expense is adjusted to reflect the number of units for which the related service and
performance conditions are expected to be met, such that the amount ultimately recognized as an
expense is based on the units of awards that meet the related service and non-market performance
conditions at the vesting date. At the end of each reporting period until the liability is settled, the fair
value of the liability is remeasured, with any changes in fair value recognized in the consolidated
statements of earnings for the period.
j) Revenue
Sales of merchandise
The Company recognizes revenue when control of the merchandise has been transferred. Revenue is
measured at the amount of consideration to which the Company expects to be entitled to, including variable
consideration to the extent that it is highly probable that a significant reversal will not occur.
Net revenues represent the sale of merchandise less discounts and returns. Net revenues at retail stores are
recognized at the point-of-sale when control of the merchandise has been transferred to the customer. Net
revenues recognized through the e-commerce channel are recognized at the date of delivery to the
customer.
Shipping fees charged to customers are recorded as e-commerce net revenues.
Customer loyalty award programs
Revenue is allocated between the customer loyalty award programs and the goods on which the awards
were earned based on their relative stand-alone selling prices. Loyalty points and awards granted under
customer loyalty award programs are recorded as deferred revenue until the loyalty points and awards are
redeemed by the customer.
Gift cards
Gift cards sold are recorded as deferred revenue and revenue is recognized when the gift cards are
redeemed. If the Company expects to be entitled to a breakage amount for the gift cards, it recognizes the
expected breakage amount as revenue in proportion to the pattern of rights exercised by the customer.
Sales with a right of return
The Company grants rights of return on goods sold to customers. Revenue is reduced by the amount of
expected returns, which is determined based on historical patterns of returns, and a related refund liability
is recorded within “Trade and other payables”. In addition, the Company recognizes a related asset for the
right to recover returned goods within “Inventories”.
k) 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 sheets under non-
current assets or liabilities, irrespective of the expected date of realization or settlement.
Current and deferred taxes attributable to amounts recognized directly in equity are also recognized
directly in equity.
l) 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 period.
m) Share Capital
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.
n) Financial Instruments
Financial assets are initially measured at fair value. On initial recognition, the Company classifies its
financial assets as subsequently measured at either amortized cost, fair value through other comprehensive
income or fair value through profit or loss, depending on its business model for managing the financial
assets and the contractual cash flow characteristics of the financial assets.
(i) Financial assets measured at amortized cost
A financial asset is subsequently measured at amortized cost, using the effective interest method and
net of any impairment loss, if:
• The asset is held within a business model whose objective is to hold assets in order to collect
contractual cash flows; and
• The contractual terms of the financial asset give rise, on specified dates, to cash flows that are
solely payments of principal and/or interest.
The Company currently classifies its cash and trade and other receivables as assets measured at
amortized cost.
(ii) Impairment of financial assets
The Company uses the “expected credit loss” model for calculating impairment and recognizes
expected credit losses as a loss allowance in the consolidated balance sheets if they relate to a financial
asset measured at amortized cost. The Company’s trade and other receivables, typically short-term
receivables with payments received within a 12-month period, do not have a significant financing
component. Therefore, the Company recognizes impairment and measures expected credit losses as
lifetime expected credit losses. The carrying amount of these assets in the consolidated balance sheets
is stated net of any loss allowance.
(iii) Financial liabilities
The Company classifies non-derivative financial liabilities as measured at amortized cost. Non-
derivative financial liabilities are initially recognized at fair value less any directly attributable
transaction costs. Subsequent to initial recognition, these liabilities are measured at amortized cost
using the effective interest method. The Company currently classifies its trade and other payables as
financial liabilities measured at amortized cost.
(iv) Non-hedge derivative financial instruments measured at fair value
Non-hedge derivative financial instruments, including foreign exchange contracts, are recorded as
either assets or liabilities measured initially at their fair value. Attributable transaction costs are
recognized in profit or loss as incurred. All derivative financial instruments not designated in a hedge
relationship are classified as financial instruments at fair value through profit and loss. Any subsequent
change in the fair value of non-hedge foreign exchange contracts is accounted for in cost of goods sold
for the period in which it arises.
(v) Hedging relationships
The Company may enter into derivative financial instruments to hedge its foreign exchange risk
exposures of part of its purchases in U.S. dollars. 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 effective in offsetting the changes in the fair value or cash
flows of the respective hedged items during the period for which the hedge is designated.
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.
Derivatives used for hedging 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 as part of equity. The amount recognized in other comprehensive income is
removed and included in net earnings under the same line item in the consolidated statements 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 or exercised, 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 directly to the initial cost of that asset.
o) 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. There
was no change in the valuation techniques applied to financial instruments during the current year. 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.
4. INVENTORIES
During the year ended February 1, 2025, inventories recognized as cost of goods sold amounted to $334,046
(February 3, 2024 - $357,917). In addition, for the year ended February 1, 2025, the Company recorded
$4,720 (February 3, 2024 - $5,767) of inventory write-downs as a result of net realizable value being lower
than cost which were recognized in cost of goods sold, and no inventory write-downs recognized in previous
periods were reversed.
