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Reitmans Case Analysis

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Reitmans is Canada’s leading specialty retailer and was founded in 1926. This company is value oriented, customer driven, and committed to excellence. The company strives to attend their customers to the best products and services on the market by promoting innovation, growth and teamwork. Reitmans has 867 stores across Canada including Smart Set, RW & CO., Thyme Penningtons, and Addition Elle. They have approximately 566,000 sq. ft. of distribution space in Montreal where they are capable of processing more than 55,000,000 units of merchandise per year. It is the preferred destination for women looking to update their wardrobe with the latest styles and colors for an affordable price.
During the fiscal period of 2005, sales increased …show more content…

In 2005, Reitmans opened 57 new stores, remodeled 26 stores and closed 35 stores. Future plans include opening 42 new stores and remodeling 22 stores for 2006. Profitability has grown more than 100% over the last 3 years and the company will continue to seek out new business opportunities. Reitmans currently leases two retail locations which are owned by a related party and has investments in marketable securities, primarily high quality preferred shares and income trusts. Investment income for fiscal 2005 amounted to $9,639,000 (net capital gains of $3,651,000) compared to $9,584,000 (net capital gains of $2,605,000) last …show more content…

Future income tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. Deferred financing costs, included in other assets, are amortized on a straight-line basis over the term of the bank financing. Reitmans accounts for stock-based compensation and other stock-based payments use the fair value based method. Basic earnings per share is determined with the weighted average number of non-voting and common shares outstanding during the period. When calculating diluted earnings per share, the weighted average shares outstanding are increased to include additional shares from the expected exercise of options. The number of additional shares is calculated by assuming that the proceeds from such exercises are used to repurchase non-voting and common shares at the average market price during the reporting period. Deferred licensing revenue is amortized on a straight-line basis. The financial statements and accompanying notes have been prepared on a consolidated basis and reflect the consolidated financial position of Reitmans and its wholly-owned subsidiaries. Merchandise inventories are valued at the lower of cost, determined principally on an average basis using the retail inventory method and net realizable value. Income is recorded on the accrual basis. Capital

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