BGI Birks Group Inc

The Company delivered increased sales, expanded gross margins as well as improved profitability and liquidity.

Birks Group Inc. (the “Company” or “Birks Group”) (NYSE American: BGI), reported its financial results for the fiscal year ended March 26, 2022.

Highlights

All figures presented herein are in Canadian dollars.

During the fiscal year ended March 26, 2022 (“fiscal 2022”), the Company achieved year-over-year sales growth of 26.7% (including an increase in comparable store sales of 32.5%), an increase in gross margin percentage of 260 basis points, improved results from operations including an increase in EBITDA(1) of $7.7 million, and a return to profitability. The Company’s sales and operating income results have outperformed pre-pandemic levels, and were achieved despite certain remaining disruptions on the business during fiscal 2022 driven by COVID-19. Indeed, the Company was impacted by temporary store lockdowns, most notably in Ontario, the Company’s largest market, from the start of the fiscal year through June 2021 as a result of the restrictions imposed by provincial government authorities in order to control the COVID-19 pandemic. Across the retail stores network, approximatively 7% of shopping days were lost due to temporary store lockdowns during fiscal 2022, as compared to approximately 31% during the fiscal year ended March 27, 2021 (“fiscal 2021”).

During fiscal 2022, the Company achieved net sales of $181.3 million, an increase of $38.2 million, or 26.7%, from fiscal 2021, yielding gross profit of $76.2 million, an increase of $19.9 million, or 35.3%, compared to fiscal 2021. Gross profit as a percentage of sales was 42.0%, an increase of 260 basis points from the gross profit as a percentage of sales of 39.4% in fiscal 2021. The Company continued to proactively control its operating costs during the period, yielding total operating expenses of $71.8 million in fiscal 2022, or 39.6% of net sales, as compared to $59.2 million, or 41.4% of net sales in fiscal 2021.

The Company’s EBITDA(1) for fiscal 2022 was $10.3 million or 5.7% of net sales, an increase of $7.7 million, or 296%, compared to EBITDA(1) of $2.6 million, or 1.8% of net sales for fiscal 2021.

Overall, the Company reported a positive net income of $1.3 million, an improvement of $7.1 million, compared to a net loss of $5.8 million recorded in fiscal 2021.

Despite losing approximately 7% of shopping days to temporary store closures in fiscal 2022, net sales of $181.3 million are greater by $11.9 million, or 7.0%, than net sales of fiscal year ended March 28, 2020 (“fiscal 2020”), which constitutes the most recent comparable period unaffected by the COVID-19 pandemic. Gross profit at $76.2 million, or 42.0% of net sales, represents an increase of $11.7 million over the $64.5 million, or 38.1% of net sales generated in fiscal 2020. This increase is driven by an improvement in gross margin percentage of 390 basis points as a result of new pricing strategies on Bijoux Birks branded products as well as a lower discounting. Overall, the Company’s reported net income of $1.3 million for fiscal 2022 represents an improvement of $13.5 million over the net loss of $12.2 million reported in fiscal 2020.

Mr. Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, commented: “We are pleased to report that fiscal 2022 was a successful year for Birks, which speaks to our teams’ ability to deliver sustained growth across the business under challenging circumstances, their hard work, and their relentless dedication to our customers and company. In fiscal 2022, Birks has shifted from recovering from the impacts of COVID-19 to growing beyond pre-pandemic levels, as our results are strong not only compared to fiscal 2021, but also compared to fiscal 2020, which was not impacted by COVID-19. Our return to profitability is a significant milestone that is indicative of the success of the strategies we implemented to overcome the challenges brought about by COVID-19 during the past two years, and of the turnaround phase of our strategic plan that began pre-pandemic. I am grateful to all our employees for their unwavering efforts and excellent execution during this past year which has allowed us to enter fiscal 2023 from a position of strength.”

Mr. Bédos further commented: “I believe that the Company today is in a stronger position to achieve its long-term objectives, and I am confident in our potential to achieve meaningful growth as we continue to prioritize investments that we believe will drive shareholder value.”

