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Reitmans (Canada) Limited (TSE:RET)
:RET
Canadian Market
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Reitmans (Canada) (RET) AI Stock Analysis

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Reitmans (Canada)

(RET)

Rating:58Neutral
Price Target:
C$2.00
▼(-1.48%Downside)
Reitmans (Canada) faces challenges with profitability and technical indicators suggesting bearish momentum. While financial stability and strategic initiatives like digital enhancement offer some positives, the high P/E ratio indicates potential overvaluation. The company needs to address revenue growth and improve profitability to enhance its investment appeal.

Reitmans (Canada) (RET) vs. iShares MSCI Canada ETF (EWC)

Reitmans (Canada) Business Overview & Revenue Model

Company DescriptionReitmans (Canada) Limited (RET) is a prominent Canadian fashion retailer specializing in women's apparel. The company operates multiple store formats, including Reitmans, Penningtons, and RW&CO., each targeting different customer segments with distinctive fashion offerings. Reitmans' core products encompass a variety of clothing and accessories, catering to diverse style preferences and sizes, thereby establishing itself as a versatile brand within the fashion industry.
How the Company Makes MoneyReitmans (Canada) Limited generates revenue primarily through the sale of women's clothing and accessories across its various retail brands. The company utilizes a multi-channel sales strategy, which includes physical retail stores and an online e-commerce platform, to reach a broad customer base. Revenue streams are primarily driven by direct sales to consumers at these physical and digital outlets. Key factors contributing to its earnings include its ability to offer a wide range of sizes, styles, and competitive pricing, as well as maintaining brand loyalty through customer engagement and marketing initiatives. Partnerships with suppliers and efficient supply chain management also play a significant role in optimizing costs and maximizing profitability.

Reitmans (Canada) Earnings Call Summary

Earnings Call Date:Jun 17, 2025
(Q3-2025)
|
% Change Since: -24.25%|
Next Earnings Date:Sep 18, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook for Reitmans Canada Limited. While the company demonstrated strong financial management, resulting in improved gross margins and a robust cash position, there were notable challenges. These included a decrease in revenue and comparable sales, reduced EBITDA, and expressed shareholder concerns regarding governance. Despite positive operational progress and store expansion, these issues led to an overall cautious sentiment.
Q3-2025 Updates
Positive Updates
Gross Margin Improvement
Achieved a 166 basis point improvement in gross margin compared to a year ago, reaching 57.3% due to strong inventory management and reduced promotional activities.
Strong Financial Position
Ended the quarter with working capital of $172.9 million, a cash position of $123.1 million, and zero debt with an undrawn $150 million revolving credit facility.
Successful Marketing Campaigns
Strong results from ambassadors marketing campaign featuring notable figures, contributing to brand visibility and customer engagement.
Continued Store Expansion
Opened new RW&Co. store in Mirabel and two new PENN stores, expanding the store footprint and supporting growth in various regions.
Negative Updates
Revenue Decline
Net revenues decreased by 2.9% to $187.7 million due to lower store count and customers delaying fall clothing purchases.
Decrease in Comparable Sales
Comparable sales for the quarter were down 1.9% mainly due to lower e-commerce traffic, despite increased sales per transaction.
Reduced EBITDA
Adjusted EBITDA decreased to $3.8 million from $9.5 million in the previous year, impacted by increased SG&A expenses and foreign exchange losses.
Shareholder Concerns
Shareholder dissatisfaction with governance and decision-making at board level, highlighting issues with minority shareholder oppression and lack of board independence.
Company Guidance
During Reitmans Canada Limited's Fiscal 2025 Third Quarter Earnings Call, management provided several key metrics and updates. The company reported a 2.9% decrease in net revenues, totaling $187.7 million, attributed to warmer-than-usual weather and a lower store count. Despite the decline in revenues, the gross margin improved by 166 basis points to 57.3%, aided by effective inventory management and reduced promotional activities. The adjusted EBITDA for the quarter was $3.8 million, down from $9.5 million the previous year, largely due to increased selling, general and administrative expenses and foreign exchange losses. Net earnings were $2.1 million or $0.04 per share, compared to $5.3 million or $0.11 per share a year ago. The company maintained a strong financial position with $123.1 million in cash and no debt. Reitmans also repurchased 91,100 shares during the quarter. Capital expenditures for the fiscal year are projected at $31 million, with $20.1 million spent in the first nine months. The company's focus remains on growth and modernization, including opening new stores and upgrading digital infrastructure.