Included in inventories is a return asset for the right to recover returned goods in the amount of $1,936 as at
February 1, 2025 (February 3, 2024 - $1,703).
5. PROPERTY AND EQUIPMENT
Land
Buildings
Fixtures and
Equipment
Leasehold
Improvements
Total
Cost
Balance at January 29, 2023
$
5,860
$ 35,314
$ 60,044
$ 25,921
$ 127,139
Additions
-
13
11,222
7,156
18,391
Derecognition of fully amortized assets
-
(174)
(6,412)
(4,374)
(10,960)
Balance at February 3, 2024
$
5,860
$ 35,153
$ 64,854
$ 28,703
$ 134,570
Balance at February 4, 2024
$
5,860
$ 35,153
$ 64,854
$ 28,703
$ 134,570
Additions
-
2,277
21,172
9,472
32,921
Derecognition of fully amortized assets
-
(1,404)
(10,800)
(5,908)
(18,112)
Balance at February 1, 2025
$
5,860
$ 36,026
$ 75,226
$ 32,267
$ 149,379
Accumulated depreciation and
impairment losses
Balance at January 29, 2023
$
-
$ 16,518
$ 32,225
$ 14,563
$ 63,306
Depreciation
-
1,099
7,030
3,507
11,636
Impairment losses
-
-
342
637
979
Derecognition of fully amortized assets
-
(174)
(6,412)
(4,374)
(10,960)
Balance at February 3, 2024
$
-
$ 17,443
$ 33,185
$ 14,333
$ 64,961
Balance at February 4, 2024
$
-
$ 17,443
$ 33,185
$ 14,333
$ 64,961
Depreciation
-
1,098
7,392
3,745
12,235
Impairment losses
-
-
223
946
1,169
Derecognition of fully amortized assets
-
(1,404)
(10,800)
(5,908)
(18,112)
Balance at February 1, 2025
$
-
$ 17,137
$ 30,000
$ 13,116
$ 60,253
Net carrying amounts
At February 3, 2024
$
5,860
$ 17,710
$ 31,669
$ 14,370
$ 69,609
At February 1, 2025
$
5,860
$ 18,889
$ 45,226
$ 19,151
$ 89,126
During the years ended February 1, 2025 and February 3, 2024, the Company tested for impairment certain
CGUs for which there were indications that their carrying amounts may not be recoverable. The impairment
related to the property and equipment is due to the reduction in profitability of CGUs such that the estimated
recoverable amount falls below the carrying amount of the CGU. For the year ended February 1, 2025, the
Company recognized impairment losses of $1,169 (February 3, 2024 – $979) on property and equipment.
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. As at February 1, 2025, 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 12.0% (February 3, 2024 – 11.0%).
A reversal of impairment occurs when previously impaired individual retail store locations generate increased
profitability. During the years ended February 1, 2025 and February 3, 2024, no impairment losses related to
property and equipment, intangible assets and right-of-use assets were reversed.
Property and equipment include an amount of $18,325, consisting mainly of fixtures and equipment,
(February 3, 2024 – $4,345) that is not being depreciated. Depreciation will begin when the assets are
available for use.
6. INTANGIBLE ASSETS
Intangible assets consist of software as follows:
February 1, 2025
February 3, 2024
Cost
Balance at beginning of the year
$
4,663
$
9,548
Additions
1,047
516
Derecognition of fully amortized assets
(2,199)
(5,401)
Balance at end of the year
$
3,511
$
4,663
Accumulated amortization
Balance at beginning of the year
$
3,097
$
6,910
Amortization
974
1,588
Derecognition of fully amortized assets
(2,199)
(5,401)
Balance at end of the year
$
1,872
$
3,097
Net carrying amounts
$
1,639
$
1,566
Intangible assets include an amount of $1,204 (February 3, 2024 - $185) that is not being amortized.
Amortization will begin when the software is available for use.
7. LEASES
The Company leases all of its retail locations and certain office equipment.
Right-of-use assets
Lease liabilities
February 1, 2025
February 3, 2024
Balance at the beginning of the year
$ 137,594
$
87,499
Lease additions
49,501
86,446
Lease modifications
(1,407)
(561)
Payment of lease liabilities
(40,254)
(43,352)
Interest expense on lease liabilities (note 16)
9,963
7,562
Balance at the end of the year
$ 155,397
$
137,594
Current portion of lease liabilities
$
34,145
$
31,329
Non-current portion of lease liabilities
121,252
106,265
Total lease liabilities
$ 155,397
$
137,594
Retail
locations
Office
equipment
Total
Balance as at February 4, 2024
$ 130,558
$
899
$ 131,457
Lease additions
49,340
152
49,492
Lease modifications
(1,388)
(77)
(1,465)
Depreciation
(38,961)
(403)
(39,364)
Balance as at February 1, 2025
$ 139,549
$
571
$ 140,120
Retail
locations
Office
equipment
Total
Balance as at January 29, 2023
$ 78,958
$
936
$
79,894
Lease additions
86,116
330
86,446
Lease modifications
(569)
-
(569)
Depreciation
(33,947)
(367)
(34,314)
Balance as at February 3, 2024
$ 130,558
$
899
$ 131,457
The following table presents a maturity analysis of future contractual undiscounted cash flows for lease
liabilities by fiscal year:
2026
$
44,385
2027
40,068
2028
30,588
2029
21,601
2030
14,430
Thereafter
34,832
Total undiscounted lease liabilities
$
185,904
The Company has certain retail locations where portions of the lease payments are contingent on a percentage
of sales or where lease payments are made with no fixed term. During the year ended February 1, 2025, the
Company recognized $3,325 (February 3, 2024 - $7,446) of variable lease payments and $2,658 (February
3, 2024 - $4,945) of lease payments with no fixed term in selling, general and administrative expenses. The
Company recognized no expenses related to short-term leases for the years ended February 1, 2025 and
February 3, 2024.
