Birks' Sales Improve, Loss Grows to $8M

RAPAPORT... Birks Group Inc. reported that sales climbed 2.2 percent year on year to $57.3 million for the second quarter that ended on September 28. Same-store sales rose 11 percent; however, the jewelry retailer operated four fewer store locations than it had one year ago. Birks' results were negatively impacted by a stronger U.S. dollar and by extra refinancing expenses, and while the retailer did not provide earnings for the quarter, Birks reported a loss for the first half. During the second quarter, the increases in comparable-store sales in both Canada and the U.S. were primarily attributable to increases in average sales, mainly driven by the success of the company’s timepiece strategy. Inventory as of September 28 rose 2.8 percent year on year to $158.2 million.

Jean-Christophe Bédos, the CEO of Birks Group, said,  “We are extremely pleased with our comparable-store sales growth during the second quarter and first half of the fiscal year as they partially offset the impact of reducing our gold refining revenue as well as the significant investments and costs being made by the company to reposition itself for long term growth and improved profitability in the months and years to come.”

Revenue for the first half increased 2 percent to $127.41 million and cost of sales jumped 6 percent to $75.25 million. Gross margin fell to 40.9 percent of sales from 43.2 percent of sales in 2012.  Birks reported a loss of $7.74 million, up from a loss of $5.69 million one year ago. Interest-bearing debt totaled $132.1 million on September 28, up from $126.6 million, but despite the increase, Birks' excess borrowing capacity under its senior secured revolving credit facility had increased about $5 million to $21.6 million.

Birks Group initially announced its plans this past month to open a Maison Birks mono-brand store in the Xanadu Plaza in  Beijing, but it told shareholders today that it will be actively reviewing alternative locations in either Beijing or Shanghai in order to open a Maison Birks in China during the 2014 calendar year.