UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 or 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2019

Commission file number: 001-32635

 

 

BIRKS GROUP INC.

(Translation of Registrant’s name into English)

 

 

2020 Robert Bourassa

Suite 200

Montreal, Québec

Canada

H3A 2A5

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

              ☒ Form 20-F              ☐ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

 

 

 


CONTENTS

The following document of the Registrant is submitted herewith:

 

99.1    Press release dated November 21, 2019


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   BIRKS GROUP INC.
   (Registrant)
   By:   

/s/ Pasquale (Pat) Di Lillo

      Pasquale (Pat) Di Lillo
Date: November 21, 2019       Vice President, Chief Financial Officer


EXHIBIT INDEX

 

Exhibit Number

  

Description

Exhibit 99.1    Press release dated November 21, 2019

 

EX-99.1

Exhibit 99.1

 

LOGO

 

    Company Contacts:
    Pasquale (Pat) Di Lillo
    Vice President, Chief Financial Officer
    (514) 397-2592
    For all media inquiries, please contact:
    OverCat, 416.966.9970
    Audrey Hyams Romoff, ahr@overcat.com
    Gillian DiCesare, gd@overcat.com
    Chelsea Brooks, cb@overcat.com

BIRKS GROUP REPORTS ITS MID-YEAR FY2020 RESULTS INCLUDING A 24% INCREASE IN NET SALES

Montreal, Quebec. November 21, 2019 - Birks Group Inc. (the “Company” or “Birks Group”) (NYSE American: BGI), today reported its financial results for the twenty-six week period ended September 28, 2019.

Financial Highlights

All figures presented herein are in Canadian dollars.

During the first half of its fiscal year 2020, the Company took further steps on its path towards its goal of returning to profitability and value creation for its shareholders, as it delivered good results for the twenty-six week period ended September 28, 2019. This turnaround in the first half of fiscal year 2020 is driven primarily by the Company starting to benefit from the significant investments it has made in its retail network and Birks brand development over the past two fiscal years in addition to its cost reduction initiatives.

During the twenty-six week period ended September 28, 2019, the Company reported net sales of $85.3 million, an increase of $16.6 million, or 24.2%, compared to net sales of $68.7 million in the twenty-six week period ended September 29, 2018. The greater sales were driven by a 12.2% increase in comparable store sales and by the incremental sales from its flagship stores and other key locations following their recent renovations. The Company also reported a gross profit of $32.6 million for the twenty-six week period ended September 28, 2019, an increase of $6.2 million, or 23.5%, compared to the gross profit of $26.4 for the twenty-six week period ended September 29, 2018. In addition, the Company generated an EBITDA of $0.3 million, an improvement of $6.4 million over the comparable period last year. As planned, during the early phase of its turnaround strategy, the Company recorded a loss from continuing operations of $4.5 million, which is an improvement of $5.9 million as compared to a loss of $10.4 million compared to the comparable period last year.


Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group, commented: “As part of the Company’s strategic plan, fiscal year 2020 was poised to reap the benefits of the Company’s investments in its flagship stores in Montreal, Toronto and Vancouver, and other key locations as well as its cost reduction initiatives during its transformational fiscal years 2018 and 2019. I would like to take this opportunity to thank all of our financial and strategic partners as well as our dedicated employees for their continued support as we go forward with our strategies in order to achieve a full turnaround. The completion of our store renovations allows us to feature some of the most reputable watch and jewelry brands in the world, alongside the Birks fine jewelry and bridal collections. The return to normal selling conditions is reflected in the results of the first half of fiscal 2020. The sales growth we have achieved to date, together with the sizeable reductions to our corporate overhead structure, in line with our strategic plan, has allowed us to realize a positive operating income before depreciation. The Company continues to focus on the execution of its strategic plan and its four key initiatives:

 

   

offering our customers access to the most reputable watch and jewelry brands through a complete omni-channel experience;

 

   

expanding our e-commerce and wholesale channels through key strategic investments;

 

   

renewing our Birks bridal and fine jewelry product offerings accentuating quality, design and accessible price points; and

 

   

developing the Birks product brand to position it as an international brand.

We remain confident that the execution of our strategic initiatives will lead to long-term value creation.”

