MONTREAL: Birks Group Inc. announced that the COVID-19 pandemic has adversely impacted, and is expected to continue to adversely impact, the Company’s operations for at least as long as the Company’s stores remain closed.
As previously announced, the Company’s stores have been closed across Canada since March 18, 2020. As a result of these store closures, the Company has experienced significant declines in sales, including a year-over-year decline of approximately 70% for the period from March 18 to April 16, 2020.
Government officials and public health professionals at both the Federal and Provincial levels in Canada have recently extended store closures and social distancing guidelines to protect Canadians, and therefore the Company’s stores will remain closed until further notice in accordance with government directives. The Company continues to offer concierge services by telephone and to operate its e-commerce business as certain provincial governments have designated e-commerce as an “essential service” which, along with the operations in support thereof, are allowed to operate.
“In these unprecedented and challenging times, all of the Maison Birks stores remain closed, contributing to a significant decline in revenue,” said Jean-Christophe Bédos, Birks Group’s President and Chief Executive Officer. “This unanticipated situation has forced us to make difficult decisions to ensure that Birks Group is positioned to emerge from this global crisis. The strength of our brand and the steps we have taken, will enable us to weather this storm.”
As a result of these developments, Birks Group has taken various actions in an attempt to mitigate the financial impact of COVID-19. The Company has temporarily laid off over 80% of its employees without pay, implemented temporary base salary reductions of 20% for its executive officers and reduced its workweek by 20% for most of those employees who remain active. The Company will continue to provide health benefits to its employees who have been temporarily laid off.
Birks Group has also taken actions to reduce its marketing expenses by approximately 57% for the first quarter of fiscal year 2021, significantly reduced its discretionary spending, negotiated extended credit terms with its vendors and rent relief with its landlords, and postponed over $2.4 million of capital expenditures through the first quarter of fiscal year 2021. The Company’s Board of Directors has also temporarily reduced its compensation by 20%.
Birks Group’s business is particularly sensitive to reductions in discretionary spending by consumers. To date, this outbreak has caused, and is continuing to cause, significant disruption in the financial markets both globally and in Canada, which could lead to a decline in discretionary spending by consumers, and which could in turn impact, possibly materially, the Company’s business, sales, financial condition and results of operations. The Company cannot predict the degree to, or the time period over, which its sales and operations will be affected by this outbreak, and the effects could be material. The Company continues to operate through its revolving credit facility, but COVID-19 has resulted in significant disruption of global financial markets, which could have a negative impact on the Company’s ability to access capital in the future. Given the uncertainty in the circumstances, the Company is pursuing other actions to enhance its liquidity position, which could include entering into new credit facilities, to the extent available.
Birks Group continues to monitor this situation closely, and will take decisive and measured action as appropriate based on guidance provided by governmental authorities. In these circumstances, there may be developments outside of the Company’s control requiring it to adjust its operating plan. The further spread of COVID-19, and the requirements to take action to limit the spread of the illness, will impact the Company’s ability to carry out its business as usual and may materially adversely impact global economic conditions, the Company’s business, results of operations and financial condition.
The Maison Birks flagships stores in Montréal, Toronto and Vancouver, as well as the Brinkhaus store (Calgary) and Graff & Patek Philippe (Vancouver) stores, are closed.
Birks Group is a leading designer of fine jewelry, timepieces and gifts and operator of luxury jewelry stores in Canada.