As at February 1, 2025, $15,910 (February 3, 2024 - $15,355) of undiscounted future lease payments are
related to extension options that were not deemed to be reasonably certain to be exercised and were not
included in lease liabilities.
8. PENSION
During the year ended February 3, 2024, the Board of Directors approved the windup and dissolution of the
Company’s defined benefit pension plan (the “Plan”) effective June 30, 2024 and approved the replacement
of the Plan with a defined contribution pension plan. During the year ended February 1, 2025, the Company
received regulatory approval from Retraite Quebec to effectively dissolve and windup the Plan. As part of the
windup process, the Company annuitized and transferred to a third-party insurer, the portion of the net pension
asset related to retirees, beneficiaries and active members who elected an immediate or deferred pension. The
Company paid members who selected a lump sum payment. As a result, the Company recognized a net
settlement loss of $12 in selling, general and administrative expense for the year ended February 1, 2025.
As at February 1, 2025, all obligations related to the windup of the Plan have been fully settled.
The following tables present reconciliations of the pension obligation, the Plan assets and the funded status
of the Plan.
Funded Status
February 1, 2025 February 3, 2024
Fair value of plan assets
$
-
$
21,198
Defined benefit obligation
-
20,049
Funded status
-
1,149
Effect of asset ceiling
-
-
Pension asset
$
-
$
1,149
For the years ended
February 1, 2025
February 3, 2024
Movement in the present value of the defined benefit obligation
Defined benefit obligation, beginning of year
$ 20,049
$ 19,834
Current service cost
292
897
Curtailment gain on past service
-
(919)
Interest cost
664
967
Employee contributions
88
117
Actuarial loss - experience
-
383
Actuarial loss - demographic assumptions
-
261
Actuarial loss (gain) - financial assumptions
625
(478)
Benefits paid from plan assets
(1,588)
(1,013)
Settlements
(20,130)
-
Defined benefit obligation, end of year
$
-
$ 20,049
Movement in the fair value of plan assets
Fair value of plan assets, beginning of year
$ 21,198
$ 20,933
Return on plan assets
189
(579)
Interest income on plan assets
711
1,011
Employer contributions
472
1,015
Employee contributions
88
117
Benefits paid
(1,588)
(1,013)
Plan administration costs
(616)
(286)
Transfers
(336)
-
Settlements
(20,118)
-
Fair value of plan assets, end of year
$
-
$ 21,198
For the year ended February 3, 2024, the net defined benefit obligation was allocated to the plans’ participants
as follows:
• Active plan participants 42%
• Retired plan members 54%
• Deferred and other plan participants 4%
As at February 3, 2024, the Plan assets were held in trust and consisted of the following assets categories,
which were not based on quoted market prices in an active market:
February 3, 2024
Debt securities – fixed income pooled funds
$ 20,981
99%
Cash and cash equivalents
217
1%
Total
$ 21,198
100%
The Company’s pension expense was as follows:
For the years ended
February 1, 2025
February 3, 2024
Pension costs recognized in net earnings
Current service cost
$
292
$
897
Curtailment gain on past service
-
(919)
Net settlement loss
(12)
-
Net interest cost
(47)
(44)
Plan administration costs1
616
286
Pension expense
$
849
$
220
1For the year ended February 1, 2025, plan administration costs include an amount of $391 related to costs
incurred in relation to the windup and settlement of the Plan.
The following table presents the change in the actuarial gains and losses and the effect of the asset ceiling
recognized in other comprehensive income and subsequently reclassified from accumulated other
comprehensive income to retained earnings:
For the years ended
February 1, 2025
February 3, 2024
Cumulative gain in retained earnings at the beginning of the year
$ (1,658)
$ (1,398)
(Loss) gain recognized in other comprehensive income during the year
(net of tax of $116; 2024 - $94)
321
(260)
Cumulative gain in retained earnings at the end of the year
$ (1,337)
$ (1,658)
Actuarial assumptions
Principal actuarial assumptions used were as follows:
For the years ended
February 1, 2025
February 3, 2024
Accrued benefit obligation:
Discount rate
4.70%
4.90%
Salary increase
4.00%
4.00%
Mortality
2014 Private Sector
Canadian
Pensioner’s
Mortality Table,
projected
generationally using
Scale MI-2017,
adjusted for pension
size
2014 Private Sector
Canadian
Pensioner’s
Mortality Table,
projected
generationally using
Scale MI-2017,
adjusted for pension
size
Employee benefit expense:
Discount rate
4.70%
4.70%
Salary increase
4.00%
4.00%
Sensitivity of Key Actuarial Assumptions
The following table outlines the key assumptions for the year ended February 3, 2024 and the sensitivity of
a 1% change in each of these assumptions on the Plan’s defined benefit obligations and the Plan’s net defined
benefit 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.
