The Company delivered increased sales,
expanded gross margins as well as improved profitability and
liquidity.
MONTREAL, June 23,
2022 /CNW Telbec/ - Birks Group Inc. (the "Company"
or "Birks Group") (NYSE American: BGI), reported its financial
results for the fiscal year ended March 26,
2022.
Highlights
All figures presented herein are in Canadian dollars.
During the fiscal year ended March 26,
2022 ("fiscal 2022"), the Company achieved year-over-year
sales growth of 26.7% (including an increase in comparable store
sales of 32.5%), an increase in gross margin percentage of 260
basis points, improved results from operations including an
increase in EBITDA(1) of $7.7
million, and a return to profitability. The Company's sales
and operating income results have outperformed pre-pandemic levels,
and were achieved despite certain remaining disruptions on the
business during fiscal 2022 driven by COVID-19. Indeed, the Company
was impacted by temporary store lockdowns, most notably in
Ontario, the Company's largest
market, from the start of the fiscal year through June 2021 as a result of the restrictions imposed
by provincial government authorities in order to control
the COVID-19 pandemic. Across the retail stores network,
approximatively 7% of shopping days were lost due to temporary
store lockdowns during fiscal 2022, as compared to approximately
31% during the fiscal year ended March 27,
2021 ("fiscal 2021").
During fiscal 2022, the Company achieved net sales of
$181.3 million, an increase of
$38.2 million, or 26.7%, from fiscal
2021, yielding gross profit of $76.2
million, an increase of $19.9
million, or 35.3%, compared to fiscal 2021. Gross profit as
a percentage of sales was 42.0%, an increase of 260 basis points
from the gross profit as a percentage of sales of 39.4% in fiscal
2021. The Company continued to proactively control its operating
costs during the period, yielding total operating expenses of
$71.8 million in fiscal 2022, or
39.6% of net sales, as compared to $59.2 million, or 41.4% of net sales in
fiscal 2021.
The Company's EBITDA(1) for fiscal 2022 was
$10.3 million or 5.7% of net
sales, an increase of $7.7 million, or 296%, compared to
EBITDA(1) of $2.6 million, or 1.8% of net sales for
fiscal 2021.
Overall, the Company reported a positive net income of
$1.3 million, an improvement of
$7.1 million, compared to
a net loss of $5.8 million
recorded in fiscal 2021.
Despite losing approximately 7% of shopping days to temporary
store closures in fiscal 2022, net sales of $181.3 million are greater by $11.9 million, or 7.0%, than net sales of
fiscal year ended March 28, 2020
("fiscal 2020"), which constitutes the most recent comparable
period unaffected by the COVID-19 pandemic. Gross profit
at $76.2 million, or 42.0% of
net sales, represents an increase of $11.7
million over the $64.5 million, or 38.1% of net sales
generated in fiscal 2020. This increase is driven by an improvement
in gross margin percentage of 390 basis points as a result of new
pricing strategies on Bijoux Birks branded products as well as a
lower discounting. Overall, the Company's reported net income of
$1.3 million for fiscal 2022
represents an improvement of $13.5 million over the net loss of
$12.2 million reported in fiscal
2020.
Mr. Jean-Christophe Bédos, President and Chief Executive Officer
of Birks Group, commented: "We are pleased to report that fiscal
2022 was a successful year for Birks, which speaks to our teams'
ability to deliver sustained growth across the business under
challenging circumstances, their hard work, and their relentless
dedication to our customers and company. In fiscal 2022, Birks has
shifted from recovering from the impacts of COVID-19 to growing
beyond pre-pandemic levels, as our results are strong not only
compared to fiscal 2021, but also compared to fiscal 2020, which
was not impacted by COVID-19. Our return to profitability is a
significant milestone that is indicative of the success of the
strategies we implemented to overcome the challenges brought
about by COVID-19 during the past two years,
and of the turnaround phase of our strategic plan that
began pre-pandemic. I am grateful to all our employees for
their unwavering efforts and excellent execution during this past
year which has allowed us to enter fiscal 2023 from a position of
strength."
Mr. Bédos further commented: "I believe that the Company today
is in a stronger position to achieve its long-term objectives, and
I am confident in our potential to achieve meaningful growth as we
continue to prioritize investments that we believe will drive
shareholder value."