Financial overview for the twenty-six week period ended September 28, 2019:

 

   

Net sales for the twenty-six week period ended September 28, 2019 were $85.3 million, an increase of $16.6 million or 24.2%, compared to $68.7 million for the twenty-six week period ended September 29, 2018. The $16.6 million increase in net sales was driven by a strong performance of our retail business mainly due to a 12.2% increase in comparable store sales and to the recent renovations of the Company’s flagship stores, Montreal in June 2018, Vancouver in February 2019 and Toronto in March 2019;

 

   

Comparable store sales in the twenty-six week period ended September 28, 2019 were 12.2% greater than in the comparable prior year period primarily related to an increase in sales of third party branded watches driven by the Company’s improved portfolio of third party watch brands, the Company’s successful pointed marketing campaigns which led to increase in key performance indicators ensuing throughout the retail network, such as conversion rate, transaction volume and average sales transaction value;

 

   

Gross profit for the twenty-six week period ended September 28, 2019 increased by $6.2 million to $32.6 million, or 38.2% of net sales, as compared to $26.4 million or 38.4% of net sales, during the comparable prior year period. The gross profit rate decrease of approximately 20 basis points was primarily attributable to a shift in product sales mix towards branded timepieces, partially offset by a reduction in sales promotions as a result of the re-opening of the Montreal and Toronto flagship locations post-renovations;


   

Selling, general and administrative (“SG&A”) expenses decreased by $0.2 million to $32.3 million for the twenty-six week period ended September 28, 2019 compared to $32.5 for the twenty-six week period ended September 29, 2018, a 940 basis points reduction in the percentage of sales, mainly driven by applying cost containment initiatives to corporate overhead and shifting marketing projects internally and having more targeted and productive campaigns, partially offset by increased occupancy costs, largely due to the new Toronto flagship location. Hence, SG&A expenses represented 37.8% of sales for the twenty-six week period ended September 28, 2019 as compared to 47.2% for the comparable period last year;

 

   

The Company’s operating loss during the twenty-six week period ended September 28, 2019 was $2.1 million, an improvement of $6.4 million compared to a loss of $8.5 million in the comparable prior year period; and

 

   

Consequently, the Company used $6.3 million to finance its operating activities from continuing and discontinued operations and used another $4.0 million to finance its investing activities. Financing for these were obtained mainly from bank indebtedness.

About Birks Group Inc.

Birks Group is a leading designer of fine jewelry, timepieces and gifts and operator of luxury jewelry stores in Canada. The Company operates 26 stores under the Birks brand in most major metropolitan markets in Canada, one retail location in Calgary under the Brinkhaus brand and two retail locations in Vancouver under the Graff and Patek Philippe brands. Birks Collections are available at Mappin & Webb and Goldsmiths in the United Kingdom in addition to several jewelry retailers across North America. Birks was founded in 1879 and has become Canada’s premier retailer and designer of fine jewelry, timepieces and gifts. Additional information can be found on Birks’ web site, www.birks.com.

Non-GAAP Measures

The Company reports information in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The Company’s performance is monitored and evaluated using various sales and earnings measures that are adjusted to include or exclude amounts from the most directly comparable GAAP measure (“non-GAAP measures”). The Company presents such non-GAAP measures in reporting its financial results to investors and other external stakeholders to provide them with useful complimentary information which will allow them to evaluate the Company’s operating results using the same financial measures and metrics used by the Company in evaluating performance. The Company does not, nor does it suggest that investors and other external stakeholders should, consider non-GAAP measures in isolation from, or as a substitute for, financial information prepared in accordance with U.S. GAAP. These non-GAAP measures may not be comparable to similarly-titled measures presented by other companies.


Total operating expenses from continuing operations and operating loss from continuing operations

The Company evaluates its operating earnings performance using financial measures which exclude expenses associated with operational restructuring plans. The Company believes that such measures provide useful supplemental information with which to assess the Company’s results relative to the corresponding period in the prior fiscal year and can result in a more meaningful comparison of the Company’s performance between the periods presented. Given that there were no restructuring costs in the twenty-six week period ended September 28, 2019, the table below provides a reconciliation of the non-GAAP measures presented to the most directly comparable financial measures with GAAP for the twenty-six week period ended September 29, 2018.

 

Reconciliation of non-GAAP measures    26 Weeks Ended September 29, 2018  

($’000)

   GAAP     Restructuring
costs (a)
     Non-GAAP  

Total operating expenses – from continuing operations

     34,868       (498      34,370  

as a % of net sales from continuing operations

     50.7        50.0

Operating loss – from continuing operations

     (8,495     498        (7,997

as a % of net sales from continuing operations

     (12.4 )%         (11.6 )% 

 

(a)

Expenses associated with the Company’s operational restructuring plan

Forward Looking Statements

This press release contains certain “forward-looking” statements concerning the Company’s performance and strategies, including that the Company is taking further steps on its path towards its goal of returning to profitability and value creation for its shareholders, and the execution of the Company’s strategic initiatives, will lead to long-term value creation. Because such statements include various risks and uncertainties, actual results might differ materially from those projected in the forward-looking statements and no assurance can be given that the Company will meet the results projected in the forward-looking statements. These risks and uncertainties include, but are not limited to the following: (i) economic, political and market conditions, including the economies of Canada, and the U.S., which could adversely affect our business, operating results or financial condition, including our revenue and profitability, through the impact of changes in the real estate markets, changes in the equity markets and decreases in consumer confidence and the related changes in consumer spending patterns, the impact on store traffic, tourism and sales; (ii) the impact of fluctuations in foreign exchange rates, increases in commodity prices and borrowing costs and their related impact on the Company’s costs and expenses; (iii) the Company’s ability to maintain and obtain sufficient sources of


