Monday September 14, 3:55 pm Eastern Time
Company Press Release
SOURCE: Nevada Bob's Canada Inc.
Nevada Bob's Canada Inc. First Half Earnings Exceed Forecast
Company points to continued strong consumer spending in golf sector
SYMBOL: NBC/NBC.db - TSE, ASE
CALGARY, Sept. 14 /CNW-PRN/ - Nevada Bob's Canada Inc. today announced strong results for the three and six months ended July 31, 1998. In the six months ended July 31, 1998, the Company reported net income of $1,733,433 ($0.10 per share) on revenues of $24.2 million and had cash flow of $2.4 million ($0.14 per share) for the period. The Company had forecasted basic earnings per share of $0.09 for the six months ended July 31, 1998. For the three months ended July 31, 1998, the
Company earned $1,291,525 ($0.07 per share) on revenues of $16.3 million and had cash flow of $1.7 million ($0.09 per share).
Lyle P. Edwards, President and CEO said: ''We are extremely pleased by these results, which exceeded our published estimates on an earnings per share basis by about 10%. At a time when companies in general and retailers in particular are cutting earnings estimates, Nevada Bob's Canada continues to excel, consistently exceeding its base plan. Results were strong despite some regional economic slowdowns, late store openings for new outlets, and delays in completing acquisitions of franchisee-owned stores.''
Mr. Edwards noted that ''Nevada Bob's Canada Inc. performed at the top of the merchandising sector based on operating margin (EBITDA) as a percentage of revenue. For the six months ended July 31, 1998, EBITDA was 11.6% of revenue, which few other major Canadian retailers can claim,'' said Mr. Edwards. He added that ''these superior results were achieved while we continued to expand our retail network, increasing our selling square footage by almost 40% to 150,000 square feet,
representing 35 locations across western Canada and the Pacific Northwest USA.''
Martin Bunting, Executive Vice President and COO indicated that same-store sales during the quarter ended July 31, 1998 were up significantly as compared with the results of comparable stores under franchisee ownership in the previous period. Mr. Bunting said that for the three months ended July 31, 1998, same-store sales were
up 6.0% over the comparable period in 1997 and were up in all operating regions, including British Columbia which is generally acknowledged as being in a deepening recession. According to the Conference Board of Canada, retail sales in BC were forecast to decline by 1.5% during the second quarter of 1998; Nevada Bob's Canada
Inc. posted growth of 1.6% on a comparable basis for the same period. The Company also reported strong growth in its franchised operations in eastern Canada, where same-store sales were up 21% for the six months ended July 31, 1998. On a consolidated basis for the six months ended July 31, 1998 the Company reported that same-store sales exhibited strong growth on a comparable basis, up 8.1% over the previous year.
Mr. Bunting said: ''Gross margins were within expectations, given our decision to aggressively adjust inventories we acquired from the franchisee take-overs to make room for our re-balanced mix of product for the 1998 season.'' Gross margins were 40.2% for the three months ended July 31, 1998 which reflect the negative impact of
these clearance pricing strategies. Selling, general and administration expenses were in line with Company forecasts at 27.4% of sales, or $6.6 million, for the six months ended July 31, 1998.
Carson J. Wynne, Sr. VP and CFO, added that the Company maintained a strong balance sheet and liquidity position. Net working capital was approximately $10 million as at July 31, 1998, and the Company continued its strategy of using its strong capital position to reduce cost of goods sold by accelerating payments to suppliers
whenever early payment discounts could be taken.
''We are just beginning to see the impact of our mass purchasing and liquidity position in our ability to source goods at the lowest cost in Canada,'' said Mr. Wynne. ''Most of the benefits will accrue in subsequent buying cycles, but we are making our presence felt,'' he added.
Mr. Edwards noted that Nevada Bob's Canada Inc. will continue to expand its retail network, adding some 125,000 square feet of selling space in the next three quarters, with growth focused primarily in central Canadian markets. By spring 1999 the Company plans to have 62 corporate-owned outlets in operation. Mr. Edwards
said ''we expect to be making some significant announcements shortly on our growth strategy.''
Financial Summary
Nevada Bob's Canada Inc.
Consolidated Statement of Earnings
For the Six Months Ended July 31, 1998
(Unaudited)
Second Quarter Six Months
---------------------- -----------------------
May 1, April 1, February 1, January 1,
1998 to 1997 to 1998 to 1997 to
July 31, June 30, July 31, June 30,
1998 1997 1998 1997
$ $ $ $
-------------------------------------------------------------------------
Sales 16,329,234 - 24,165,098 -
Cost of Sales 9,763,255 - 14,735,495 -
-------------------------------------------------------------------------
Gross Profit 6,565,979 - 9,429,603 -
-------------------------------------------------------------------------
Expenses
Depreciation and
Amortization 311,699 - 396,007 -
Interest on long-term debt 136,096 - 262,756 -
Selling, general and
administrative 4,407,659 9,536 6,618,407 9,589
4,855,454 9,536 7,277,170 9,589
-------------------------------------------------------------------------
Earnings before income
Taxes 1,710,525 (9,536) 2,152,433 (9,589)
Income tax expense 419,000 - 419,000 -
-------------------------------------------------------------------------
Net Earnings 1,291,525 (9,536) 1,733,433 (9,589)
-------------------------------------------------------------------------
Basic earnings per share $ 0.07 $ - $ 0.10 $ -
-------------------------------------------------------------------------
Neither the Toronto Stock Exchange nor the Alberta Stock Exchange has approved nor disapproved the information herein contained.
SOURCE: Nevada Bob's Canada Inc. |