Financial overview for fiscal 2022:

• Net sales for fiscal 2022 were $181.3 million, an increase of $38.2 million, or 26.7%, compared to net sales of $143.1 million in fiscal 2021. The increase in net sales in fiscal 2022 was primarily driven by strong results experienced throughout the Company’s retail channel fueled by improved performance of third party branded timepieces and Bijoux Birks branded jewelry and bridal collections. The increase in net sales in fiscal 2022 was also attributable to the reduced impact of COVID-19 (including government-mandated temporary store closures, traffic declines and capacity limitations) experienced by the Company during fiscal 2022 as compared to fiscal 2021. Approximatively 7% of shopping days were lost due to temporary store closures during fiscal 2022, as compared to approximatively 31% during fiscal 2021;
• Comparable store sales increased by 32.5% in fiscal 2022 compared to fiscal 2021. Such increase is primarily related to the reduced impact of COVID-19 (including government-mandated temporary store closures, traffic declines and capacity limitations) experienced by the Company during the period as compared to during fiscal 2021. Comparable store sales as presented in the results of operations below for fiscal 2022 and fiscal 2021 have not been adjusted to remove the impact of any government mandated temporary store closures;
• Gross profit for fiscal 2022 was $76.2 million, or 42.0% of net sales, compared to $56.4 million, or 39.4% of net sales for fiscal 2021. This increase was primarily driven by the increased sales volume experienced in the period driven by the reduced adverse effects of COVID-19 on the Company’s retail operations in fiscal 2022 as compared to fiscal 2021, as well as by an improvement in gross margin of 260 basis points. The increase in 260 basis points in gross margin percentage was mainly attributable to the Company’s adjusted pricing strategy on Bijoux Birks branded products, as well as its strategic focus on reducing sales promotions and discounting;
• SG&A expenses in fiscal 2022 were $65.9 million, or 36.3% of net sales, compared to $53.7 million, or 37.5% of net sales in fiscal 2021. SG&A expenses in fiscal 2022 increased by $12.2 million versus SG&A expenses in fiscal 2021. This increase is primarily related to the reduced impact of COVID-19 (including government-mandated temporary store lockdowns, traffic declines and capacity limitations) experienced by the Company during the period as compared to fiscal 2021, and therefore reduced cost containment initiatives undertaken by management in response to the pandemic. The drivers of the increase in SG&A expenses in the period include greater occupancy costs ($2.2 million) as a result of the re-opening of stores and related non-recurring rent abatements in fiscal 2021, increased marketing costs ($2.3 million), greater compensation costs ($5.0 million) due to the re-opening of the stores and related non-recurring temporary lay-offs, and salary reductions in fiscal 2021, as well as higher sales commissions and variable compensation due to increased sales volume and improved operating performance, higher general operating costs and variable costs including credit cards fees ($2.2 million) driven by increased sales activity and lower wage and rent subsidies ($1.3 million), partially offset by lower stock-based compensation ($0.9 million). As a percentage of sales, SG&A expenses in fiscal 2022 have decreased by 120 basis points as compared to fiscal 2021;
• The Company’s EBITDA (1) for fiscal 2022 was $10.3 million, an increase of $7.7 million, compared to EBITDA(1) of $2.6 million for fiscal 2021;
• The Company’s reported operating income for fiscal 2022 was $4.5 million, an improvement of $7.3 million, compared to a reported operating loss of $2.8 million for fiscal 2021; and
• The Company recognized net income for fiscal 2022 of $1.3 million, or $0.07 share, compared to a net loss for fiscal 2021 of $5.8 million, or ($0.32) per share.

(1)

This is a non-GAAP financial measure defined below under “Non-GAAP Measures” and accompanied by a reconciliation to the most directly comparable GAAP financial measure.

About Birks Group Inc.

