The North West Company Inc. Announces First Quarter Earnings and a Quarterly Dividend
Press Release
Winnipeg, Manitoba, June 10, 2025 (TSX: NWC): The North West Company Inc. (the “Company” or “North West”) today reported its unaudited financial results for the first quarter ended April 30, 2025. It also announced that the Board of Directors has declared a quarterly dividend of $0.40 to shareholders of record on June 27, 2025, to be paid on July 15, 2025.
“Our strong first quarter performance reflects the continued momentum across our business,” said Dan McConnell, President & CEO. “Same-store sales growth and improved execution focused on meeting customer needs drove increased earnings and built on the solid foundation we established in the first quarter of last year. We’re especially encouraged by the progress we’ve made in improving on-shelf availability and refining our merchandise assortment. While it’s still early, we’re confident that our focus on operational excellence through the Next 100 initiative is the right strategy — one that will deliver meaningful value to both our customers and our shareholders. Finally, I want to acknowledge the communities affected by the wildfires in northern Canada. Our thoughts are with those impacted, and we extend our heartfelt thanks to the firefighters, community leaders, and everyone working tirelessly to protect residents and ensure their safety.”
Financial Highlights
Sales First quarter consolidated sales increased 3.9% to $641.4 million compared to $617.5 million last year led by same store sales gains, the impact of foreign exchange on the translation of International Operations sales and sales from new stores. These factors were partially offset by the impact of lower wholesale sales and one extra day of sales last year as a result of February 29. Excluding the foreign exchange impact, consolidated sales increased 1.8%, with food sales increasing 1.7% and general merchandise and other sales increasing 1.9% compared to last year. On a same store basis, sales increased 3.5%1 compared to the first quarter last year driven by a 4.0% increase in same store sales in Canadian Operations and a 2.8%1 increase in same store sales in International Operations.
Gross Profit Gross profit increased 7.2% to $214.0 million compared to $199.6 million last year due to sales gains and a 103 basis point increase in gross profit rate compared to last year. The increase in gross profit rate was largely due to changes in sales blend, including a lower blend of wholesale food sales, and lower markdowns, including the impact of more effective data-driven promotions as part of our Next 100 work.
Selling, Operating and Administrative Expenses Selling, operating and administrative expenses (“Expenses”) increased $13.9 million or 8.7% compared to last year and were up 120 basis points as a percentage to sales. The increase in Expenses is largely due to an investment in staff resources and an increase in information technology costs to support the Next 100 operational excellence work, the impact of foreign exchange on the translation of International Operations Expenses, an increase in depreciation and new stores. A $2.9 million increase in share-based compensation costs primarily related to changes in the Company’s share price and the impact of $2.1 million in one-time costs for professional fees related to the execution of the Next 100 strategy were also factors. The impact of the Next 100 one-time costs was offset in the quarter by more effective data-driven promotional activity, including a reduction in print media, store labour productivity gains and other cost savings initiatives. Excluding the impact of share-based compensation and Next 100-related one-time costs, Expenses increased $8.8 million or 5.6% compared to last year and were up 43 basis points as a percentage to sales.
1 Excluding the impact of foreign exchange
2 See Non-GAAP Measures Section of the news release
Earnings From Operations Earnings from operations (“EBIT”) increased 1.2% to $40.3 million compared to very strong earnings gains last year which were up 17.9% to $39.8 million, and earnings before interest, income taxes, depreciation and amortization (“EBITDA2”) increased 3.2% to $70.1 million on top of a 15.2% increase in EBITDA2 to $67.9 million last year due to the sales, gross profit and Expense factors previously noted. Adjusted EBITDA2, which excludes the impact of share-based compensation and Next 100-related one-time costs, increased $7.2 million or 10.1% to $78.0 million compared to $70.8 million last year and as a percentage to sales was 12.2% compared to 11.5% last year.
Interest Expense Interest expense decreased 10.5% to $3.9 million compared to $4.3 million last year largely due to lower interest rates and long-term debt.
Income Tax Expense Income tax expense increased to $8.7 million compared to $8.3 million last year due to the impact of higher earnings and an increase in the effective tax rate to 23.9% compared to 23.5% last year. The increase in the effective tax rate is substantially due to the impact of The Global Minimum Tax Act (“GMTA”) – Pillar Two legislation included in Bill C-69 that was enacted in Canada on June 20, 2024.
Net Earnings Net earnings increased 2.2% to $27.7 million which is on top of a 22.3% increase in net earnings to $27.2 million last year. Net earnings attributable to shareholders were $25.8 million and diluted earnings per share were $0.53 per share compared to $0.53 per share last year. Adjusted net earnings2, which excludes the after-tax impact of share-based compensation and Next 100-related one-time costs, increased $4.2 million or 14.2% to $33.6 million compared to $29.4 million last year due to the sales, gross profit, Expense, interest and GMTA – Pillar Two income tax expense factors previously noted.
Non-GAAP Financial Measures
The Company uses the following non-GAAP financial measures: earnings before interest, income taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA and adjusted net earnings. The Company believes these non-GAAP financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Company for the reasons outlined below.
Earnings Before Interest, Income Taxes, Depreciation and Amortization (EBITDA) is not a recognized measure under IFRS. Management believes that in addition to net earnings, EBITDA is a useful supplemental measure as it provides investors with an indication of the Company’s operational performance before allocating the cost of interest, income taxes and capital investments. Investors should be cautioned however, that EBITDA should not be construed as an alternative to net earnings determined in accordance with IFRS as an indicator of the Company’s performance. The Company’s method of calculating EBITDA may differ from other companies and may not be comparable to measures used by other companies.
Adjusted EBITDA and Adjusted Net Earnings are not recognized measures under IFRS. Management uses these non-GAAP financial measures to exclude the impact of certain income and expenses that must be recognized under IFRS. The excluded amounts are either subject to volatility in the Company’s share price or may not necessarily be reflective of the Company’s underlying operating performance. These factors can make comparisons of the Company’s financial performance between periods more difficult. The Company may exclude additional items if it believes that doing so will result in a more effective analysis and explanation of the underlying financial performance. The exclusion of these items does not imply that they are non-recurring.
These measures do not have a standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures presented by other publicly traded companies and should not be construed as an alternative to the other financial measures determined in accordance with IFRS.
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