liquidity to fund its operations, to achieve planned sales, gross margin and net income, to keep costs low, to implement its business strategy, maintain relationships with its primary vendors, to mitigate fluctuations in the availability and prices of the Company’s merchandise, to compete with other jewelers, to succeed in its marketing initiatives, and to have a successful customer service program; (iv) the Company’s ability to continue to borrow under its credit facilities, (v) the Company’s ability to maintain profitable operations as well as maintain specified excess availability levels under its credit facilities, (vi) the Company’s financial performance in the second half of fiscal 2020 and the level of capital expenditures requirements related to renewing store leases, (vii) the Company’s ability to execute its strategic vision, and (viii) the Company’s ability to continue as a going concern. Information concerning factors that could cause actual results to differ materially is set forth under the captions “Risk Factors” and “Operating and Financial Review and Prospects” and elsewhere in the Company’s Annual Report on Form 20-F filed with the Securities and Exchange Commission on June 24, 2019 and subsequent filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this statement or to reflect the occurrence of unanticipated events, except as required by law.

BIRKS GROUP INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(In thousands)

 

     26 weeks ended
September 28, 2019
    26 weeks ended
September 29, 2018
 

Net sales

   $ 85,343     $ 68,728  

Cost of sales

     52,719       42,355  
  

 

 

   

 

 

 

Gross profit

     32,624       26,373  

Selling, general and administrative expenses

     32,289       32,471  

Restructuring charges

     —         498  

Depreciation and amortization

     2,386       1,899  
  

 

 

   

 

 

 

Total operating expenses

     34,675       34,868  
  

 

 

   

 

 

 

Operating loss

     (2,051     (8,495

Interest and other financial costs

     2,417       1,866  
  

 

 

   

 

 

 

Loss from continuing operations

     (4,468     (10,361

Income taxes (benefits)

     —         —    

Net loss from continuing operations

     (4,468     (10,361

(Loss) income from discontinued operations, net of tax

     (117     (444
  

 

 

   

 

 

 

Net loss

     (4,585     (10,805
  

 

 

   

 

 

 

Weighted average common shares outstanding

    

Basic

     17,965       17,961  

Diluted

     17,965       17,961  

Net loss per common share

    

Basic

   $ (0.26   $ (0.60

Diluted

   $ (0.26   $ (0.60

Net loss from continuing operations per common share

    

Basic

   $ (0.25   $ (0.58

Diluted

   $ (0.25   $ (0.58


BIRKS GROUP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS – UNAUDITED

(In thousands)

 

     As of  
     September 28, 2019     March 30, 2019  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 1,588     $ 1,179  

Accounts receivable and other receivables

     6,161       3,537  

Inventories

     101,655       91,541  

Prepaid expenses and other current assets

     1,998       2,142  
  

 

 

   

 

 

 

Total current assets

     111,402       98,399  

Long-term receivables

     3,912       1,266  

Property and equipment

     29,254       29,727  

Operating lease right-of-use asset

     63,753       —    

Intangible assets and other assets

     4,372       4,403  
  

 

 

   

 

 

 

Total non-current assets

     101,291       35,396  
  

 

 

   

 

 

 

Total assets

   $ 212,693     $ 133,795  
  

 

 

   

 

 

 

Liabilities and Stockholders’ Equity

    

Current liabilities:

    

Bank indebtedness

   $ 58,740     $ 47,021  

Accounts payable

     40,135       33,264  

Accrued liabilities

     7,603       9,657  

Current portion of long-term debt

     1,791       993  

Current portion of operating lease liabilities

     4,459       —    
  

 

 

   

 

 

 

Total current liabilities

     112,728       90,935  

Long-term debt

     14,470       16,111  

Long-term portion of operating lease liabilities

     71,631       —    

Other long-term liabilities

     2,193       12,966  
  

 

 

   

 

 

 

Total long-term liabilities

     88,294       29,077  

Stockholders’ equity:

    

Class A common stock – no par value, unlimited shares authorized, issued and outstanding 10,252,911

     35,603       35,593  

Class B common stock – no par value, unlimited shares authorized, issued and outstanding 7,717,970

     57,755       57,755  

Preferred stock – no par value, Unlimited shares authorized, none issued

     —         —    

Additional paid-in capital

     19,137       19,120  

Accumulated deficit

     (100,668     (98,473

Accumulated other comprehensive loss

     (156     (212
  

 

 

   

 

 

 

Total stockholders’ equity

     11,671       13,783  
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 212,693     $ 133,795