Danier Leather Reports Fiscal 2015 Second Quarter Results
(firmenpresse) - TORONTO, ONTARIO -- (Marketwired) -- 02/06/15 -- Danier Leather Inc. (TSX: DL) ("Danier" or the "Company") today announced its unaudited interim consolidated financial results for the 13-week and 26-week periods ended December 27, 2014.
FINANCIAL HIGHLIGHTS ($000s, except earnings per share (EPS), square footage and number of stores):
Sales during the second quarter of fiscal 2015 decreased by 10% to $55.7 million compared with $62.0 million during the second quarter last year. Over the same period, comparable store sales(2) decreased by 13%. Year-to-date sales decreased by 12% or $9.9 million to $76.3 million, while comparable store sales decreased by 14%, compared to the corresponding period last year.
Revenue during the relevant periods was adversely affected mainly as a result of shifts in the marketplace and a highly promotional retail environment. Danier has been taking corrective actions, which steps are discussed further below.
In February 2014, Danier launched its eCommerce click-to-buy website for orders within Canada. While not currently a significant portion of Danier''s overall sales, eCommerce revenue for the second quarter of fiscal 2015 increased by 265% compared to revenue from the phone order channel during the same quarter last year. Year-to-date eCommerce revenue increased by 205% compared to the first half of last year.
Gross profit as a percentage of revenue during the second quarter decreased by 400 basis points to 48.7% compared with 52.7% during the second quarter last year. Gross profit margin during the first half of fiscal 2015 decreased by 370 basis points to 48.2% compared with 51.9% during the first six months of last year. The decrease in gross margin was mainly due to management''s decision to increase promotional activity and implement deeper than planned markdowns during the second quarter in order to reduce inventory. The reduction in inventory is expected to allow the Company to enter the Spring season with fresh merchandise. Inventory at the end of the second quarter of fiscal 2015 was $6.1 million lower than inventory at the end of the second quarter last year.
Selling, general and administrative expenses ("SG&A") during the second quarter of fiscal 2015 decreased by $0.5 million to $22.8 million, compared with $23.3 million during the second quarter last year. Year-to-date SG&A decreased by approximately $0.6 million to $39.9 million compared with $40.5 million during the first half of last year.
Danier has implemented a cost reduction initiative to achieve reductions in head office staff and expenses, and in marketing, non-selling expenditures and capital expenditures. The Company''s objective is to achieve annualized savings of between $5 million and $7 million during fiscal 2016 as compared to fiscal 2014. During January 2015, head office staff was reduced by approximately 15%. Severance costs of approximately $1 million related to this reduction will be recorded during the third quarter of fiscal 2015.
Net earnings during the second quarter of fiscal 2015 decreased by approximately $3.4 million to $3.5 million ($0.89 per diluted share) compared with $6.9 million ($1.73 per diluted share) during the second quarter last year. For the year-to-date period, net loss was $2.4 million ($0.63 loss per diluted share), compared with net earnings of $3.3 million ($0.84 per diluted share) during the first six months of last year.
At the end of the second quarter of fiscal 2015, Danier had working capital(3) of $26.8 million, no long-term debt and a book value of $11.97 per outstanding share.
"We are disappointed with the Company''s unsatisfactory financial results and are implementing a number of changes which we believe will produce meaningful improvements," said Jeffrey Wortsman, President and Chief Executive Officer. Action currently being taken to improve the Company''s performance include, among other things:
The Company is also exploring strategic alternatives as outlined in a separate press release issued today.
Non-IFRS Financial Measures
The Company prepares its consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"). In order to provide additional insight into the business, the Company has also provided certain non-IFRS data, including EBITDA, Adjusted EBITDA and comparable store sales, each as defined below. Non-IFRS measures such as EBITDA, Adjusted EBITDA and comparable store sales are not recognized measures for financial presentation under IFRS. These non-IFRS measures do not have a standardized meaning prescribed by IFRS and, therefore, may not be comparable to similarly titled measures presented by other publicly traded companies, nor should they be construed as an alternative to other financial measures determined in accordance with IFRS.