For the year ended
February 3, 2024
(Decrease) increase in defined benefit obligation of the Plan
Discount rate
Impact of increase of 1%
$ (2,131)
Impact of decrease of 1%
$ 2,598
Salary increase or decrease
Impact of increase of 1%
$
109
Impact of decrease of 1%
$
(137)
Lifetime expectancy
Impact of increase of 1 year in expected lifetime of plan members
$
438
Overall return in the capital markets and the level of interest rates affected the funded status of the Plan.
Adverse changes with respect to the Plan’s returns and the level of interest rates from the date of the last
actuarial valuation may have had an adverse effect on the funded status of the Plan and on the Company’s
results of operations.
The weighted average duration of the Plan was approximately 12.2 years as at February 3, 2024.
Defined contribution plan
During the year ended February 1, 2025, the Company recognized pension expense of $697 (February 3,
2024 – $56) related to contributions to the defined contribution pension plan.
9. INCOME TAX
The Company’s income tax expense is comprised as follows:
For the years ended
February 1, 2025 February 3, 2024
Current tax expense
Current year
$
547
$
444
Adjustment in respect of prior years
(285)
(1)
Current tax expense
262
443
Deferred tax expense
Recognition and reversal of temporary differences
3,498
5,044
Changes in tax rates
4
4
Changes in unrecognized deferred tax asset
(2)
(2)
Adjustment in respect of prior years
-
(165)
Deferred tax expense
3,500
4,881
Total tax expense
$ 3,762
$
5,324
Income tax recognized in other comprehensive income
For the years ended
February 1, 2025
February 3, 2024
Before tax
Tax expense
Net of tax
Before tax
Tax expense
Net of tax
Cash flow hedges
$ 9,524
$ (2,522) $ 7,002
$ 1,158
$
(307) $
851
Defined benefit plan
actuarial (losses) gains
(437)
116
(321)
354
(94)
260
$ 9,087
$ (2,406) $ 6,681
$ 1,512
$
(401) $ 1,111
Reconciliation of effective tax rate
For the years ended
February 1, 2025
February 3, 2024
Earnings before income taxes
$ 15,901
$ 20,139
Income tax expense using the Company’s
statutory tax rate
4,212
26.50%
5,336
26.50%
Changes in tax rates
4
0.03%
4
0.02%
Non-deductible expenses and other adjustments
219
1.38%
471
2.34%
Change in unrecognized deferred tax assets
(2)
(0.01%)
(2)
(0.01%)
Effect of tax in foreign jurisdictions
(386)
(2.43%)
(319)
(1.58%)
Adjustment in respect of prior years
(285)
(1.79%)
(166)
(0.83%)
Income tax expense
$
3,762
23.66%
$
5,324
26.44%
Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024 February 1, 2025
February 3, 2024
Lease liabilities
$ 40,928
$ 37,030
$
-
$
-
$ 40,928
$ 37,030
Right-of-use assets
-
-
36,908
34,464
(36,908)
(34,464)
Property, equipment and
intangible assets
7,595
11,269
-
-
7,595
11,269
Inventories
-
-
1,352
1,519
(1,352)
(1,519)
Derivative financial
asset
-
-
3,194
307
(3,194)
(307)
Pension asset
-
294
-
598
-
(304)
Accounting reserves
1,077
650
-
-
1,077
650
Tax benefit of losses
carried forward
13,176
14,737
-
-
13,176
14,737
Other
145
276
347
342
(202)
(66)
$ 62,921
$ 64,256
$ 41,801
$ 37,230
$ 21,120
$ 27,026
Changes in deferred tax balances during the year
Balance
January 28,
2023
Recognized in
net earnings
Recognized in
other
comprehensive
income
Balance
February 3,
2024
Recognized in
net earnings
Recognized in
other
comprehensive
income
Balance
February 1,
2025
Lease liabilities
$ 22,641
$ 14,389
$
-
$ 37,030
$
3,898
$
-
$ 40,928
Right-of-use assets
(20,626)
(13,838)
-
(34,464)
(2,444)
-
(36,908)
Property, equipment and
intangible assets
15,091
(3,822)
-
11,269
(3,674)
-
7,595
Inventories
(1,780)
261
-
(1,519)
167
-
(1,352)
Derivative financial asset
-
-
(307)
(307)
(365)
(2,522)
(3,194)
Pension asset
-
(210)
(94)
(304)
188
116
-
Accounting reserves
6,491
(5,841)
-
650
427
-
1,077
Tax benefit of losses carried
forward
10,349
4,388
-
14,737
(1,561)
-
13,176
Other
142
(208)
-
(66)
(136)
-
(202)
$ 32,308
$ (4,881) $
(401)
$ 27,026
$ (3,500)
$ (2,406)
$ 21,120
Unrecognized deferred tax assets
As at February 1, 2025, deferred income tax assets related to allowable capital losses carry-forward for
$3,140 (February 3, 2024 - $3,142) were not recognized on the consolidated balance sheets as it is not
probable that sufficient future taxable capital gains will be available from the Canadian operations to utilize
the benefits. The allowable capital losses carry-forward do not expire under current income tax legislation.
