RE:RE:RE:RE:RET.A is on fire. Reitmans reconstruction plan is working. what are the thoughts after current financial results, will it survive ?
deleuze68 wrote: Reitmans last financials cover the period ending May 2nd. Since then E&Y has prepared 2 monitor's reports that cover the period from May 17-August 1. You can find read them here https://documentcentre.ey.com/#/detail-engmt?eid=380
In filing the reports E&Y with input from Reitmans prepared cash flow projections. These projections were initially prepared on May 18th.
Of note, for the period May 17-July 11, E&Y projected Reitmans to have sales of $92 million and finish the period with a cash balance of $7 million. It was because of these internal projections that the need for financing was so dire. But in reality, due to the liquidation process and online sales momentum being much better than anticipated, Reitmans had sales of $145 million and finished the period with a cash balance of $77 million.
For the period July 11-August 1, Reitmans had $48 million in sales vs $42 million projected and finished with a cash balance of $71 million vs $55 million projected. Sales are continuing to exceed projections and expenses are being contained. There is some timing differences related to the expenses so the $16 million variance isn't as strong as it appears but still very positive that they are maintaining a strong cash position through the slow season.
Reitmans has now secured a $60 million credit facility through BMO. They had to file under the CCAA in order to do so. The irony is they may not ever need this financing. E&Y is currently projecting that Reitmans will have $42 million in cash on October 17th just as they enter their strongest selling season. I wouldn't be surprised if Reitmans continues to outperform though. Further E&Y doesn't see Reitmans having any need for the credit facility in the forseeeable future.
The company is solvent and performing extremely well considering the circumstances and dire projections at the beginning of Spring. They will have no problem emerging from the CCAA process with full support of their creditors and landlords. And with $40 million+ in cash in addition to an untapped $60 million credit facility they will have plenty of time to continue turning their operations around and returning to profitability.