(1) EBITDA and Adjusted EBITDA - EBITDA is defined as net earnings (loss) before interest expense, interest income, income taxes and amortization. Adjusted EBITDA is defined as EBITDA (as defined above) before impairment loss on property and equipment, foreign exchange loss (gain) and termination benefits. EBITDA is a financial metric used by management and some investors to compare companies on the basis of ongoing operating results before taxes, interest expense, interest income and amortization and its ability to incur and service debt. Adjusted EBITDA is a financial metric used by management to compare EBITDA (as defined above) before impairment loss on property and equipment, foreign exchange loss (gain) and termination benefits. EBITDA and Adjusted EBITDA are also used by management to measure performance against internal targets, prior period results and other retailers. EBITDA and Adjusted EBITDA are calculated as outlined in the following table:
(2) Comparable store sales are defined as sales generated by stores that have been open during the full current fiscal year as well as the full prior fiscal year. Comparable store sales is a key indicator used by the Company to measure performance against internal targets and prior period results and excludes sales fluctuations due to new stores, store closings and certain permanent store relocations. This measure is also commonly used by financial analysts and investors to compare Danier to other retailers. Comparable store sales is calculated as outlined in the following tables:
(3) Working capital is defined as total current assets minus total current liabilities. Working capital is a key indicator and financial metric used by the Company to measure short-term liquidity for those assets that can easily be converted into cash to satisfy both short-term liabilities and upcoming operating expenses. Working capital is calculated as outlined in the following table:
Forward-Looking Statements
This press release contains forward-looking information and forward-looking statements which reflect the current view of Danier with respect to the Company''s objectives, plans, goals, strategies, future growth, results of operations, financial and operating performance and business prospects and opportunities. Wherever used, the words "may", "will", "anticipate", "intend", "estimate", "expect", "plan", "believe" and similar expressions identify forward-looking statements and forward-looking information. Forward-looking statements and forward-looking information should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All of the statements in this press release containing forward-looking statements or forward-looking information, if any, are qualified by these cautionary statements.
Forward-looking statements and forward-looking information are based on information available at the time they are made, underlying estimates, opinions and assumptions made by management and management''s good faith belief with respect to future events, performance and results and are subject to inherent risks and uncertainties surrounding future expectations generally. Such risks and uncertainties include, but are not limited to, decreases in sales from existing stores, a decline in general economic conditions, consumer confidence, or consumer spending or increases in consumer debt levels, risks associated with foreign supply, sourcing and manufacturing, including increasing leather prices and increasing constraints on foreign vendors'' capacity, branding, merchandising, fashion and apparel and leather industry risks that can adversely affect demand for the Company''s products and result in inventory mark-downs and reduced gross margin, the Company''s inability to successfully implement its business strategy or financial, capital expenditure, cost reduction or budgetary activities and initiatives, the Company being unable to successfully grow revenues, gross profit, gross margin and generate net earnings or to generate the necessary cash flows and earnings, or any other material disruption to or decline in the Company''s operations. For additional information with respect to Danier''s inherent risks and uncertainties, reference should be made to Danier''s continuous disclosure materials filed from time to time with the Canadian Securities Regulatory Authorities, including the Company''s most recent annual information form, quarterly and annual reports and financial statements and notes thereto, and supplementary information, which are available on SEDAR at and in the Investor Relations section of the Company''s website at . Additional risks and uncertainties not presently known to the Company or that Danier currently believes to be less significant may also adversely affect the Company.
Danier cautions readers that such factors and uncertainties are not exhaustive and that should certain risks or uncertainties materialize, or should underlying estimates or assumptions prove incorrect, actual events, performance and results may vary significantly from those expected. There can be no assurance that the actual results, performance, events or activities anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. Potential investors and other readers are urged to consider these factors carefully in evaluating forward-looking information and forward-looking statements and are cautioned not to place undue reliance on any forward-looking information or forward-looking statements. Danier disclaims any intention or obligation to update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
About Danier
Danier Leather Inc. is a leading integrated designer, manufacturer, and retailer of high-quality fashion-oriented leather apparel and accessories. The Company''s merchandise is marketed exclusively under the well-known Danier brand name and is available at its 90 shopping mall, street-front and outlet stores as well as the online store at danier.com. For more information about the Company and our products, visit .
Approved by the Board of Directors
February 6, 2015
Contacts:
Investor Relations Contact: Danier Leather Inc.
Jeffrey Wortsman
President and Chief Executive Officer
(416) 762-8175 ext. 302
Danier Leather Inc.
Bryan Tatoff
Executive Vice-President and Chief Financial Officer
(416) 762-8175 ext. 328
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Datum: 06.02.2015 - 18:02 Uhr
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