THUNDER BAY – The North West Company Inc. (the “Company” or “North West”) reported its unaudited financial results for the third quarter ended October 31, 2012. It also announced that the Board of Directors have declared a dividend of $0.26 per share to shareholders of record on December 31, 2012, to be paid on January 15, 2013.
Financial Highlights: Sales decreased 0.2% to $377.7 million compared to the third quarter last year as food sales growth was offset by a decrease in general merchandise sales. Sales excluding the foreign exchange impact were up 0.3% but were down 0.4% on a same store basis. Food sales increased 1.4% and were up 1.0% on a same store basis and general
merchandise sales decreased 5.0% and were down 5.8% on a same store basis.
Earnings from Operations: increased 3.6% to $26.4 million compared to $25.4 million in the third quarter last year as gross profit rate improvements more than offset higher selling, operating and administrative expenses. Continued improvement in fresh categories profitability, product assortment changes and special buys were the leading factors contributing to the gross profit rate improvement. Selling, operating and administrative expenses increased 3.0% compared to last year and were up 70 basis points as a percentage to sales largely due to a $1.7 million increase in share-based compensation costs and a $1.3 million asset impairment provision related to the pending closure of six underperforming Giant Tiger stores. The increase in share-based compensation costs is mainly related to an increase in share price compared to last year. Excluding the asset impairment provision, earnings from operations increased 8.9% compared to last year.
Trading profit: or earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 3.7% to $35.7 million compared to $34.5 million last year. Excluding the asset impairment provision, trading profit increased $2.6 million or 7.6% and was 9.8% as a percentage to sales compared to 9.1% last year.
Third quarter net earnings were $17.5 million, an increase of 2.9% compared to last year’s third quarter net earnings of $17.0 million, and diluted earnings per share were $0.36 compared to $0.35 per share last year. Excluding the impact of the asset impairment provision, earnings per share was $0.38 in the quarter.
“Our work on being in-stock, controlling product waste and managing margins all helped to offset a difficult sales environment,” commented North West President and CEO Edward Kennedy. “Our product mix geared to everyday needs also helped to counter a drop-off in big-ticket sales related to more constrained incomes.”
Further information on the financial results is available in the Company’s third quarter report to shareholders, Management’s Discussion and Analysis and unaudited interim condensed consolidated financial statements which can be found in the investor section of the Company’s website at www.northwest.ca.