Financial overview for fiscal 2022:
- Net sales for fiscal 2022 were $181.3
million, an increase of $38.2
million, or 26.7%, compared to net sales of $143.1 million in fiscal 2021. The increase in
net sales in fiscal 2022 was primarily driven by strong results
experienced throughout the Company's retail channel fueled by
improved performance of third party branded timepieces and Bijoux
Birks branded jewelry and bridal collections. The increase in net
sales in fiscal 2022 was also attributable to the reduced impact of
COVID-19 (including government-mandated temporary store closures,
traffic declines and capacity limitations) experienced by the
Company during fiscal 2022 as compared to fiscal 2021.
Approximatively 7% of shopping days were lost due to temporary
store closures during fiscal 2022, as compared to approximatively
31% during fiscal 2021;
- Comparable store sales increased by 32.5% in fiscal 2022
compared to fiscal 2021. Such increase is primarily related to the
reduced impact of COVID-19 (including government-mandated temporary
store closures, traffic declines and capacity limitations)
experienced by the Company during the period as compared to during
fiscal 2021. Comparable store sales as presented in the results of
operations below for fiscal 2022 and fiscal 2021 have not been
adjusted to remove the impact of any government mandated temporary
store closures;
- Gross profit for fiscal 2022 was $76.2
million, or 42.0% of net sales, compared to $56.4 million, or 39.4% of net sales for fiscal
2021. This increase was primarily driven by the increased sales
volume experienced in the period driven by the reduced adverse
effects of COVID-19 on the Company's retail operations in fiscal
2022 as compared to fiscal 2021, as well as by an improvement in
gross margin of 260 basis points. The increase in 260 basis points
in gross margin percentage was mainly attributable to the Company's
adjusted pricing strategy on Bijoux Birks branded products, as well
as its strategic focus on reducing sales promotions and
discounting;
- SG&A expenses in fiscal 2022 were $65.9 million, or 36.3% of net sales, compared to
$53.7 million, or 37.5% of net sales
in fiscal 2021. SG&A expenses in fiscal 2022 increased by
$12.2 million versus SG&A
expenses in fiscal 2021. This increase is primarily related to the
reduced impact of COVID-19 (including government-mandated temporary
store lockdowns, traffic declines and capacity limitations)
experienced by the Company during the period as compared to fiscal
2021, and therefore reduced cost containment initiatives undertaken
by management in response to the pandemic. The drivers of the
increase in SG&A expenses in the period include greater
occupancy costs ($2.2 million) as a
result of the re-opening of stores and related non-recurring rent
abatements in fiscal 2021, increased marketing costs ($2.3 million), greater compensation costs
($5.0 million) due to the re-opening
of the stores and related non-recurring temporary lay-offs, and
salary reductions in fiscal 2021, as well as higher sales
commissions and variable compensation due to increased sales volume
and improved operating performance, higher general operating costs
and variable costs including credit cards fees ($2.2 million) driven by increased sales activity
and lower wage and rent subsidies ($1.3
million), partially offset by lower stock-based compensation
($0.9 million). As a percentage of
sales, SG&A expenses in fiscal 2022 have decreased by 120 basis
points as compared to fiscal 2021;
- The Company's EBITDA (1) for fiscal 2022 was $10.3 million, an increase of $7.7 million, compared to EBITDA(1) of
$2.6 million for fiscal 2021;
- The Company's reported operating income for fiscal 2022 was
$4.5 million, an improvement of
$7.3 million, compared to a reported
operating loss of $2.8 million for
fiscal 2021; and
- The Company recognized net income for fiscal 2022 of
$1.3 million, or $0.07 share, compared to a net loss for fiscal
2021 of $5.8 million, or ($0.32) per share.
(1)
This is a non-GAAP financial measure defined below under
"Non-GAAP Measures" and accompanied by a reconciliation to the most
directly comparable GAAP financial measure.
|
About Birks Group Inc.
Birks Group is a leading designer of fine jewellery, timepieces
and gifts and operator of luxury jewellery stores in Canada. The Company operates 24 stores under
the Maison Birks brand in most major metropolitan markets in
Canada, one retail location in
Calgary under the Brinkhaus brand,
one retail location in Vancouver
operated under the Graff brand and one location in Vancouver under the Patek Philippe brand.
