Acquisition boosts North West Company sales

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This article was published 15/06/2017 (3049 days ago), so information in it may no longer be current.

Last year’s acquisition of a leading retailer/wholesaler in the British Virgin Islands is paying dividends for Winnipeg-based North West Company Inc.

The junior department store operator released its first-quarter results on Wednesday, which showed sales for the quarter were up 8.6 per cent from a year earlier to $476.8 million.

The company said much of the increase was due to last year’s acquisition of the nine-store Roadtown Wholesale Trading Ltd. (RTW), as well as improved sales within its Canadian operations.

“The quarter was a very strong one in northern Canada as we continued to build sales and expense-management momentum,” said company president and CEO Edward Kennedy.

“Our acquisition in the BVI was also a solid contributor to our results, which were very positive after adjusting for non-operating and one-time costs.”

The company said despite the stronger sales, it recorded a substantial drop in profit for the quarter due to a 22 per cent increase in selling, operating and administrative expenses.

That included one-time acquisition-related expenses, higher share-based compensation costs, and additional costs associated with the opening of some new stores in Canada.

The company said if the RTW acquisition-related expenses and the share-based compensation costs are excluded, adjusted net earnings are up 15.9 per cent from a year earlier.

RTW was one of two key acquisitions the company made in the past year. The other was April’s purchase of a Thunder Bay-based airline — North Star Air Ltd. — for $31 million.

Kennedy told shareholders attending NWC’s annual meeting that owning its own cargo airline will enable the company to ship product faster and more reliably than its competitors.

“If we can create an advantage within this sort of ecosystem, it translates into more sales and a more secure, long-term relationship with our customers,” he said.

One shareholder expressed concern the company has no experience in operating an airline, and that it could wind up being a drain on earnings.

But Kennedy downplayed those concerns, saying he expects the acquisition to provide long-term benefits for both the company and its shareholders.

murray.mcneill@freepress.mb.ca