EX-99.1 2 d75971dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO

 

  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

BIRKS GROUP REPORTS ITS MID-YEAR FY2021 RESULTS

Montreal, Quebec. November 27, 2020 - Birks Group Inc. (the “Company” or “Birks Group”) (NYSE American: BGI), today reported its financial results for the twenty-six week period ended September 26, 2020.

Highlights

All figures presented herein are in Canadian dollars.

The Company’s financial results for the twenty-six week period ended September 26, 2020 were significantly impacted by the COVID-19 pandemic, most notably by the temporary closure of the Company’s stores from the start of the fiscal year through June 2020 as a consequence of the restrictions imposed by provincial government authorities.

In the twenty-six week period ended September 26, 2020, the Company achieved net sales of $57.0 million, a decrease of $28.3 million, or 33.2%, from the comparable prior period in fiscal 2020, yielding gross profit of $22.8 million, a decrease of $9.8 million, or 30.0%, compared to the same period in fiscal 2020, as a direct result of the negative impacts of COVID-19. Gross profit as a percentage of sales was 40.1%, an increase of 190 basis points from the gross profit as a percentage of sales of 38.2% in the twenty-six week period ended September 28, 2019. Despite the decline in sales and gross profit volumes, the Company was able, through its proactive management of the impact of the pandemic, to control costs. Total operating expenses was $24.2 million in the twenty-six week period ended September 26, 2020, representing a decrease of $10.4 million, or 30.1%, as compared to same period in fiscal 2020. Overall, the Company reported a net loss of $2.8 million, an improvement of $1.8 million, or 38.3%, compared to the twenty-six week period ended September 28, 2019. A significant factor leading to the overall improvement was the fact that during the second thirteen-week period ended September 26, 2020, subsequent to the re-opening of our store network, the Company generated a 4% increase in comparable store sales.

 


As of July 2020, the Company had re-opened all of its 30 stores, albeit at reduced operating hours. As a result of provincial restrictions to address the “second wave” of the COVID-19 pandemic, our Winnipeg store is currently temporarily closed for in-person shopping for a four-week period since November 12, 2020 and six of our Ontario stores, including our Bloor street flagship store, are also temporarily closed for in-person shopping, for a four-week period since November 23, 2020. However, all of the affected stores remain available for concierge telephone service and curbside pickup.

Mr. Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, commented: “Since the start of the fiscal year, we have shown great resilience and agility in taking the necessary steps to mitigate the negative impacts of the COVID-19 pandemic on the Company, notably by managing liquidity tightly, by working with our various partners and stakeholders to contain costs, by increasing our focus on generating revenues from our e-commerce business and concierge service, and by adapting to emerging trends to better serve our clients. At the outset of the pandemic, we established a cross-functional management team that reviewed business goals, objectives and processes in order to steer the Company through this global crisis and protect the well-being of our employees, clients, partners and communities. The cross-functional management team continues to monitor the situation very closely, on a provincial, national and global basis.”

Mr. Bédos further commented: “Thanks to the dedication of our employees and the support from our key stakeholders and partners, we have been able to achieve improved results in the twenty-six week period ended September 26, 2020 as compared to last year. Our fiscal discipline during the period has also allowed us to deliver improvements to results from operations. As we continue to navigate through the pandemic, I believe that the actions we have taken since the start of the fiscal year and during the pandemic, has better positioned the Company for managing challenges through uncertain times.”

Financial overview for the twenty-six week period ended September 26, 2020:

 

   

Net sales for the twenty-six week period ended September 26, 2020 were $57.0 million, a decrease of $28.3 million, or 33.2%, compared to $85.3 million for the twenty-six week period ended September 28, 2019. The decrease in net sales was primarily attributable to the effects of COVID-19, and the resulting temporary closures of all stores across the retail channel during the first quarter of fiscal 2021. The overall decrease was partially offset by strong e-commerce sales, representing approximately 4.5% of total net sales, as compared to approximately 1.0% in the same period in fiscal 2020;

 

   

Comparable store sales decreased by 32% compared to the twenty-six week period ended September 28, 2019, primarily due to the negative impacts of COVID-19 during


 

the period, including the temporary store closures. During the first quarter of the fiscal year, during which time the Company’s stores were temporarily closed, the Company experienced a 65% decrease in comparable store sales. In the second quarter of fiscal 2021, during which time the Company’s stores were fully re-opened, albeit operating at reduced hours and with lower levels of foot traffic, the Company experienced a 4% increase in comparable store sales. This increase was driven in part by the sales performance of third party branded watches resulting from the Company’s improved portfolio of third party watch brands, and the Company’s successful targeted marketing campaigns which we believe led to increases in average sales transaction value throughout the retail network;

 

   

Gross profit for the twenty-six week period ended September 26, 2020 decreased by $9.8 million to $22.8 million, or 40.1% of net sales, as compared to $32.6 million or 38.2% of net sales, during the twenty-six week period ended September 28, 2019. This decrease was primarily due to the reduction of sales volume caused by COVID-19, partially offset by an improvement of gross margin of 190 basis points. The increase of 190 basis points in gross margin percentage was mainly attributable to the Company’s strategic focus to reduce sales promotions and discounting, partially offset by a shift in product sales mix towards branded timepieces;

 

   

