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Reitmans Ord Shs V.RET

Alternate Symbol(s):  RTMNF | RTMAF | V.RET.A

Reitmans (Canada) Limited is a Canada-based specialty apparel retailer for women and men, with retail outlets throughout the country. The principal business activity of the Company is the sale of women’s wear. The Company operates three different brands: Reitmans, Penningtons and RW&CO. The Reitmans banner is a specialty fashion destination. The Reitmans has an online presence and store locations across the country. Penningtons is a destination for plus-size fashion, ranging from sizes 14 to 32. Penningtons operates stores across Canada, as well as an ecommerce site at penningtons.com. RW&CO. operates stores averaging 4,500 square feet in premium locations in shopping malls, as well as on their e-commerce site. Specializing in menswear and womenswear, the brand delivers versatile, well-crafted collections and brand experiences. It operates approximately 391 stores under three distinct banners consisting of 226 Reitmans, 85 Pennington, and 80 RW&CO.


TSXV:RET - Post by User

Post by RedeyeGarf2on Jan 26, 2023 12:34am
328 Views
Post# 35247010

Reposting - Savyinvestor333 link to Jesse Gamble

Reposting - Savyinvestor333 link to Jesse Gamble
Jesse Gamble, Senior VP & Portfolio Manager, Donville Kent Asset Management
Reitmans (TSXV:RET.A; TSXV:RET)

Covid lockdowns proved to be a decisive moment for Reitmans.

Due to government forced store closures, Reitmans strategically entered CCAA protection and restructured their business.

They exited this process in 2022 after:

  • Closing over 30% of their stores
  • Consolidating their banners from five to three
  • Laying off 1,600 employees
  • Paying 50 cents on the dollar to settle debt & liabilities

This process gave them cover and a cheaper way to close unprofitable stores and renegotiate retail leases at an opportune time.

We estimate they saved 10% on lease costs across their high-tier locations and over 60% on their second-tier locations.

Now Reitman’s carries:

  • $68m of cash
  • No debt
  • Has reported Net Income of ~$60m in the last 12 months
  • Owns roughly $200m of real estate in Montreal
  • All while trading at a $110m market cap

Add in a quickly growing e-commerce segment, now representing 25% of sales, positive online search trends, increasing revenue per square foot and decreasing cost per square foot, we think the profitability is sustainable.

In past recessions, like 2001/2002 & 2008/2009, the business remained profitable, as they are a value brand, plus they are one of the few retailers with a growing customer base.

We estimate their target market is growing 3.3% per year.

We think the stock will see a massive re-rating in 2023 as it gets back onto investors’ radars and reinstates dividends & buybacks, plus gets a push to monetize real estate.

https://uncommonsenseinvestor.com/best-stock-ideas-for-2023-from-our-all-star-roster/

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