Bijoux Birks fine jewellery collections are also available through
select SAKS Fifth Avenue stores in Canada and the U.S., select Mappin &
Webb and Goldsmiths locations in
the United Kingdom, in Mayors
stores in the United States as
well as several jewellery retailers across North America and the E.U. Birks was founded
in 1879 and has become Canada's
premier retailer and designer of fine jewellery, timepieces and
gifts. Additional information can be found on Birks' web site,
www.birks.com.
NON-GAAP MEASURES
The Company reports financial information in accordance with
U.S. Generally Accepted Accounting Principles ("U.S. GAAP"). The
Company's performance is monitored and evaluated using various
sales and earnings measures that are adjusted to include or exclude
amounts from the most directly comparable
GAAP measure ("non-GAAP measures"). The Company
presents such non-GAAP measures in reporting
its financial results to assist in business decision making and to
provide key performance information to senior management. The
Company believes that this additional information provided to
investors and other external stakeholders will allow them to
evaluate the Company's operating results using the same financial
measures and metrics used by the Company in evaluating performance.
The Company does not, nor does it suggest that investors and other
external stakeholders
should, consider non-GAAP measures in isolation
from, or as a substitute for, financial information prepared in
accordance with U.S.
GAAP. These non-GAAP measures may not be
comparable to similarly-titled measures presented by other
companies. In addition to our results determined in accordance with
U.S. GAAP, we use non-GAAP measures including:
"EBITDA and "adjusted EBITDA".
EBITDA
"EBITDA" is defined as net income (loss) from continuing
operations before interest expense and other financing costs,
income taxes expense (recovery) and depreciation and
amortization.
Adjusted EBITDA
The Company evaluates its operating earnings performance using
financial measures which exclude expenses associated with
impairment losses. The Company believes that such measures provide
useful supplemental information with which to assess the Company's
results relative to the corresponding period in the prior year and
can result in a more meaningful comparison of the Company's
performance between the periods presented. The table below provides
a reconciliation of the non-GAAP measures presented to the most
directly comparable financial measures calculated with GAAP.
Total Adjusted
Operating Expenses
|
|
|
|
|
|
|
|
|
For the fiscal year
ended
|
($000's)
|
March 26,
2022
|
March 27,
2021
|
March 28,
2020
|
Total operating
expenses (GAAP measure)
|
71,751
|
59,171
|
71,021
|
as a % of net
sales
|
39.6 %
|
41.4 %
|
41.9 %
|
Remove the impact
of:
|
|
|
|
Impairment of
long-lived assets (a)
|
—
|
—
|
-309
|
Total adjusted
operating expenses (non-GAAP measure)
|
$71,751
|
$59,171
|
$70,712
|
as a % of net
sales
|
39.6 %
|
41.4 %
|
41.7 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income (loss)
|
|
|
|
|
|
|
|
|
For the fiscal year
ended
|
($000's)
|
March 26,
2022
|
March 27,
2021
|
March 28,
2020
|
Operating income
(loss) (GAAP measure)
|
4,469
|
(2,821)
|
(6,544)
|
as a % of net
sales
|
2.5 %
|
-2.0 %
|
-3.9 %
|
Add the impact
of:
|
|
|
|
Impairment of
long-lived assets (a)
|
—
|
—
|
309
|
Adjusted operating
income (loss) (non-GAAP measure)
|
$4,469
|
(2,821)
|
(6,235)
|
as a % of net
sales
|
2.5 %
|
-2.0 %
|
-3.7 %
|
EBITDA &
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
For the fiscal year
ended
|
($000's)
|
March 26,
2022
|
March 27,
2021
|
March 28,
2020
|
Net income (loss)
from continuing operations (GAAP measure)
|
1,287
|
(5,838)
|
(12,227)
|
as a % of net
sales
|
0.70 %
|
-4.10 %
|
-7.20 %
|
Add the impact
of:
|
|
Interest expense and
other financing costs
|
3,182
|
3,017
|
5,683
|
Income taxes expense
(recovery)
|
—
|
—
|
—
|
Depreciation and
amortization
|
5,809
|
5,458
|
4,845
|
EBITDA (non-GAAP
measure)
|
$10,278
|
(2,637)
|
(1,699)
|
as a % of net
sales
|
5.7 %
|
1.8 %
|
-1.0 %
|
Add the impact
of:
|
|
|
|
Impairment of
long-lived assets (a)
|
—
|
—
|
309
|
Adjusted EBITDA
(non-GAAP measure)
|
$10,278
|
$2,637
|
(1,390)
|
as a % of net
sales
|
5.7 %
|
1.8 %
|
-0.8 %
|
(a)
|
Non-cash
impairment of long-lived assets in fiscal 2020 related to leasehold
improvements that are associated to store leases that have a
possibility of early lease termination.
