The North West Company Inc. (the "Company" or "North West")
(TSX:NWC) today reported its unaudited financial results for the
second quarter ended July 31, 2013. It also announced that the
Board of Directors have declared a dividend of $0.28 per share to
shareholders of record on September 30, 2013, to be paid on October
15, 2013.
Financial Highlights(3)
Second quarter net earnings increased 0.8% to $18.1 million
compared to a 21.6% increase in second quarter earnings last year.
Diluted earnings per share was flat to last year at $0.37 per share
as higher earnings in the Canadian Operations was offset by lower
earnings in the International Operations.
Sales increased 1.2% to $388.6 million compared to $383.8
million in the second quarter last year as sales growth in our
International Operations led by new store sales and same store
sales growth more than offset lower sales in the Canadian
Operations due to the impact of store closures in the fourth
quarter of 2012. Sales excluding the foreign exchange impact
increased 0.8% and were up 2.2%(1) on a same store basis. Food
sales(1) increased 1.7% and were up 2.3% on a same store basis and
general merchandise sales(1) decreased 2.8% but were up 1.7% on a
same store basis.
Earnings from Operations(2 ) increased 2.9% to $28.0 million
compared to $27.2 million in the second quarter last year. Gross
profit dollars were flat to last year due to the impact of the
store closures in the Canadian Operations in the fourth quarter
last year and lower gross profit rates largely due to more
aggressive pricing in the International Operations. Selling,
operating and administrative expenses decreased 0.9% compared to
last year and were down 49 basis points as a percentage to sales as
the impact of the store closures, lower incentive plan costs, and a
non-comparable insurance gain were partially offset by higher store
expenses largely related to a new Cost-U-Less store in Barbados.
Higher utility costs in remote markets and expenses related to
strategic planning work were also factors. Excluding the foreign
exchange impact, the non-comparable insurance gain and strategic
planning costs, earnings from operations decreased 0.8% compared to
last year.
Trading profit(2) or earnings before interest, income taxes,
depreciation and amortization (EBITDA) increased 2.7% to $37.4
million compared to $36.4 million last year as gains within
Canadian Operations more than offset a decrease in the
International Operations. Excluding the foreign exchange impact,
the insurance related gain and strategic planning costs, trading
profit was flat to last year and was 9.2% as a percentage to sales
compared to 9.3% last year.
"Second quarter results were mixed with stronger sales numbers
in our Giant Tiger and Alaska businesses offset by softer spending
in the Canadian north and the Caribbean" commented North West
President and CEO, Edward Kennedy." Our focus on the second half is
to improve our sales momentum while we continue to work on our
'More in Store' priorities."
Further information on the financial results is available in the
Company's second quarter report to shareholders, Management's
Discussion and Analysis and unaudited interim condensed
consolidated financial statements which can be found in the
investor section of the Company's website at www.northwest.ca.
1. Excluding the foreign exchange impact
2. See Non-GAAP Measures Section of Management's Discussion & Analysis
3. Certain of the 2012 comparative figures have been restated in accordance
with the implementation of the revised IAS19, Employee Benefits
accounting standard. Further information is provided in the 2013 second
quarter Management's Discussion & Analysis or Note 3 in the Company's
2013 second quarter unaudited interim condensed consolidated financial
statements.
Loan Facilities Refinancing
The Company has, subject to the completion of a definitive
agreement and customary closing conditions, refinanced the US$52.0
million loan facility in the International Operations that
currently matures December 31, 2013. The new, committed, revolving
loan facilities, which will be provided by the lenders of the
existing facilities, provides the Company with a US$52.0 million
revolving loan facility for working capital and general corporate
purposes. The new loan facilities will mature December 31, 2018 and
will bear a floating rate of interest based on LIBOR plus a spread.
These facilities will be secured by a floating charge against the
assets of the Company and rank pari passu with the US$70.0 million
senior notes and the $170.0 million loan facilities.
The Company has also, subject to the completion of a definitive
agreement and customary closing conditions, refinanced the $170.0
million loan facility in the Canadian Operations that currently
matures December 31, 2015. The new, increased, committed, revolving
loan facilities, which will be provided by the lenders of the
existing facilities, provides the Company with a $200.0 million
revolving loan facility for working capital and general corporate
purposes. The new loan facilities will mature December 31, 2018 and
will bear a floating rate of interest based on Bankers Acceptances
rates plus a spread or the Canadian prime rate. These facilities
will be secured by a floating charge on the assets of the Company
and rank pari passu with the US$70.0 million senior notes and the
US$52.0 million loan facilities.
Second Quarter Conference Call
North West is also hosting a conference call for its second
quarter results on September 5, 2013 at 11:30 a.m. (Eastern
Daylight Time). To access the call, please dial 416-340-2217 or
866-696-5910 with a pass code of 1898170. The conference call will
be archived and can be accessed by dialing 905-694-9451 or
800-408-3053 with a pass code of 8278270 on or before September 12,
2013.
Notice to Readers
Certain forward-looking statements are made in this news
release, within the meaning of applicable securities laws. These
statements reflect North West's current expectations and are based
on information currently available to management. The words may,
will, should, believe, expect, plan, anticipate, intend, estimate,
predict, potential, continue, or the negative of these terms,
identify forward- looking matters. These statements speak only as
of the date of this press release. The actual results could differ
materially from those anticipated in these forward-looking
statements.
Reliance should not be placed on forward-looking statements
because they involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or
achievements of North West to differ materially from anticipated
future results, performance or achievement expressed or implied by
such forward-looking statements. Factors that could cause actual
results to differ materially from those set forth in the
forward-looking statements include, but are not limited to,
fluctuations in interest rates and currency values, legislative and
regulatory developments, legal developments, the occurrence of
weather- related and other natural catastrophes, changes in tax
laws, and those risks and uncertainties detailed in the section
entitled Risk Factors in North West's Management's Discussion and
Analysis and Annual Information Form, both for the year-ended
January 31, 2013. The preceding list is not an exhaustive list of
possible factors. These and other factors should be considered
carefully and readers are cautioned not to place undue reliance on
these forward-looking statements. North West undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, other than as required by applicable law.
Company Profile
The North West Company Inc., through its subsidiaries, is a
leading retailer of food and everyday products and services to
rural communities and urban neighbourhoods in Canada, Alaska, the
South Pacific and the Caribbean. North West operates 226 stores
under the trading names Northern, NorthMart, Giant Tiger, AC Value
Center and Cost-U-Less and has annualized sales of approximately
CDN$1.5 billion.
The common shares of North West trade on the Toronto Stock
Exchange under the symbol NWC.
Contacts: The North West Company Inc. Edward Kennedy President
and CEO 204-934-1482 204-934-1317 (FAX)ekennedy@northwest.ca The
North West Company Inc. John King Chief Financial Officer
204-934-1397 204-934-1317 (FAX)jking@northwest.ca
www.northwest.ca
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