Reitmans (Canada) Limited (RET) AI Stock Analysis

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TSE:RET Dividends

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Reitmans (Canada) Limited

(RET)

62Neutral

Reitmans (Canada) Limited shows signs of financial improvement with stable margins and a strong balance sheet, yet faces challenges with declining revenue and shareholder concerns. The technical outlook is bearish, but the stock is potentially undervalued based on its P/E ratio. This mixed performance results in a cautious overall score, reflecting both recovery potential and existing risks.

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

Market Cap

C$100.44M

Dividend YieldN/A

Average Volume (3M)2.73K

Price to Earnings (P/E)9.1

Beta (1Y)0.23

Revenue Growth-2.38%

EPS Growth-18.21%

CountryCA

Employees6,812

SectorReal Estate

Sector Strength79

IndustryApparel - Retail

Share Statistics

EPS (TTM)-0.08

Shares Outstanding13,440,000

10 Day Avg. Volume5,623

30 Day Avg. Volume2,729

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) Limited Business Overview & Revenue Model

Company DescriptionReitmans (Canada) Limited (RET) is a prominent Canadian fashion retailer specializing in women's apparel. The company operates multiple store formats, including Reitmans, Penningtons, and RW&CO., each targeting different customer segments with distinctive fashion offerings. Reitmans' core products encompass a variety of clothing and accessories, catering to diverse style preferences and sizes, thereby establishing itself as a versatile brand within the fashion industry.

How the Company Makes MoneyReitmans (Canada) Limited generates revenue primarily through the sale of women's clothing and accessories across its various retail brands. The company utilizes a multi-channel sales strategy, which includes physical retail stores and an online e-commerce platform, to reach a broad customer base. Revenue streams are primarily driven by direct sales to consumers at these physical and digital outlets. Key factors contributing to its earnings include its ability to offer a wide range of sizes, styles, and competitive pricing, as well as maintaining brand loyalty through customer engagement and marketing initiatives. Partnerships with suppliers and efficient supply chain management also play a significant role in optimizing costs and maximizing profitability.

Reitmans (Canada) Limited Financial Statement Overview

Summary

Reitmans (Canada) Limited demonstrates a solid financial position with stable profitability and effective cash flow management. While revenue growth is slow, the company maintains healthy margins and a strong equity base. Cash flow metrics are particularly strong, providing flexibility for future investments or debt servicing. Overall, the company is in a stable financial state with opportunities for growth and improvement in profitability.

Income Statement

Positive

Reitmans (Canada) Limited shows a stable gross profit margin of 54.5% for TTM, indicating strong cost management. The net profit margin is modest at 2.06%, showing a slight improvement over the previous year. Revenue growth is positive but slow, with a marginal decline of 0.6% from the previous year. EBIT and EBITDA margins are healthy at 3.22% and 10.6% respectively, suggesting operational efficiency and profitability.

Balance Sheet

Positive

The company maintains a solid equity base with an equity ratio of 55.5%, indicating strong financial stability. The debt-to-equity ratio is 0.50, which is reasonable and suggests manageable leverage. Return on equity stands at 5.5%, reflecting moderate returns on shareholder investment.

Cash Flow

Positive

Reitmans exhibits strong cash generation with a significant operating cash flow to net income ratio of 5.75, indicating effective conversion of earnings into cash. The free cash flow grew by 24.9%, showcasing improved cash availability for reinvestment and debt reduction. The free cash flow to net income ratio is robust at 3.97, highlighting strong cash profitability.

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
123.07M	116.65M	25.50M	77.92M	89.41M	162.21M
	Total Assets
533.94M	490.75M	314.27M	397.23M	560.17M	492.82M
	Total Debt
148.15M	137.59M	81.94M	123.22M	213.87M	213.87M
	Net Debt
25.08M	20.94M	56.44M	45.30M	124.46M	101.35M
	Total Liabilities
237.38M	211.73M	130.45M	375.55M	366.35M	153.22M
	Stockholders Equity
296.56M	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) Limited Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.20

Price Trends

50DMA

2.42

Negative

100DMA

2.59

Negative

200DMA

2.64

Negative

Market Momentum

MACD

-0.05

Positive

RSI

42.84

Neutral

STOCH

33.86

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RET, the sentiment is Negative. The current price of 2.2 is below the 20-day moving average (MA) of 2.32, below the 50-day MA of 2.42, and below the 200-day MA of 2.64, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 42.84 is Neutral, neither overbought nor oversold. The STOCH value of 33.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:RET.