Birks Group is a leading designer of fine jewellery, timepieces and gifts and operator of luxury jewellery stores in Canada. The Company operates 24 stores under the Maison Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand, one retail location in Vancouver operated under the Graff brand and one location in Vancouver under the Patek Philippe brand. Bijoux Birks fine jewellery collections are also available through select SAKS Fifth Avenue stores in Canada and the U.S., select Mappin & Webb and Goldsmiths locations in the United Kingdom, in Mayors stores in the United States as well as several jewellery retailers across North America and the E.U. Birks was founded in 1879 and has become Canada’s premier retailer and designer of fine jewellery, timepieces and gifts. Additional information can be found on Birks’ web site, www.birks.com.

NON-GAAP MEASURES

The Company reports financial information in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The Company’s performance is monitored and evaluated using various sales and earnings measures that are adjusted to include or exclude amounts from the most directly comparable GAAP measure (“non-GAAP measures”). The Company presents such non-GAAP measures in reporting its financial results to assist in business decision making and to provide key performance information to senior management. The Company believes that this additional information provided to investors and other external stakeholders will allow them to evaluate the Company’s operating results using the same financial measures and metrics used by the Company in evaluating performance. The Company does not, nor does it suggest that investors and other external stakeholders should, consider non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. These non-GAAP measures may not be comparable to similarly-titled measures presented by other companies. In addition to our results determined in accordance with U.S. GAAP, we use non-GAAP measures including: “EBITDA and “adjusted EBITDA”.

EBITDA

“EBITDA” is defined as net income (loss) from continuing operations before interest expense and other financing costs, income taxes expense (recovery) and depreciation and amortization.

Adjusted EBITDA

The Company evaluates its operating earnings performance using financial measures which exclude expenses associated with impairment losses. The Company believes that such measures provide useful supplemental information with which to assess the Company’s results relative to the corresponding period in the prior year and can result in a more meaningful comparison of the Company’s performance between the periods presented. The table below provides a reconciliation of the non-GAAP measures presented to the most directly comparable financial measures calculated with GAAP.

Total Adjusted Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fiscal year ended

($000’s)

 

March 26, 2022

 

March 27, 2021

 

March 28, 2020

Total operating expenses (GAAP measure)

 

71,751

 

59,171

 

71,021

as a % of net sales

 

39.6%

 

41.4%

 

41.9%

Remove the impact of:

 

 

 

 

 

 

Impairment of long-lived assets (a)

 

—

 

—

 

-309

Total adjusted operating expenses (non-GAAP measure)

 

$71,751

 

$59,171

 

$70,712

as a % of net sales

 

39.6%

 

41.4%

 

41.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted operating income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fiscal year ended

($000’s)

 

March 26, 2022

 

March 27, 2021

 

March 28, 2020

Operating income (loss) (GAAP measure)

 

4,469

 

(2,821)

 

(6,544)

as a % of net sales

 

2.5%

 

-2.0%

 

-3.9%

Add the impact of:

 

 

 

 

 

 

Impairment of long-lived assets (a)

 

—

 

—

 

309

Adjusted operating income (loss) (non-GAAP measure)

 

$4,469

 

(2,821)

 

(6,235)

as a % of net sales

 

2.5%

 

-2.0%

 

-3.7%

EBITDA & Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the fiscal year ended

($000’s)

 

March 26, 2022

 

March 27, 2021

 

March 28, 2020

Net income (loss) from continuing operations (GAAP measure)

 

1,287

 

(5,838)

 

(12,227)

as a % of net sales

 

0.70%

 

-4.10%

 

-7.20%

Add the impact of:

 

 

Interest expense and other financing costs

 

3,182

 

3,017

 

5,683

Income taxes expense (recovery)

 

—

 

—

 

—

Depreciation and amortization

 

5,809

 

5,458

 

4,845

EBITDA (non-GAAP measure)

 

$10,278

 

(2,637)

 

(1,699)

as a % of net sales

 

5.7%

 

1.8%

 

-1.0%

Add the impact of:

 

 

 

 

 

 

Impairment of long-lived assets (a)

 

—

 

—

 

309

Adjusted EBITDA (non-GAAP measure)

 

$10,278

 

$2,637

 

(1,390)

as a % of net sales

 

5.7%

 

1.8%

 

-0.8%

(a)

Non-cash impairment of long-lived assets in fiscal 2020 related to leasehold improvements that are associated to store leases that have a possibility of early lease termination.

