Changes at April 29, 2023 as compared to January 28, 2023 were primarily due to the following:
• cash decreased $33.6 million primarily due to the payment of fiscal 2023 performance incentive plan awards, the timing of payments related to trade and non-trade payables, less cash generated from operations, and the investments made in property and equipment in the first quarter of 2024;
• trade and other receivables increased primarily due to higher credit card receivables as at April 29, 2023 as compared to as at January 28,2023;
• inventories decreased by $3.2 million due to reduced advanced merchandise deliveries as supply chain conditions improved;
• the increase of $4.1 million in prepaid expenses and other assets is primarily due to the timing of payments related to in-cloud hosting service contracts;
• property and equipment & intangible assets decreased by $0.8 million.
...During the first quarter of 2024, $3.5 million was invested primarily on new stores, store renovations and head office hardware and software investments.
..Depreciation and amortization of $3.3 million and a net impairment of $0.3 million on property and equipment and intangible assets were recognized in the first quarter of 2024 ($3.9 million of depreciation and amortization and a net impairment of $1.2 million on property and equipment and intangible assets were recognized in the first quarter of 2023);
• right-of-use assets represent the right-to-use the retail stores and certain equipment over their lease terms. Right-of-use assets increased by a net $8.5 million primarily due to leases signed during the first quarter of 2024.
Depreciation and amortization of $7.8 million was recognized in the first quarter of 2024 ($5.8 million in the first quarter of 2023). No impairment charges were recognized in the first quarter of 2024 and 2023;
• pension asset increased by $1.3 million due to an actuarial gain recognized in other comprehensive income in the first quarter of 2024. On May 19, 2023, the Company’s Board of Directors has approved the dissolution of the defined benefit pension plan (“Plan”). The effective date of the windup for the Plan is June 30, 2024. See Notes 6 and 20 of the unaudited condensed consolidated interim financial statements for the first quarter of 2024;
• deferred tax assets arise primarily due to temporary differences and operating losses carried forward relating to the Canadian operations as a result of management’s assessment that the Company has the ability to generate future profitable operations and that it is probable that future taxable profits will be available to utilize the tax benefits;
• trade and other payables decreased by $27.4 million due to the timing of payments related to trade and non-trade payables and personnel-related liabilities (including performance incentive plan awards), partially offset by an increase in the refund liability related to sales returns associated with the increase in sales during the first quarter of 2024;
• deferred revenue decreased by $1.3 million due to the timing of gift card redemptions. Deferred revenue consists of unredeemed gift cards, loyalty points and awards granted under customer loyalty programs;
• income taxes payable consists primarily of estimated net tax liabilities of a foreign subsidiary. The decrease of $0.5 million in income taxes payable is due to payments made by a foreign subsidiary;
• lease liabilities represent the present value of the Company’s obligations to make lease payments for its store and equipment leases.
During the first quarter of 2024, lease liabilities increased by lease additions of $16.4 million and interest expense of $1.6 million, offset by payments of $8.9 million and lease terminations of $0.1 million.