Reitmans (Canada) Financial Statement Overview

Summary
Reitmans (Canada) shows a stable financial performance with a strong equity base and effective cash management. However, profitability is a concern with low margins and declining revenues, necessitating improvements in operational efficiency and revenue growth.
Income Statement
68
Positive
Reitmans (Canada) has demonstrated a moderate level of stability in its income statement. The TTM Gross Profit Margin is approximately 56%, indicating effective cost management, although a decline from the previous year. The TTM Net Profit Margin is low at around 0.5%, reflecting thin profitability. Revenue has decreased by around 0.9% compared to the previous year, indicating a slight decline. The EBIT Margin is about 1.1%, and the EBITDA Margin stands at 8.8%, both of which suggest limited operational efficiency improvements are needed.
Balance Sheet
72
Positive
Reitmans (Canada) shows a stable balance sheet with a Debt-to-Equity Ratio of 0.55, indicating conservative leverage. The Return on Equity (ROE) is low at approximately 1.3%, reflecting modest profitability. The Equity Ratio stands at about 54.6%, denoting a solid equity base relative to assets, which is a positive indicator of financial stability.
Cash Flow
75
Positive
The cash flow position of Reitmans (Canada) is relatively strong. The TTM Free Cash Flow to Net Income Ratio is high, indicating strong cash conversion. The Operating Cash Flow to Net Income Ratio is robust, showing effective cash management. However, the Free Cash Flow Growth Rate is negative, highlighting a decline in free cash flow compared to the previous year.
BreakdownMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue773.80M794.69M661.95M533.36M869.50M
Gross Profit435.04M431.00M353.17M246.25M444.39M
EBITDA78.44M76.22M94.70M194.46M-41.58M
Net Income12.14M14.81M158.26M-172.22M-87.43M
Balance Sheet
Total Assets574.09M490.75M314.27M397.23M560.17M
Cash, Cash Equivalents and Short-Term Investments158.12M116.65M25.50M77.92M89.41M
Total Debt155.40M137.59M81.94M123.22M213.87M
Total Liabilities277.66M211.73M130.45M375.55M366.35M
Stockholders Equity296.43M279.02M183.83M21.68M193.82M
Cash Flow
Free Cash Flow73.06M51.83M-35.38M34.03M53.70M
Operating Cash Flow104.26M69.53M-24.73M40.20M77.18M
Investing Cash Flow-31.19M-17.70M-15.22M-6.16M17.95M
Financing Cash Flow-40.03M-39.90M-9.19M-46.82M-121.78M

Reitmans (Canada) Technical Analysis

Technical Analysis Sentiment
Negative
Last Price2.03
Price Trends
50DMA
2.34
Negative
100DMA
2.34
Negative
200DMA
2.53
Negative
Market Momentum
MACD
-0.09
Negative
RSI
41.93
Neutral
STOCH
35.14
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:RET, the sentiment is Negative. The current price of 2.03 is below the 20-day moving average (MA) of 2.09, below the 50-day MA of 2.34, and below the 200-day MA of 2.53, indicating a bearish trend. The MACD of -0.09 indicates Negative momentum. The RSI at 41.93 is Neutral, neither overbought nor oversold. The STOCH value of 35.14 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:RET.

Reitmans (Canada) Peers Comparison

Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSATZ
79
Outperform
$7.16B36.3923.27%22.57%197.68%
60
Neutral
C$124.28M30.45-19.69%2.63%-3376.73%
59
Neutral
C$1.25B-2.58-8.19%4.97%10.84%-23.78%
TSRET
58
Neutral
C$101.08M27.211.29%-3.33%-78.69%
* Real Estate Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:RET
Reitmans (Canada)
2.03
-0.72
-26.18%
TSE:ATZ
Aritzia
75.31
29.52
64.47%
TSE:ROOT
Roots Corporation
3.08
0.97
45.97%

Reitmans (Canada) Corporate Events

Executive/Board ChangesShareholder Meetings
Reitmans (Canada) Limited Elects Board of Directors at Annual Meeting
Neutral
Jun 18, 2025

Reitmans (Canada) Limited announced the election of its board of directors during the Annual General Meeting of Shareholders in Laval, Québec. All director nominees listed in the Management Proxy Circular were elected, indicating strong shareholder support. This election is significant for the company’s governance as it continues to maintain its position as a prominent apparel retailer in the Canadian market.

Stock BuybackBusiness Operations and StrategyFinancial Disclosures
Reitmans Reports First Quarter Loss Amid Weather and Economic Challenges
Negative
Jun 17, 2025

Reitmans (Canada) Limited reported a challenging first quarter for 2025, with a 4.1% decrease in net revenues to $158.9 million, primarily due to severe winter weather and economic uncertainty impacting in-store traffic. Despite growth in e-commerce sales, the company faced a net loss of $10 million, attributed to lower gross profits and increased operational costs. In response, Reitmans is implementing a five-year strategic plan to drive long-term growth, which includes optimizing its store fleet and advancing its digital strategy with new e-commerce storefronts and a migration to Shopify. The company also plans to renew its normal course issuer bid to repurchase shares, reflecting ongoing efforts to strengthen its market position.

Executive/Board ChangesBusiness Operations and Strategy
Reitmans (Canada) Limited Strengthens Board with Technology Expert Martin Thibodeau
Positive
May 13, 2025

Reitmans (Canada) Limited has appointed Martin Thibodeau, a seasoned technology executive with over three decades of experience in IT within the retail industry, to its Board of Directors. This strategic addition aims to bolster the company’s technological capabilities and support its multi-year strategy for future growth, reflecting a commitment to modernization and strengthening its position in the apparel retail market.

Executive/Board ChangesBusiness Operations and Strategy
Reitmans Appoints Martin Thibodeau to Board of Directors
Positive
May 13, 2025

Reitmans (Canada) Limited has appointed Martin Thibodeau, a seasoned technology executive, to its Board of Directors. Thibodeau’s extensive experience in IT and fashion retail is expected to support the company’s strategic business objectives and modernization efforts, as it continues to implement its multi-year strategy for future growth.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 11, 2025