FormerXBC Inc XEBEQ

RE:RE:Time to regroup / New ideas

[TheCount11]

Shareholders did not get wiped out.  Be careful drawing a direct comparison between Xebec and Reitmans. 

Pre Covid Reitmans was floundering.  Revenues and store count had peaked many years ago (2010).  Canada like the US had too many malls.  Ecommerce only brands were squeezing gross margins.  The company owned their head office and warehouse.  When Covid came around goverments ordered the closure of apparel stores forcing many companies like Reitmans to seek CCAA court protection.

There were 1,016 creditors with claims totalling $5.8M with a claim in an amount of $20,000 or less which were paid in full. 

98.8% of the 1,481 creditors voted in favor.  The biggest creditors were landlords.  Goverments eventually aided lanlords.

The company closed 3 banners (brands) and many stores.  They have brought 2 back.  Leases were renegotiated.  

A Secret so don't tell anyone - Covid was best thing for Reitmans.
Closing unprofitable stores immediately flows to the bottom line.  While revenues will be less than pre covid expenses will be even more.  Some store closure revenue will be recaptured within the Omnichannel from loyal customers.  Last quarter it was way more than I expected!

Reitmans made 76 cents a share last quarter!  I am modelling YoY Q3 revenue increase of 29% to $230M based on YoY Q2 revenue increased by 33%, to $229.2M while YTD revenue increased by 31%, to $383.1M. 

I think a 58% gross margin is reasonable as container rates are coming down.  I model a 14.1% operating margin (EBIT) and a13.8% profit margin which is 65 cents are share.   

Reitmans has a long runway.  I hope likeminded shareholders will strongly ask for a NCIB next annual meeting.  

This is my take on Reitmans.  I assume you are up to speed on Xebec.