10. CREDIT FACILITY
During the year ended February 1, 2025, the Company entered into a new senior secured revolving credit
agreement with a Canadian financial institution, which consists of a $50,000 revolving credit facility. The
Company can borrow funds in Canadian or US dollars at prime, base, the Canadian Overnight Repo Rate
Average (“CORRA”) or the Secured Overnight Financing Rate (“SOFR”). The revolving credit facility bears
interest at the prime or base rate, and the CORRA or SOFR rate plus 1.75%. Up to $25,000 (or its U.S. dollar
equivalent) of the facility can be withdrawn through secured letters of credit.
As at February 1, 2025 and February 3, 2024, no amount was drawn under the revolving credit facilities and
$1,000 was committed for secured letters of credit (February 3, 2024 – $2,010).
The new credit facility is secured by a first-ranking deed of immovable hypothec on certain of the
Company’s property and equipment. The Company is required to maintain certain financial covenants
related to this revolving credit facility. As at February 1, 2025 and February 3, 2024, the Company was in
compliance of all financial covenants.
11. TRADE AND OTHER PAYABLES
February 1, 2025 February 3, 2024
Trade payables
$ 61,572
$ 22,844
Personnel liabilities
22,415
21,720
Other non-trade payables
19,835
13,940
Refund liability
3,697
3,250
Financial liability under ASPP (note 13)
2,152
-
$ 109,671
$ 61,754
12. DEFERRED REVENUE
February 1, 2025 February 3, 2024
Loyalty points and awards granted under loyalty programs
$
307
$
201
Unredeemed gift cards
12,091
11,738
$ 12,398
$ 11,939
13. SHARE CAPITAL AND OTHER COMPONENTS OF EQUITY
For the years ended
February 1, 2025
February 3, 2024
Number
of shares
(in 000’s)
Carrying
amount
Number
of shares
(in 000’s)
Carrying
amount
Common shares
Balance at beginning and end of the year
13,440
$
482
13,440
$
482
Class A non-voting shares
Balance at beginning of the year
35,856
27,810
35,427
26,924
Shares issued pursuant to exercise of share options
461
958
429
886
Shares purchased for cancellation under ASPP
(182)
(142)
-
-
Balance at end of the year
36,135
28,626
35,856
27,810
Total share capital
49,575
$ 29,108
49,296
$ 28,292
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 February 1, 2025, 460,667 (February 3, 2024 – 429,000) Class A non-voting shares
were issued from the exercise of vested share options arising from the Company’s share option program (note
14). The amounts credited to share capital from the exercise of share options include a cash consideration of
$691 (February 3, 2024 – $643) with an ascribed value from contributed surplus of $267 (February 3, 2024
– $243).
Purchase of shares for cancellation under normal course issuer bid
On July 31, 2024, the Company received approval the TSX Venture Exchange to proceed with a normal
course issuer bid (“NCIB”). Under the NCIB, the Company may acquire up to an aggregate of 3,283,582
Class A non-voting shares of the Company (“Shares”) over the 12-month period commencing on August 5,
2024, and ending on August 4, 2025, representing approximately 10% of the public float of the Shares.
Additionally, under the NCIB, the Company may not acquire more than 2% of the public float of the Shares,
representing 718,326 Shares, in any 30-day period.
In connection with the NCIB, the Company entered into an automatic share purchase plan (“ASPP”) with a
designated broker to facilitate the purchase of Shares under the NCIB during times when the Company would
ordinarily not be permitted to purchase Shares during self-imposed blackout periods. During the year ended
February 1, 2025, under the NCIB and ASPP, the Company purchased for cancellation 181,900 Shares having
a carrying amount of $142 for an aggregate cash consideration of $464. The premium over of the carrying
amount of $322 for the year ended February 1, 2025, was charged to retained earnings.
As February 1, 2025, a financial liability with a corresponding amount charged to retained earnings of $2,152
was recognized in trade and other payables. This liability represents the maximum value of Shares authorized
to be repurchased by the designated broker under the ASPP during self-imposed blackout periods. Subsequent
to February 1, 2025, under the terms and conditions of the NCIB, the Company purchased for cancellation
136,300 Shares for an aggregate cash consideration of $309.
