Reitmans Ord Shs V.RET

They know when to pick a date

[savyinvestor333]

Reitmans (Canada) Limited Announces the Granting of Options to Management

V.RET | 3 minutes ago

MONTREAL, April 26, 2022 /CNW Telbec/ - Reitmans (Canada) Limited ("Reitmans" or the "Company") (TSXV: RET) (TSXV: RET.A) today announces that it has granted an aggregate of 2,050,000 options to purchase Class A non-voting shares of the Company (the "Options") to members of management pursuant to its second amended and restated share option plan dated April 19, 2021.

The Options have an exercise price of $1.50, are subject to time-based and performance-based vesting terms. The grant of the Options is made pursuant to the Company's Long-Term Incentive Plan which is designed to incentivize members of management in the achievement of long-term financial targets.

About Reitmans (Canada) Limited

[tomperns]

I usually don't say this, but in this case they really seserve it.

[Zemoy190]

So does this mean diluting the class A shares?? 

[savyinvestor333]

They have an option to buy shares for $1.50  They do not get them for free.

[TheCount11]

When the strike price is set at current stock price generally the options will be in the money.  So yes.  Most managements initiate a buybuck so there is no net dilution. There should have been a stretch goal like a $2.00 strike price for motivation.  Thats roughly 4% of the company...

[Zemoy190]

Once again shareholders get the butt end of the stick,,, am disappointed they put the offer price so low,, they were buying shares back in 2019 for 3 bucks and now selling them for $1.50,, more money for the execs and shareholders get shafted,,, 

[TheCount11]

Yeah.  Tangible book value $5.  Options $1.50... I had to sit through bankruptcy with shares that stopped trading for a while.  Management needs to spend time on the floor in the stores. I go to the website and the Mid season 50% off special is still going.  Tons of items on special.  How can that be possible? 

[Mephistopheles3]

If they were a well run company, we wouldn't be on this board picking up shares for $1.50 each!   I'm looking through senior management and the current CFO has been with the company for 40 years.. that's longer than i've been alive which is insane. And I think he's one of the younger ones when you look at the BoD.  They probably could use some new blood. CFO

[Zemoy190]

Only positive I see is they won't have to use cash for compensation,,, will be interesting to see what they use the proceeds from the options and current cash for!

[TheCount11]

Haha true enough!  Agreed CFO needs to manage cashflow and do buybacks.  My concern is around their tendency to over order inventory then be overly promotional.  I feel like they are out of ideas and use big specials to drive foot traffic which makes company way less profitable.

[savyinvestor333]

The specials are not really special. They always say 50% off but the margins are over 60% i believe. They never hope or intend to sell at full sticker price. This is all part of marketing.

[TheCount11]

So your Q1 gross margin forecast is over 60%?

[savyinvestor333]

No. Last year we had 2 quarters over 55% and 2 quarters over 49%. I will estimate 40-50% margin for the first quarter as this is the weakest quarter for retail.

[TheCount11]

Reitmans right now is a goldmine.  Way back in 2008 there were 373 Reitmans, 163 Penningtons and 54 RW&CO.  Now there is 237 Reitmans, 90 Penningtons and 77 RW&CO.    Leases a little over 2M sq ft with evenue per sq ft is a healthy $331.  Consolidation means more foot traffic per store.  Less stores means less places to get stockouts and logistics get a

[Gann999]

Doesn't this kind of further reinforce a floor of at least 1.50

[savyinvestor333]

No not really but they usually hope the share price increases after they dirstribute the options so the employees feel they are getting a bonus. The options could be for 1 to 3 year term and I didn't check the terms.The company could also start a NCIB to buy the shares on the open market to counter a rising share count . I have seen other companies do this.

[Mephistopheles3]

I was going through the details and they cannot issue any options below the exercise price of the previous day, which is $1.50 in this case. So the BoD issued the options at the legal minimum.  They don't state the vesting period here, but in Note 18 in the FS, they state that the vesting period is typically up to 4 years.   They are allowed up to 3.5 million options and they

[savyinvestor333]

The senior management just received over 2 million bonus money according to the 4th quarter MD&A. • a $2.1 million discretionary compensation bonus to the Company’s head office employees in recognition of their efforts to emerge out of the CCAA proceedings;

[Mephistopheles3]

Yes, I'm really not happy about the 2 million options as it's such bad corporate governance as the family and management are just trying to profit.  At the end of the day, it doesn't throw off the valuation that much as the free cash flow being generated is enough that with an NCIB, we should see nice returns. However, when you have upper management giving themselves bonuses and

[savyinvestor333]

I really think it is a non issue. It's up to 4 years out and if the company doesn't perform they get nothing.

[Gann999]

Agreed it's based on reaching certain goals which if they do the sp goes much higher than current levels so it's all good.

[savyinvestor333]

Gann999   Did you take a position? If so Welcome aboard

[Gann999]

I did although I probably paid more than I should have but such is life got in at 1.69

[savyinvestor333]

I think you will be fine. If you only bought a partial position it may be a good time to average down. Like I said after earnings give it a week. The large seller does not seem to be done yet and seems like they just want out regardless of price. I think they will soon be done and also any fund will have had time to go over the financials .GLTA

[Gann999]

I will be patient and see how things go. You should have a look at trulieve at current prices it's a great entry in my opinion.