Birks(US:BGI)2024-11-27 22:25Financial Performance - For the twenty-six week period ended September 28, 2024, net sales were $80.1 million, a decrease of 8.8% compared to $87.8 million for the same period in 2023[24]. - Comparable store sales decreased by 4.9% for the twenty-six week period ended September 28, 2024, compared to an increase of 4.3% for the same period in 2023[23]. - Gross profit for the twenty-six week period ended September 28, 2024, was $31.3 million, down from $36.1 million in the prior year, reflecting a gross margin of 39.0%[24]. - The company reported an operating loss of $0.3 million for the twenty-six week period ended September 28, 2024, compared to an operating income of $0.5 million in the prior year[24]. - Net loss for the twenty-six week period ended September 28, 2024, was $3.1 million, compared to a net loss of $1.5 million for the same period in 2023[24]. - The company reported a net loss of $3.1 million, or -3.8% of net sales, compared to a net loss of $1.5 million, or -1.7% of net sales, in the prior year[34]. - EBITDA for the 26 weeks ended September 28, 2024, was $4.7 million, or 5.8% of net sales, compared to $5.0 million, or 5.6% of net sales, in the previous year[34]. - The Company recorded a net loss of $3.1 million for the twenty-six week period ended September 28, 2024, compared to a net loss of $1.5 million for the same period in 2023, indicating a deterioration in financial performance[88]. - The Company recorded a net loss of $3,081,000 for the 26 weeks ended September 28, 2024, compared to a net loss of $1,482,000 for the same period in 2023[72]. - The net loss per common share for the twenty-six week period ended September 28, 2024, was ($0.16), compared to ($0.08) for the same period in 2023, indicating a 100% increase in loss per share[108][109]. Expenses and Costs - Selling, general and administrative expenses (SG&A) were $27.8 million for the twenty-six week period ended September 28, 2024, compared to $32.5 million in the same period of 2023[24]. - Marketing expenses represented approximately 2.7% of net sales during the twenty-six week period ended September 28, 2024, down from 4.2% in the same period of 2023[17]. - Depreciation and amortization expense increased to $3.7 million from $3.1 million, mainly due to accelerated depreciation related to a store closure[28]. - Interest and other financing costs rose to $4.0 million from $3.4 million, driven by an increase in the average amount outstanding on the Amended Credit Facility[29]. - Fixed operating lease expense for the 26 weeks ended September 28, 2024, was $5.333 million, a decrease from $5.973 million in the prior year, representing a reduction of approximately 10.7%[131]. - Total lease expense for the 26 weeks ended September 28, 2024, was $7.869 million, down from $8.785 million for the same period in 2023, a decrease of approximately 10.4%[131]. Assets and Liabilities - Total assets as of September 28, 2024, were $193.1 million (U.S. $143.1 million), with total revenues of $80.1 million (U.S. $59.4 million) for the same period[15]. - Total current assets increased to $117,192,000 as of September 28, 2024, from $112,218,000 as of March 30, 2024[67]. - Total liabilities increased to $201,273,000 as of September 28, 2024, compared to $208,417,000 as of March 30, 2024[67]. - The company’s bank indebtedness rose to $71,152,000 as of September 28, 2024, from $63,372,000 as of March 30, 2024[67]. - The Company has a total stockholders' equity deficiency of $(8,226,000) as of September 28, 2024, compared to $(5,149,000) as of March 30, 2024[67]. - The Company has a working capital ratio of 0.92 as of September 28, 2024, below the required ratio of 1.01, but received a tolerance letter allowing a ratio of 0.90 for the upcoming fiscal year[47]. - The Company has a negative working capital as of September 28, 2024, and March 30, 2024, indicating potential liquidity issues[88]. - The Company has $46.3 million of net liabilities subject to foreign exchange rate risk, which could impact earnings by approximately $0.5 million with a 100 basis point change in the Canadian dollar against the U.S. dollar[60]. Cash Flow - Net cash used in operating activities was $3.5 million for the 26 weeks ended September 28, 2024, a decrease of $4.0 million compared to a net cash provided of $0.5 million in the same period last year[55]. - Net cash used in investing activities increased to $5.0 million for the 26 weeks ended September 28, 2024, compared to $4.3 million in the prior year[56]. - Net cash provided by financing activities was $8.5 million for the 26 weeks ended September 28, 2024, up from $4.6 million in the same period last year[57]. - The Company used net cash flows from operations of $3.5 million in the twenty-six week period ended September 28, 2024, compared to a positive cash flow of $0.5 million in the prior year[88]. Financing and Credit Facilities - As of September 28, 2024, the Company had an outstanding balance of $71.2 million under its Amended Credit Facility, with a maximum amount of $90.0 million available[36]. - The Company expects to maintain excess availability of at least $8.5 million for the next twelve months, ensuring compliance with financial covenants[40]. - The Company has $84.0 million of floating-rate debt as of September 28, 2024, which could result in an annualized interest expense change of approximately $0.8 million with a 100 basis point interest rate fluctuation[59]. - The Company has $15.6 million of excess borrowing capacity as of September 28, 2024, compared to $13.4 million as of March 30, 2024, reflecting a 16.4% increase[111]. - The Company entered into an amendment to its Amended Credit Facility on June 26, 2024, which adjusted the interest rate structure, potentially impacting future borrowing costs[113]. - The Company has outstanding loans of $3.7 million as of September 28, 2024, from a six-year term loan with Investissement Québec, which was used for working capital needs[91]. - The Company secured a $12.5 million term loan with SLR, which has been amended to extend the maturity date to December 2026[114]. Strategic Initiatives - The company plans to focus on enhancing customer awareness and appreciation of the Birks product brand through various marketing strategies and expanding sales channels, including e-commerce[18]. - The company plans to evaluate the productivity of existing stores and intends to close unproductive locations while opening new stores in prime retail areas[65]. - The Company continues to explore alternative financing sources, including public or private equity and asset disposals, to improve its financial position[99]. - The Company is actively managing liquidity and implementing cost reductions to mitigate adverse economic conditions affecting its operations[101].