|
Forward Looking
Statements
This press release contains forward- looking statements which
can be identified by their use of words like "plans," "expects,"
"believes," "will," "anticipates," "intends," "projects,"
"estimates," "could," "would," "may," "planned," "goal," and other
words of similar meaning. All statements that address expectations,
possibilities or projections about the future, including without
limitation, statements about the Company's ability to achieve its
long-term objectives, achieve meaningful growth, and drive
shareholder value are forward-looking statements.
Because such statements include various risks and uncertainties,
actual results might differ materially from those projected in the
forward- looking statements and no assurance can be given that the
Company will meet the results projected in the forward-looking
statements.
These risks and uncertainties include, but are not limited to
the following: (i) the magnitude and length of economic disruption
as a result of the worldwide novel coronavirus (COVID-19) outbreak,
including its impact on macroeconomic conditions, generally, as
well as its impact on the results of operations and financial
condition of the Company and the trading price of its shares; (ii)
a decline in consumer spending or deterioration in consumer
financial position; (iii) economic, political and market
conditions, including the economies of Canada and the U.S., which could adversely
affect the Company's business, operating results or financial
condition, including its revenue and profitability, through the
impact of changes in the real estate markets, changes in the equity
markets and decreases in consumer confidence and the related
changes in consumer spending patterns, the impact on store traffic,
tourism and sales; (iv) the impact of fluctuations in foreign
exchange rates, increases in commodity prices and borrowing costs
and their related impact on the Company's costs and expenses; (v)
the Company's ability to maintain and obtain sufficient sources of
liquidity to fund its operations, to achieve planned sales, gross
margin and net income, to keep costs low, to implement its business
strategy, maintain relationships with its primary vendors, to
mitigate fluctuations in the availability and prices of the
Company's merchandise, to compete with other jewelers, to succeed
in its marketing initiatives, and to have a successful customer
service program; (vi) the Company's ability to execute its
strategic vision; and (vii) the Company's ability to invest in and
finance capital expenditures.
Information concerning factors that could cause actual results
to differ materially is set forth under the captions "Risk Factors"
and "Operating and Financial Review and Prospects" and elsewhere in
the Company's Annual Report on Form 20-F filed with the Securities
and Exchange Commission on June 23,
2022 and subsequent filings with the Securities and Exchange
Commission. The Company undertakes no obligation to update or
release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this statement or
to reflect the occurrence of unanticipated events, except as
required by law.