Accumulated Other Comprehensive Income (“AOCI”)
AOCI is comprised of the following:
Cash Flow
Hedges
Foreign
Currency
Translation
Differences
Total AOCI
Balance at February 4, 2024
$
851
$
-
$
851
Net change in fair value of cash flow hedges (net of tax of
$4,151)
11,520
-
11,520
Transfer to cost of inventory (net of tax of $1,629)
(4,518)
-
(4,518)
Balance at February 1, 2025
$
7,853
$
-
$
7,853
Balance at January 29, 2023
$
-
$
(1,044)
$
(1,044)
Net change in fair value of cash flow hedges (net of tax of
$663)
1,839
-
1,839
Transfer to cost of inventory (net of tax of $356)
(988)
-
(988)
Loss on foreign currency translation differences
reclassified to net earnings (1)
-
1,044
1,044
Balance at February 3, 2024
$
851
$
-
$
851
(1) During the year ended February 3, 2024, a subsidiary of the Company has been wound-up. Amounts previously
recognized in other comprehensive income were reclassified to net earnings (note 16).
Dividends
No dividends were declared or paid during years ended February 1, 2025 and February 3, 2024.
14. SHARE-BASED PAYMENTS
Share Option Plan
Under the share option plan, and in compliance with the policies of the TSX Venture Exchange, the Company
is limited to issue 4,300,000 (February 3, 2024 – 3,800,000) Class A non-voting shares pursuant to the
exercise of options. The granting of options and the related vesting period, which is normally up to 4 years,
are at the discretion of the Board of Directors and the options have a maximum term of up to 7 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 Class A
non-voting shares on the trading day immediately preceding the effective date of the grant.
Service-based share options
During the year ended February 1, 2025, the Company granted 1,201,917 (359,869 during the year ended
February 3, 2024) service-based share options to certain executives, for which service conditions are expected
to be satisfied. Estimated fair values of options on the grant date were determined using the Black Scholes
option pricing model based on the following assumptions (amounts in dollars):
For the year ended
February 1, 2025
17,000 Share
Options Granted
December 19, 2024
75,000 Share
Options Granted
September 19, 2024
1,109,917 Share
Options Granted
June 26, 2024
Weighted average expected share option life
2.7 years
2.7 years
3.0 years
Weighted average risk-free interest rate
3.18%
2.84%
3.88%
Weighted average expected share price volatility
28.88%
36.83%
38.96%
Dividend yield
-
-
-
Share price at grant date
$2.57
$2.40
$2.42
Exercise price
$2.57
$2.40
$2.42
Weighted average fair value
$0.55
$0.62
$0.71
For the year ended
February 3, 2024
327,869 Share
Options Granted
September 5, 2023
32,000 Share
Options Granted
August 3, 2023
Expected share option life
3.3 years
1.5 years
Risk-free interest rate
4.30%
4.78%
Expected share price volatility
68.10%
73.40%
Dividend yield
-
-
Share price at grant date
$3.05
$3.04
Exercise price
$3.05
$3.04
Average fair value
$1.52
$1.13
The expected volatility is based on the historical volatility of the Company.
The changes in outstanding service-based share options were as follows:
For the years ended
February 1, 2025
February 3, 2024
Options
(in 000’s)
Weighted
Average
Exercise Price
Options
(in 000’s)
Weighted
Average
Exercise Price
Outstanding, at beginning of year
1,697
$
3.55
1,635
$
3.63
Granted
1,202
2.42
360
3.05
Exercised (note 13)
(301)
1.50
(149)
1.50
Forfeited and expired
(708)
5.73
(149)
5.30
Outstanding, at end of year
1,890
$
2.34
1,697
$
3.55
Options exercisable, at end of year
248
$
2.11
756
$
5.36
Information about service-based share options outstanding at February 1, 2025:
Options Outstanding
Options Exercisable
Range of
Exercise
Prices
Number
Outstanding
(in 000’s)
Weighted
Average
Remaining
Contractual Life
Weighted
Average
Exercise Price
Number
Exercisable
(in 000’s)
Weighted
Average
Exercise Price
$1.50 - $2.39
408
0.31 years
$
1.50
150
$
1.50
$2.40 - $2.57
1,122
2.78
2.42
-
-
$2.58 - $3.05
360
2.46
3.05
98
3.05
1,890
1.69 years
$
2.34
248
$
2.11
During the year ended February 1, 2025, the Company recognized $516 of compensation costs related to the
Company’s service-based share options with a corresponding credit to contributed surplus (February 3, 2024
- $292).
Market-condition share options
During the years ended February 1, 2025 and February 3, 2024, no market-condition share options were
granted.
The changes in outstanding market-condition share options were as follows:
For the year ended
February 1, 2025
For the year ended
February 3, 2024
Options
(in 000’s)
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual Life
Options
(in 000’s)
Weighted
Average
Exercise Price
Outstanding, at beginning of year
830
$
1.50
-
1,110
$
1.50
Exercised (note 13)
(160)
1.50
-
(280)
1.50
Outstanding, at end of year
670
$
1.50
0.31 years
830
$
1.50
Options exercisable, at end of year
670
$
1.50
0.31 years
830
$
1.50
During the year ended February 1, 2025, no compensation costs related to the Company’s market-condition
share options were recognized (February 3, 2024 - $287).