Reitmans (Canada) Limited Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CTC.A	74 Outperform	$8.34B	9.20	15.17%	4.80%	-1.79%	318.70%
ATZ	73 Outperform	$4.85B	35.69	15.44%	―	10.36%	41.78%
GIL	68 Neutral	$8.64B	16.89	23.48%	2.04%	4.03%	-16.63%
GOOS	64 Neutral	$1.07B	14.77	15.82%	―	4.64%	41.68%
RET	62 Neutral	C$100.44M	9.13	4.22%	―	-2.38%	-18.21%
Sector *	59 Neutral	$2.71B	11.52	0.08%	8691.97%	5.56%	-16.56%
ROOT	54 Neutral	C$93.84M	30.45	-19.09%	―	0.10%	-1665.60%

* Real Estate Sector Average

Performance Comparison

TSE:RET

Reitmans (Canada) Limited

2.20

-0.68

-23.61%

TSE:GIL

Gildan Activewear

56.94

10.03

21.39%

TSE:ATZ

Aritzia

42.71

9.11

27.11%

TSE:GOOS

Canada Goose Holdings

11.30

-4.40

-28.03%

TSE:CTC.A

Canadian Tire

147.92

19.27

14.98%

TSE:ROOT

Roots Corporation

2.35

0.00

0.00%

Reitmans (Canada) Limited Earnings Call Summary

Earnings Call Date: Apr 10, 2025 | % Change Since: -11.65% | Next Earnings Date: Jun 24, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed outlook for Reitmans Canada Limited. While the company demonstrated strong financial management, resulting in improved gross margins and a robust cash position, there were notable challenges. These included a decrease in revenue and comparable sales, reduced EBITDA, and expressed shareholder concerns regarding governance. Despite positive operational progress and store expansion, these issues led to an overall cautious sentiment.

Highlights

Gross Margin Improvement

Achieved a 166 basis point improvement in gross margin compared to a year ago, reaching 57.3% due to strong inventory management and reduced promotional activities.

Strong Financial Position

Ended the quarter with working capital of $172.9 million, a cash position of $123.1 million, and zero debt with an undrawn $150 million revolving credit facility.

Successful Marketing Campaigns

Strong results from ambassadors marketing campaign featuring notable figures, contributing to brand visibility and customer engagement.

Continued Store Expansion

Opened new RW&Co. store in Mirabel and two new PENN stores, expanding the store footprint and supporting growth in various regions.

Lowlights

Revenue Decline

Net revenues decreased by 2.9% to $187.7 million due to lower store count and customers delaying fall clothing purchases.

Decrease in Comparable Sales

Comparable sales for the quarter were down 1.9% mainly due to lower e-commerce traffic, despite increased sales per transaction.

Reduced EBITDA

Adjusted EBITDA decreased to $3.8 million from $9.5 million in the previous year, impacted by increased SG&A expenses and foreign exchange losses.

Shareholder Concerns

Shareholder dissatisfaction with governance and decision-making at board level, highlighting issues with minority shareholder oppression and lack of board independence.

Company Guidance

During Reitmans Canada Limited's Fiscal 2025 Third Quarter Earnings Call, management provided several key metrics and updates. The company reported a 2.9% decrease in net revenues, totaling $187.7 million, attributed to warmer-than-usual weather and a lower store count. Despite the decline in revenues, the gross margin improved by 166 basis points to 57.3%, aided by effective inventory management and reduced promotional activities. The adjusted EBITDA for the quarter was $3.8 million, down from $9.5 million the previous year, largely due to increased selling, general and administrative expenses and foreign exchange losses. Net earnings were $2.1 million or $0.04 per share, compared to $5.3 million or $0.11 per share a year ago. The company maintained a strong financial position with $123.1 million in cash and no debt. Reitmans also repurchased 91,100 shares during the quarter. Capital expenditures for the fiscal year are projected at $31 million, with $20.1 million spent in the first nine months. The company's focus remains on growth and modernization, including opening new stores and upgrading digital infrastructure.

Reitmans (Canada) Limited Corporate Events

Business Operations and StrategyFinancial Disclosures

Reitmans Reports Fiscal 2025 Results and Outlines Growth Ambitions

Neutral

Apr 10, 2025

Reitmans (Canada) Limited reported a decrease in net revenues for the fourth quarter and fiscal year 2025, with a notable decline in net earnings. Despite these challenges, the company achieved strong performance during key shopping events like Black Friday and Cyber Monday, which helped offset some of the negative impacts. The company successfully implemented a new inventory management system and made strategic decisions to streamline operations, including closing certain business segments. Looking forward, Reitmans aims to expand its store footprint and invest over $100 million in growth initiatives, with a goal of reaching $1 billion in annual net revenue by fiscal 2030.

Spark’s Take on TSE:RET Stock

According to Spark, TipRanks’ AI Analyst, TSE:RET is a Neutral.

Reitmans (Canada) Limited shows a stable financial position with strong cash flow metrics and attractive valuation, which are major strengths. However, mixed technical indicators and cautious sentiment from the latest earnings call reflect challenges like revenue decline and governance issues, impacting the overall score negatively.

To see Spark’s full report on TSE:RET stock, click here.

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.