Reitmans (Canada) (RET.A) AI Stock Analysis

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TSE:RET.A Dividends

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Reitmans (Canada)

(OTC:RET.A)

68Neutral

Reitmans (Canada) demonstrates a sound financial base with strong cash flow and equity positions, contributing positively to its stock score. Technical indicators are weak, showing bearish momentum, which weighs down the overall score. Valuation metrics suggest the stock is undervalued, offering potential upside. The earnings call highlighted both operational strengths and revenue challenges, impacting the score. Overall, the stock reflects potential for recovery, but current market pressures and technical weakness are notable concerns.

Reitmans (Canada) (RET.A) vs. S&P 500 (SPY)

Market Cap

$100.44M

Dividend YieldN/A

Average Volume (3M)19.37K

Price to Earnings (P/E)7.9

Beta (1Y)0.50

Revenue Growth-2.38%

EPS Growth-18.21%

CountryCA

Employees2,621

SectorConsumer Cyclical

Sector Strength63

IndustryApparel - Retail

Share Statistics

EPS (TTM)-0.08

Shares Outstanding35,998,790

10 Day Avg. Volume30,413

30 Day Avg. Volume19,368

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.15

Price to Cash Flow (P/CF)1.80

P/FCF Ratio2.50

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Reitmans (Canada) Business Overview & Revenue Model

Company DescriptionReitmans (Canada) Limited primarily engages in the retail sale of women's wear apparel in Canada. It also offers apparel for men. The company serves customers through retail and e-commerce channels. As of April 21, 2022, it operated 404 stores, including 237 Reitmans, 90 Penningtons, and 77 RW&CO. The company was founded in 1926 and is headquartered in Montreal, Canada.

How the Company Makes MoneyReitmans (Canada) Limited generates revenue primarily through the sale of women's apparel and accessories across its retail brands. The company operates brick-and-mortar stores across Canada, providing a physical shopping experience, while also expanding its e-commerce platforms to capture online sales. Key revenue streams include the direct sale of clothing items such as tops, bottoms, dresses, and outerwear, as well as accessories like jewelry and handbags. Significant factors contributing to its earnings include strategic brand positioning, a focus on customer service, and the ability to adapt to fashion trends. The company may engage in partnerships with designers or other fashion entities to enhance its product offerings, although specific partnerships are not detailed.

Reitmans (Canada) Financial Statement Overview

Summary

Reitmans (Canada) demonstrates solid profitability and cash flow generation, with strong gross margins and cash flow ratios. The balance sheet is stable, supported by a healthy equity ratio and moderate leverage. However, challenges in revenue growth and relatively low ROE highlight areas for improvement.

Income Statement

Positive

The company shows a strong gross profit margin of 54.5% for TTM, indicating efficient cost management. Net profit margin improved to 2.1% TTM from 1.9% annually, reflecting better bottom-line performance. However, revenue growth is negative at -0.6% TTM, suggesting a slight decline in sales. EBIT and EBITDA margins are moderate at 3.2% and 10.6% TTM, respectively, indicating stable operating profitability.

Balance Sheet

Positive

The balance sheet indicates a healthy equity position with an equity ratio of 55.5% TTM, signifying financial stability. The debt-to-equity ratio is manageable at 0.50 TTM, reflecting moderate leverage. However, ROE is relatively low at 5.5% TTM, suggesting limited returns on equity investments.

Cash Flow

Positive

The company reports robust free cash flow growth of 24.9% TTM, indicating strong cash generation capabilities. The operating cash flow to net income ratio is high at 5.75 TTM, demonstrating efficient cash earnings. Free cash flow to net income ratio stands at 3.97 TTM, showcasing strong cash conversion efficiency.

TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
789.94M	794.69M	661.95M	533.36M	869.50M	923.02M
	Gross Profit
430.27M	431.00M	353.17M	246.25M	444.39M	509.51M
	EBIT
25.42M	22.93M	143.15M	-108.00M	-51.44M	18.24M
	EBITDA
83.75M	76.22M	94.70M	194.46M	-41.58M	42.14M
	Net Income Common Stockholders
16.30M	14.81M	158.26M	-172.22M	-87.43M	6.76M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
276.60M	116.65M	25.50M	77.92M	89.41M	162.21M
	Total Assets
631.39M	490.75M	314.27M	397.23M	560.17M	492.82M
	Total Debt
12.73M	137.59M	81.94M	123.22M	213.87M	213.87M
	Net Debt
-215.85M	20.94M	56.44M	45.30M	124.46M	101.35M
	Total Liabilities
121.23M	211.73M	130.45M	375.55M	366.35M	153.22M
	Stockholders Equity
510.17M	279.02M	183.83M	21.68M	193.82M	339.60M
Cash Flow		Free Cash Flow
64.75M	51.83M	-35.38M	34.03M	53.70M	15.88M
	Operating Cash Flow
93.65M	69.53M	-24.73M	40.20M	77.18M	42.01M
	Investing Cash Flow
-28.90M	-17.70M	-15.22M	-6.16M	17.95M	-26.01M
	Financing Cash Flow
-47.58M	-39.90M	-9.19M	-46.82M	-121.78M	-12.67M

