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RAPAPORT... The Birks Group reported that revenue fell 4 percent year on year to $281.2 million for the fiscal year that ended on March 29. However, same-store sales rose 4 percent. Cost of sales were flat at $166.5 million. Birks recorded a loss of $5.8 million or 35 cents per share compared with profit of $1.5 million or 11 cents per share one year earlier. Stronger comparable-store sales were driven by an increase in the average sale transaction, while the overall revenue decline was primarily the result of closing 10 retail locations over the past two years. Approximately $7.6 million in revenue was lost in currency translation due to a stronger dollar.
The jeweler recorded inventory of $144.6 million as of March 29, an increase of 5.6 percent, reflecting higher values of comparable-store inventory and stocking two new mono-brand locations. Interest bearing debt totaled $128.7 million at the end of the fiscal year, up from $109.2 million one year earlier The company’s excess borrowing capacity under its senior secured revolving credit facility was $17.2 million as of March 29, compared with $16.4 million at the end of fiscal 2013. Birks Group announced that it would undergo an operational restructuring plan in an effort to reduce corporate overhead, improve profitability and drive efficiency. Birks expects to consolidate most of its corporate administrative workforce from its regional office in Tamarac, Florida to its Montreal corporate head office. This move will incur restructuring costs over the next 12 months of between $2 million and $4 million, primarily consisting of employee severance, professional fees and possible costs related to terminating certain leases. Once the plan is fully implemented, Birks expects to generate annual savings in excess of these costs in the first full year after implementation. So far in the current fiscal year, Birks recorded a comparable-store sales increase of 16 percent and total sales increased of 5.9 percent to $74.2 million for the three months that ended on June 30. These increases were driven by higher average sales as well as a higher number of sales transactions associated the company’s watch brand strategy in the U.S. In Canada, the increase in comparable-store sales was primarily related to a higher average sale transaction reflecting higher sales in both the Birks brand fine jewelry and bridal jewelry. Jean-Christophe Bédos, the president and CEO of Birks Group, said, “Our operating results for fiscal 2014 include significant investments in new initiatives such as new store openings and remodels, new marketing campaigns, website upgrades and the introduction of new brands and expansion of existing brands. The combination of these long term investments combined with our holiday results being lower than plan resulted in the company recognizing a net loss for the year of $5.8 million. Furthermore, following the last two years of investment and strategic transition, we are beginning to realize the benefits of our initiatives as demonstrated by the 16 percent comparable-store sales growth in the first quarter of fiscal 2015 compared to the first quarter of fiscal 2014.”
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