Reitmans Ord Shs V.RET

2022 Canadian Clothing stores sales are VERY good so far

[NicolasR]

June retail data from StatCan are out. Canadian clothing stores had their best month of june over the past 5 years. It was already the case in february, march, april and may. So far, 2022 is a record year for the industry.

It explains why Reitmans first quarter operating results were "the strongest in the last nine comparable quarters" as indicated in the last financial results news release. 

Disclosure: I am long Reitmans stock.

Monthly Clothing Stores Sales in Canada 2018-2022
Source: Add/Remove data - Retail trade sales by province and territory (statcan.gc.ca)

[NicolasR]

Monthly Clothing Stores Sales in Canada 2018-2022.jpg (484×183)

[NicolasR]

Not sure how stockhouse attachment systme works but you can find the graph here https://ceo.ca/ret?1609faef7b65

[tomperns]

All I will say is that at the current market cap, you can buy the business for free. $100M of real estate with no debt and $600M-$700M of annual sales with what looks like a profitable business after CCAA and the store closures. Next few quarters will hopefully remain profitable and the market will realize that this company is worth at least $200M-$300M (which translates to over $5/share). holding

[Lllennn]

Probably more like $7 imo

[Northforce13]

Where did you get that from? I am wondering what they own for real estate.  Their office building, of course, which *might* be worth 40 million.  Do they own other properties or some of the real estate their stores are located in?  Any source for info on this?

[tomperns]

They own the distribution center in Ville st Laurent (montreal) and their home office building. Combined book value is $70M if I recall and the market value is about $100M. Both properties are 100 percent paid off.

[Mephistopheles3]

Market value came off the appraisal report that was done as part of the bankruptcy proceedings.  It's untapped value, but unless they do something about it, it will be trapped there.  I would be looking at either downsizing  (since they likely don't need all that industrial space now that they're half the size) and moving out to cheaper land in Quebec or just doing a

[Northforce13]

Thanks

[TheCount11]

According to CBRE Industrial rents in MTL have more than doubled over the past three years.  The average rent was $13.40 per square foot in the second quarter, up from $6.12 in the comparable period of 2019. The national average is $12.25. Reitmans investors do not need to worry about occupancy price shock risks regarding warehouse or head office.  They also use the owned

[Mephistopheles3]

Yes and no.  I would make the argument that since they are literally half the size they were just a few years ago with the massive store shutdown and with the move to a more hybrid workplace, they don't need that much square footage.  They can sell the property to unlock the value here and relocate head office to a smaller location - office space is cheap these days.  It's

[NicolasR]

I agree with both of you. On one side, the company is protected from increase in industrial rents because she owns its facilities. On the other side, the current return on capital is not optimized since they are mobilizing very valuable real estate assets that could be replaced by cheaper places. Looking at last CBRE reports on Montreal Industrial Stats, the combined value of the two buildings