Reitmans (Canada) Technical Analysis

Technical Analysis Sentiment

Negative

Last Price1.92

Price Trends

50DMA

2.18

Negative

100DMA

2.32

Negative

200DMA

2.40

Negative

Market Momentum

MACD

-0.09

Positive

RSI

35.14

Neutral

STOCH

36.82

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RET.A, the sentiment is Negative. The current price of 1.92 is below the 20-day moving average (MA) of 2.02, below the 50-day MA of 2.18, and below the 200-day MA of 2.40, indicating a bearish trend. The MACD of -0.09 indicates Positive momentum. The RSI at 35.14 is Neutral, neither overbought nor oversold. The STOCH value of 36.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:RET.A.

Reitmans (Canada) Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RET.A	68 Neutral	$100.44M	7.91	4.34%	―	-2.38%	-18.21%
Sector *	60 Neutral	$6.86B	11.61	3.16%	4.15%	2.41%	-21.45%
ROOT	59 Neutral	C$99.51M	30.45	-19.09%	―	0.10%	-1665.60%
TGO	47 Neutral	C$27.40M	―	-119.27%	―	0.50%	0.06%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:RET.A

Reitmans (Canada)

1.92

-0.53

-21.63%

GIL

Gildan Activewear

42.50

7.75

22.30%

TSE:TGO

TeraGo Inc.

1.37

-0.59

-30.10%

TSE:ROOT

Roots Corporation

2.46

0.09

3.80%

ATZAF

Aritzia

34.42

9.03

35.57%

CDNAF

Canadian Tire

108.88

13.90

14.63%

Reitmans (Canada) Earnings Call Summary

Earnings Call Date: Apr 10, 2025 | % Change Since: -9.86% | Next Earnings Date: Jun 24, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mix of positive and negative aspects. While the company showed improvements in gross margin, financial stability, and store expansion, it faced challenges with declining net revenue, comparable sales, EBITDA, and net earnings. The strategic focus on long-term growth and operational improvements indicates potential for future recovery.

Highlights

Improved Gross Margin

The company achieved a 166 basis point improvement in gross margin, increasing from 55.6% to 57.3% year-over-year, due to strong inventory management and reduced promotional activities.

Strong Financial Position

Reitmans ended the quarter with $123.1 million in cash, $141.3 million in inventory, and zero debt, maintaining a completely undrawn $150 million revolving credit facility.

Successful Store Openings

New RW&Co. store opened in Mirabel Premium Outlet, Quebec, and two new PENN stores opened in Avalon Mall, St. John's, and Durham Center, Ajax.

Growth in Menswear and Loyalty Programs

Continued strong growth in menswear for RW&Co. and positive customer and loyalty performance indicators for the company.

Lowlights

Decline in Net Revenue

Net revenues decreased by 2.9% from $193.4 million to $187.7 million, attributed to lower store count and delayed seasonal purchases due to warmer weather.

Reduced Comparable Sales

Comparable sales fell by 1.9%, primarily due to lower e-commerce traffic, though this was partially offset by increased sales per transaction.

Decrease in Adjusted EBITDA

Adjusted EBITDA dropped from $9.5 million to $3.8 million, largely due to a $3.2 million increase in SG&A expenses and higher foreign exchange losses.

Decrease in Net Earnings

Net earnings decreased from $5.3 million ($0.11 per share) to $2.1 million ($0.04 per share) year-over-year.

Company Guidance

During Reitmans Canada Limited's fiscal 2025 third-quarter earnings call, management provided detailed guidance on several metrics. Net revenues were reported at $187.7 million, a decrease of 2.9% from the previous year due to a lower store count and delayed customer purchases caused by warmer-than-normal weather. Comparable sales dipped by 1.9%, largely impacted by reduced e-commerce traffic. Despite this, gross profit remained stable at $107.6 million, with a notable improvement in gross margin by 166 basis points to 57.3%. Adjusted EBITDA for the quarter was $3.8 million, down from $9.5 million the previous year, primarily due to increased selling, general and administrative expenses and a rise in foreign exchange loss. The company ended the quarter with a strong cash position of $123.1 million and zero debt, while capital expenditures for the fiscal year are projected at $31 million, with $20.1 million spent in the first nine months.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.