Performance Share Units (cash-settled)
The Company has a performance share unit (“PSUs”) plan for its executives and key management that entitles
them to a cash payment. The PSUs vest based on non-market performance conditions measured over a three
fiscal-year period (“performance period”). The number of PSUs that can vest can be up to 1.5 times the actual
number of PSUs awarded if exceptional performance is achieved. Upon settlement of the vested PSUs, the
cash payment will be equal to the number of PSUs multiplied by the fair value of the Common shares
calculated using the volume weighted average trading price during the five trading days commencing five
trading days subsequent to the release of the Company’s financial results for the performance period.
No PSUs were granted during the years ended February 1, 2025 and February 3, 2024.
Deferred Share Units (cash-settled)
Subsequent to February 1, 2025, the Board of Directors of the Company approved the adoption of a Deferred
Share Unit (“DSU”) plan available to non-employee members of the Board of Directors. In accordance with
the DSU plan, the number of DSUs granted by the Board of Directors is based on the market value of the
Company’s Class A non-voting shares for the five-trading day-period ending the day before the grant date.
DSUs become redeemable for cash at the time when an eligible Director ceases to be a Director of the
Company for an amount based on the market value of the Company’s Class A non-voting shares at the
redemption date.
15. COMMITMENTS
As at February 1, 2025, financial commitments 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:
Purchase
Obligations
Other Service
Contracts
Total
Within 1 year
$ 108,499
$ 2,336
$ 110,835
Within 2 years
5,811
986
6,797
Within 3 years
2,941
976
3,917
Within 4 years
2,649
163
2,812
Within 5 years
597
-
597
Subsequent years
-
-
-
Total
$ 120,497
$ 4,461
$ 124,958
For the timing of payments under lease obligations, refer to note 7.
16. FINANCE INCOME AND FINANCE COSTS
For the years ended
February 1, 2025
February 3, 2024
Interest income
$
5,783
$
5,200
Foreign exchange gain
2,241
620
Finance income
8,024
5,820
Interest expense on lease liabilities (note 7)
9,963
7,562
Loss on foreign currency translation differences reclassified
to net earnings (note 13)
-
1,044
Finance costs
9,963
8,606
Net finance costs
$
1,939
$
2,786
17. EARNINGS PER SHARE
The number of shares (in thousands) used in the basic and diluted earnings per share calculations is as follows:
For the years ended
February 1, 2025
February 3, 2024
Weighted average number of shares – basic
49,357
49,121
Dilutive effect of stock options granted
502
677
Weighted average number of shares – diluted
49,859
49,798
As at February 1, 2025, 1,481,796 (February 3, 2024 - 955,869) 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.
18. RELATED PARTY TRANSACTIONS
Transactions with Key Management Personnel
Key management personnel are those persons (both executive and non-executive) who have the authority and
responsibility for planning, directing and controlling the activities of the entity - directly or indirectly. The
Board of Directors (which includes the Chief Executive Officer) has the responsibility for planning, directing
and controlling the activities of the Company and are considered key management personnel. The Board of
Directors participate in the share option plan, as described in note 14.
During the year ended February 1, 2025, the Company incurred $2,669 (February 3, 2024 - $2,638) in
compensation expenses for key management personnel consisting of salaries, directors’ fees and short-term
benefits.
Other Related-Party Transactions
During the year ended February 1, 2025, the Company incurred $212 (February 3, 2024 - $260) for legal
services rendered by a law firm connected to a member of the Board of Directors. These transactions are
recorded at the amount of consideration paid as established and agreed to by the related parties.
19. PERSONNEL EXPENSES
For the years ended
February 1, 2025
February 3, 2024
Wages, salaries and employee benefits
$ 191,905
$ 190,981
Expenses related to pension plans
1,546
276
Share-based compensation costs
516
579
$ 193,967
$ 191,836
20. SUPPLEMENTARY CASH FLOW INFORMATION
For the years ended
February 1, 2025
February 3, 2024
Non-cash transactions:
Additions to property and equipment and intangible assets
included in trade and other payables
$ 5,316
$ 2,542
For the year ended February 1, 2025, payments of lease liabilities of $40,254 include interest of $9,963
(payments of lease liabilities of $43,352 include interest of $7,562 for the year ended February 3, 2024).
21. NET REVENUES
Net revenues are disaggregated as follows:
For the years ended
February 1, 2025
February 3, 2024
Retail stores
$
571,477
$
576,897
E-commerce
202,327
217,791
Net revenues
$
773,804
$
794,688
22. 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.
February 1, 2025
Carrying Amount
Fair Value
Fair Value
through Profit
or Loss
Fair Value of
Hedging
Instruments
Amortized
Cost
Total
Level 1
Level 2
Total
Financial assets measured at
fair value through profit or
loss
Derivative financial asset
$
-
$ 12,286 $
-
$ 12,286
$
- $ 12,286
$ 12,286
February 3, 2024
Carrying Amount
Fair Value
Fair Value
through Profit
or Loss
Fair Value of
Hedging
Instruments
Amortized
Cost
Total
Level 1
Level 2
Total
Financial assets measured at
fair value through profit or
loss
Derivative financial asset
$
-
$ 1,382 $
-
$ 1,382
$
- $ 1,382
$ 1,382
There were no transfers between levels of the fair value hierarchy for the years ended February 1, 2025 and
February 3, 2024.