Forward Looking Statements

This press release contains forward- looking statements which can be identified by their use of words like “plans,” “expects,” “believes,” “will,” “anticipates,” “intends,” “projects,” “estimates,” “could,” “would,” “may,” “planned,” “goal,” and other words of similar meaning. All statements that address expectations, possibilities or projections about the future, including without limitation, statements about the Company’s ability to achieve its long-term objectives, achieve meaningful growth, and drive shareholder value are forward-looking statements.

Because such statements include various risks and uncertainties, actual results might differ materially from those projected in the forward- looking statements and no assurance can be given that the Company will meet the results projected in the forward-looking statements.

These risks and uncertainties include, but are not limited to the following: (i) the magnitude and length of economic disruption as a result of the worldwide novel coronavirus (COVID-19) outbreak, including its impact on macroeconomic conditions, generally, as well as its impact on the results of operations and financial condition of the Company and the trading price of its shares; (ii) a decline in consumer spending or deterioration in consumer financial position; (iii) economic, political and market conditions, including the economies of Canada and the U.S., which could adversely affect the Company’s business, operating results or financial condition, including its revenue and profitability, through the impact of changes in the real estate markets, changes in the equity markets and decreases in consumer confidence and the related changes in consumer spending patterns, the impact on store traffic, tourism and sales; (iv) the impact of fluctuations in foreign exchange rates, increases in commodity prices and borrowing costs and their related impact on the Company’s costs and expenses; (v) the Company’s ability to maintain and obtain sufficient sources of liquidity to fund its operations, to achieve planned sales, gross margin and net income, to keep costs low, to implement its business strategy, maintain relationships with its primary vendors, to mitigate fluctuations in the availability and prices of the Company’s merchandise, to compete with other jewelers, to succeed in its marketing initiatives, and to have a successful customer service program; (vi) the Company’s ability to execute its strategic vision; and (vii) the Company’s ability to invest in and finance capital expenditures.

Information concerning factors that could cause actual results to differ materially is set forth under the captions “Risk Factors” and “Operating and Financial Review and Prospects” and elsewhere in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 23, 2022 and subsequent filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this statement or to reflect the occurrence of unanticipated events, except as required by law.

BIRKS GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - AUDITED

 

 

 

Fiscal Year Ended

 

 

March 26, 2022

 

March 27, 2021

 

March 28, 2020

 

 

(In thousands, except per share amounts)

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

181,342

 

$

143,068

 

 

$

169,420

 

Cost of sales

 

 

105,122

 

 

 

86,718

 

 

 

104,943

 

Gross profit

 

 

76,220

 

 

 

56,350

 

 

 

64,477

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

65,942

 

 

 

53,713

 

 

 

65,867

 

Depreciation and amortization

 

 

5,809

 

 

 

5,458

 

 

 

4,845

 

Impairment of long-lived assets

 

 

-

 

 

 

-

 

 

 

309

 

Total operating expenses

 

 

71,751

 

 

 

59,171

 

 

 

71,021

 

Operating income (loss)

 

 

4,469

 

 

 

(2,821

)

 

 

(6,544

)

Interest and other financial costs

 

 

3,182

 

 

 

3,017

 

 

 

5,683

 

 

Loss from continuing operations

 

 

1,287

 

 

 

(5,838

)

 

 

(12,227

)

Income taxes (benefits)

 

 

-

 

 

 

-

 

 

 

-

 

Loss from continuing operations

 

 

1,287

 

 

 

(5,838

)

 

 

(12,227

)

 

Discontinued operations:

 

 

 

 

 

 

 

 

 

Loss income from discontinued operations, net of tax

 

 

-

 

 

 

-

 

 

 

(552

)

Gain on disposal of discontinued operations

 

 

-

 

 

 

-

 

 

 

-

 

Net (loss) income from discontinued operations, net of tax

 

 

-

 

 

 

-

 

 

 

(552

)

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

1,287

 

 

$

(5,838

)

 

$

(12,779

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

18,346

 

 

 

18,005

 

 

 

17,968

 

Diluted

 

 

18,794

 

 

 

18,005

 

 

 

17,968

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

(0.32

)

 

$

(0.71

)

Diluted

 

 

0.07

 

 

 

(0.32

)

 

 

(0.71

)

 

Net (loss) income from continuing operations per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

(0.32

)

 

$

(0.68

)

Diluted

 

 

0.07

 

 

 

(0.32

)

 

 

(0.68

)

     

BIRKS GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS – AUDITED

 

 

 

As of

 

 

March 26, 2022

 

March 27, 2021

 

 

(In thousands)

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,013

 

 

$

1,807

 

Accounts receivable and other receivables

 

 

8,037

 

 

 

7,307

 

Inventories

 

 

78,907

 

 

 

97,789

 

Prepaids and other current assets

 

 

1,822

 

 

 

2,044

 

Total current assets

 

 

90,779

 

 

 

108,947

 

 

 

 

 

 

 

 

Long-term receivables

 

 

5,599

 

 

 

5,673

 

Property and equipment

 

 

22,781

 

 

 

24,496

 

Operating lease right-of-use asset

 

 

58,071

 

 

 

57,670

 

Intangible assets and other assets

 

 

6,031

 

 

 

4,894

 

Total non-current assets

 

 

92,482

 

 

 

92,733

 

Total assets

 

$

183,261

 

 

$

201,680

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Bank indebtedness

 

$

43,157

 

 

$

53,387

 

Accounts payable

 

 

28,291

 

 

 

37,975

 

Accrued liabilities

 

 

8,340

 

 

 

11,209

 

Current portion of long-term debt

 

 

2,129

 

 

 

2,960

 

Current portion of operating lease liabilities

 

 

6,963

 

 

 

6,298

 

Total current liabilities

 

 

88,880

 

 

 

111,829

 

 

 

 

 

 

 

 

Long-term debt

 

 

21,371

 

 

 

23,062

 

Long-term portion of operating lease liabilities

 

 

66,757

 

 

 

66,713

 

Other long-term liabilities

 

 

389

 

 

 

1,498

 

Total long-term liabilities

 

 

88,517

 

 

 

91,273

 

Stockholders’ equity (deficiency):

 

 

 

 

 

 

Class A common stock – no par value, unlimited shares authorized, issued and outstanding 10,795,443 (10,610,973 as of March 27, 2021)

 

 

37,883

 

 

 

37,361

 

Class B common stock – no par value, unlimited shares authorized, issued and outstanding 7,717,970

 

 

57,755

 

 

 

57,755

 

Preferred stock – no par value, unlimited shares authorized, none issued

 

 

-

 

 

 

–

 

Additional paid-in capital

 

 

23,669

 

 

 

18,259

 

Accumulated deficit

 

 

(113,413

)

 

 

(114,700

)

Accumulated other comprehensive loss

 

 

(30

)

 

 

(97

)

Total stockholders’ equity (deficiency)

 

 

5,864

 

 

 

(1,422

)

Total liabilities and stockholders’ equity

 

$

183,261

 

 

$

201,680

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220622006049/en/

Company Contacts: Katia Fontana Vice President and Chief Financial Officer (514) 397-2592 For all press and media inquiries, please contact: OverCat Communications Audrey Hyams Romoff, ahr@overcat.com, (647) 223-9970 Gillian DiCesare, gd@overcat.com, (647) 223-5590 Chelsea Brooks, cb@overcat.com, (289) 221-6006