BIRKS GROUP INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS - AUDITED
|
Fiscal Year
Ended
|
|
|
March 26,
2022
|
|
|
March 27,
2021
|
|
|
March 28,
2020
|
|
|
(In thousands,
except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
$
|
181,342
|
|
$
|
143,068
|
|
$
|
169,420
|
|
Cost of
sales
|
|
105,122
|
|
|
86,718
|
|
|
104,943
|
|
Gross profit
|
|
76,220
|
|
|
56,350
|
|
|
64,477
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
65,942
|
|
|
53,713
|
|
|
65,867
|
|
Depreciation and
amortization
|
|
5,809
|
|
|
5,458
|
|
|
4,845
|
|
Impairment of
long-lived assets
|
|
-
|
|
|
-
|
|
|
309
|
|
Total operating
expenses
|
|
71,751
|
|
|
59,171
|
|
|
71,021
|
|
Operating income
(loss)
|
|
4,469
|
|
|
(2,821)
|
|
|
(6,544)
|
|
Interest and other
financial costs
|
|
3,182
|
|
|
3,017
|
|
|
5,683
|
|
|
|
Loss from continuing
operations
|
|
1,287
|
|
|
(5,838)
|
|
|
(12,227)
|
|
Income taxes
(benefits)
|
|
-
|
|
|
-
|
|
|
-
|
|
Loss from continuing
operations
|
|
1,287
|
|
|
(5,838)
|
|
|
(12,227)
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
|
Loss income from
discontinued operations, net of
tax
|
|
-
|
|
|
-
|
|
|
(552)
|
|
Gain on disposal of
discontinued operations
|
|
-
|
|
|
-
|
|
|
-
|
|
Net (loss) income from
discontinued operations, net of
tax
|
|
-
|
|
|
-
|
|
|
(552)
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
1,287
|
|
$
|
(5,838)
|
|
$
|
(12,779)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
18,346
|
|
|
18,005
|
|
|
17,968
|
|
Diluted
|
|
18,794
|
|
|
18,005
|
|
|
17,968
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.07
|
|
$
|
(0.32)
|
|
$
|
(0.71)
|
|
Diluted
|
|
0.07
|
|
|
(0.32)
|
|
|
(0.71)
|
|
Net (loss) income from
continuing operations per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.07
|
|
$
|
(0.32)
|
|
$
|
(0.68)
|
|
Diluted
|
|
0.07
|
|
|
(0.32)
|
|
|
(0.68)
|
|
|
|
|
|
|
|
|
|
|
|
|
BIRKS GROUP INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS – AUDITED
|
|
|
As of
|
|
|
|
March 26,
2022
|
|
|
March 27,
2021
|
|
|
|
(In
thousands)
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,013
|
|
$
|
1,807
|
|
Accounts receivable
and other receivables
|
|
|
8,037
|
|
|
7,307
|
|
Inventories
|
|
|
78,907
|
|
|
97,789
|
|
Prepaids and other
current assets
|
|
|
1,822
|
|
|
2,044
|
|
Total current
assets
|
|
|
90,779
|
|
|
108,947
|
|
|
|
|
|
|
|
|
|
Long-term
receivables
|
|
|
5,599
|
|
|
5,673
|
|
Property and
equipment
|
|
|
22,781
|
|
|
24,496
|
|
Operating lease
right-of-use asset
|
|
|
58,071
|
|
|
57,670
|
|
Intangible assets and
other assets
|
|
|
6,031
|
|
|
4,894
|
|
Total non-current
assets
|
|
|
92,482
|
|
|
92,733
|
|
Total assets
|
|
$
|
183,261
|
|
$
|
201,680
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
43,157
|
|
$
|
53,387
|
|
Accounts
payable
|
|
|
28,291
|
|
|
37,975
|
|
Accrued
liabilities
|
|
|
8,340
|
|
|
11,209
|
|
Current portion of
long-term debt
|
|
|
2,129
|
|
|
2,960
|
|
Current portion of
operating lease liabilities
|
|
|
6,963
|
|
|
6,298
|
|
Total current
liabilities
|
|
|
88,880
|
|
|
111,829
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
21,371
|
|
|
23,062
|
|
Long-term portion of
operating lease liabilities
|
|
|
66,757
|
|
|
66,713
|
|
Other long-term
liabilities
|
|
|
389
|
|
|
1,498
|
|
Total long-term
liabilities
|
|
|
88,517
|
|
|
91,273
|
|
Stockholders' equity
(deficiency):
|
|
|
|
|
|
|
|
Class A common stock –
no par value,
unlimited shares
authorized, issued and outstanding 10,795,443 (10,610,973 as of
March 27, 2021)
|
|
|
37,883
|
|
|
37,361
|
|
Class B common stock –
no par value,
unlimited shares
authorized, issued and outstanding 7,717,970
|
|
|
57,755
|
|
|
57,755
|
|
Preferred stock – no
par value,
unlimited shares
authorized, none issued
|
|
|
-
|
|
|
–
|
|
Additional paid-in
capital
|
|
|
23,669
|
|
|
18,259
|
|
Accumulated
deficit
|
|
|
(113,413)
|
|
|
(114,700)
|
|
Accumulated other
comprehensive loss
|
|
|
(30)
|
|
|
(97)
|
|
Total stockholders'
equity (deficiency)
|
|
|
5,864
|
|
|
(1,422)
|
|
Total liabilities and
stockholders' equity
|
|
$
|
183,261
|
|
$
|
201,680
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Birks Group Inc.