Derivative financial instruments
The Company entered into forward contracts with its banks on the U.S. dollar. These foreign exchange
contracts extend over a period normally not exceeding twelve months.
Details of the foreign exchange contracts outstanding, all of which are designated as cash flow hedges are as
follows:
Average
Strike Price
Notional
Amount in
U.S. Dollars
Derivative
Financial
Asset
Derivative
Financial
Liability
Net
Foreign exchange forward contracts
February 1, 2025
$ 1.347
$ 134,000
$ 12,286
$
-
$ 12,286
February 3, 2024
$ 1.328
$ 90,000
$ 1,382
$
-
$ 1,382
23. FINANCIAL RISK MANAGEMENT
The Company may periodically use derivative financial instruments to manage risks related to fluctuations
in foreign exchange rates. The use of derivative financial instruments is governed by the Company’s risk
management policies approved by the Board of Directors. 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 and interest rate 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 trade and other receivables. The Company limits its exposure to credit risk
with respect to cash by dealing with major Canadian financial institutions. 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. Due to the nature of the Company’s activities and the low
credit risk of the Company’s trade and other receivables as at February 1, 2025 and February 3, 2024,
expected credit loss on these financial assets is not significant.
As at February 1, 2025, the Company’s maximum exposure to credit risk for these financial instruments was
as follows:
Cash
$ 158,116
Trade and other receivables
6,088
$ 164,204
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 Company believes that future cash flows provided by
operations and funds available from the revolving credit facility will be sufficient to meet the Company’s
operational requirements and financial obligations. The majority of trade and other payables are payable
within twelve months.
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 forward contracts, normally not to exceed twelve months, and U.S. dollar spot rate purchases. 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. The Company enters into certain qualifying foreign exchange contracts that it
designated as cash flow hedging instruments. This results in the effective portion of the changes in fair value
for qualifying hedging instruments, being recorded as a component of other comprehensive income, until it
is recognized as a cost of inventory or reclassified to net earnings upon transfer from Accumulated Other
Comprehensive Income.
The Company has performed a sensitivity analysis on its U.S. dollar denominated financial instruments,
which consist principally of cash of $23,055, trade and other receivables of $113 and trade payables of
$19,828 to determine how a change in the U.S. dollar exchange rate would impact net earnings. On February
1, 2025, a 10% 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 $356 increase or decrease,
respectively, in the Company’s net earnings for the year ended February 1, 2025.
The Company has performed a sensitivity analysis on its derivative financial instruments (which are all
designated as cash flow hedges), to determine how a change in the U.S. dollar exchange rate would impact
other comprehensive income. On February 1, 2025, a 5% 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 $6,521 decrease or
$6,746 increase, respectively, in the Company’s other comprehensive income for the year ended February 1,
2025.
Interest Rate Risk
Interest rate risk exists in relation to the Company’s cash and its revolving credit facility. Market fluctuations
in interest rates impacts the Company’s earnings with respect to interest earned on cash that are invested
mainly with major Canadian financial institutions and interest paid on outstanding balances of the revolving
credit facility. See note 10 for credit facility details.
The Company has performed a sensitivity analysis on interest rate risk related to interest income earned on
its cash as at February 1, 2025 to determine how a change in interest rates would impact net earnings. For the
year ended February 1, 2025, the Company earned interest income of $5,783 on its cash. An increase or
decrease of 100 basis points in the average interest rate earned during the year would have increased or
decreased net earnings by $888. This analysis assumes that all other variables, in particular foreign currency
rates, remain constant.
The Company did not incur interest expense on its revolving credit facility for the year ended February 1,
2025.
24. CAPITAL MANAGEMENT
The Company’s objectives in managing capital are:
• to ensure sufficient liquidity to support its operations and to enable the internal financing of capital
projects;
• to ensure all financial obligations under the revolving credit facility are met;
• 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 shareholders’ equity and its access to credit facilities described in
note 10. 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, technology infrastructure
including e-commerce, and office and distribution center improvements. The Company funds these
requirements out of its internally-generated cash flows and its access to credit facilities. The Company does
not have any long-term financing debt (other than lease liabilities).
CORPORATE INFORMATION
Administration Office
Reitmans (Canada) Limited
250 Sauvé Street West
Montreal, Quebec Canada H3L 1Z2
Telephone:
514-384-1140
e-mail:
info@reitmans.com
Corporate Website: reitmanscanadalimited.com
Registered Office
Reitmans (Canada) Limited
155 Wellington Street West, 40th Floor
Toronto, Ontario Canada M5V 3J7
INVESTOR RELATIONS
Alexandra Cohen
Vice President, Corporate Communications
acohen@reitmans.com
REGISTRAR AND TRANSFER AGENT
Computershare Trust Company of Canada
650 de Maisonneuve Blvd West, Suite 700
Montreal, Quebec Canada H3A 3T2
Toll free: 1-800-564-6253
From outside North America: 1-514-982-7888
e-mail: service@computershare.com
STOCK SYMBOLS
TSX VENTURE EXCHANGE
Common
RET
Class A non-voting
RET.A
Reitmans (Canada) Limited | Annual Report 2025