SG&A expenses were $21.4 million, or 37.5% of net sales, in the twenty-six week period ended September 26, 2020, compared to $32.3 million, or 37.8% of net sales, in the twenty-six week period ended September 28, 2019. SG&A expenses in the twenty-six week period ended September 26, 2020 decreased by $10.9 million versus SG&A expenses in the prior comparable period in fiscal 2020. This variance is driven primarily by cost containment initiatives undertaken by management as a proactive measure against the potential impact of COVID-19, which initiatives included lower occupancy costs driven by the negotiation of rent abatements with the Company’s landlords, lower compensation costs driven by the impact of temporary lay-offs, the receipt of the federal government’s wage subsidies, reduced operating hours at retail locations, temporary wage reductions at the corporate head office, lower marketing costs and lower general expenses; and

 

   

The Company’s operating loss from continuing operations during the twenty-six week period ended September 26, 2020 was $1.4 million, an improvement of $0.7 million compared to an operating loss of $2.1 million in the comparable prior year period. The Company’s total net loss was $2.8 million during the twenty-six week period ended September 26, 2020, an improvement of $1.8 million compared to a net loss of $4.6 million in the twenty-six week period ended September 28, 2019.


About Birks Group Inc.

Birks Group is a leading designer of fine jewellery, timepieces and gifts and operator of luxury jewellery stores in Canada. As of November 26, 2020, the Company operates 26 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 Mappin & Webb and Goldsmiths locations in the United Kingdom in addition to several jewellery retailers across North America. 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.


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 our strategies for growth, expansion plans, sources or adequacy of capital, expenditures and financial results 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 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 the shares; (ii) economic, political and market conditions, including the economies of Canada, and the U.S., which could adversely affect our business, operating results or financial condition, including our 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; (iii) 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; (iv) changes in interest rates; (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 continue to borrow under the Credit Facility, (vii) the Company’s ability to maintain profitable operations, as well as maintain specified excess availability levels under the Credit Facility, make scheduled payments of principal and interest, and fund capital expenditures; (viii) the Company’s financial performance in the second half of fiscal 2021 and the level of capital expenditures requirements related to renewing store leases; (ix) the Company’s ability to execute its strategic vision; and (x) the Company’s ability to continue as a going concern.

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 July 8, 2020 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 – UNAUDITED

 

     26 weeks ended
September 26, 2020
    26 weeks ended
September 28, 2019
 

Net sales

   $ 57,025     $ 85,343  

Cost of sales

     34,182       52,719  
  

 

 

   

 

 

 

Gross profit

     22,843       32,624  

Selling, general and administrative expenses

     21,404       32,289  

Depreciation and amortization

     2,829       2,386  
  

 

 

   

 

 

 

Total operating expenses

     24,233       34,675  
  

 

 

   

 

 

 

Operating loss

     (1,390     (2,051

Interest and other financial costs

     1,437       2,417  
  

 

 

   

 

 

 

Loss from continuing operations

     (2,827     (4,468

Income taxes (benefits)

     —         —    

Net loss from continuing operations

     (2,827     (4,468

(Loss) income from discontinued operations, net of tax

     —         (117
  

 

 

   

 

 

 

Net loss

   $ (2,827   $ (4,585
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     17,971       17,965  

Diluted

     17,971       17,965  

Net loss per common share

    

Basic

   $ (0.16   $ (0.26

Diluted

   $ (0.16   $ (0.26

Net loss from continuing operations per common share

    

Basic

   $ (0.16   $ (0.25

Diluted

   $ (0.16   $ (0.25


BIRKS GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS – UNAUDITED

 

     As of  
     September 26,
2020
    March 28, 2020  
     (In thousands)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 2,408     $ 565  

Accounts receivable and other receivables

     6,274       6,019  

Inventories

     100,327       101,899  

Prepaids and other current assets

     2,030       2,007  
  

 

 

   

 

 

 

Total current assets

     111,039       110,490  

Long-term receivables

     4,725       4,538  

Property and equipment

     24,310       26,613  

Operating lease right-of-use asset

     60,973       64,069  

Intangible assets and other assets

     4,931       4,942  
  

 

 

   

 

 

 

Total non-current assets

     94,939       100,162  
  

 

 

   

 

 

 

Total assets

   $ 205,978     $ 210,652  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Bank indebtedness

   $ 59,951     $ 58,035  

Accounts payable

     36,157       48,183  

Accrued liabilities

     7,145       4,661  

Current portion of long-term debt

     2,569       64  

Current portion of operating lease liabilities

     5,754       5,823  
  

 

 

   

 

 

 

Total current liabilities

     111,576       116,766  

Long-term debt

     23,551       16,217  

Long-term portion of operating lease liabilities

     69,189       72,636  

Other long-term liabilities

     1,021       1,623  
  

 

 

   

 

 

 

Total long-term liabilities

     93,761       90,476  

Stockholders’ equity:

    

Class A common stock – no par value, unlimited shares authorized, issued and outstanding 10,252,911

     35,613       35,613  

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

     19,131       19,131  

Accumulated deficit

     (111,689     (108,862

Accumulated other comprehensive loss

     (169     (227
  

 

 

   

 

 

 

Total stockholders’ equity

     641       3,410  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 205,978     $ 210,652