·

Sales increased by 22.7% to  C$75.8 million from  C$61.8 million in the fourth quarter of fiscal 2014.  Comparable sales increased by 6.6%.

·

Gross profit increased by 20.9% to  C$42.2 million from  C$34.9 million in the fourth quarter of fiscal 2014, while gross profit as a percent of sales decreased to 55.7% from 56.5% in the fourth quarter of fiscal 2014. The decrease in gross profit as a percent of sales was driven primarily by the adverse impact of the stronger U.S. dollar on U.S. dollar denominated purchases partially offset by supply chain efficiencies. On a constant currency basis, gross profit as a percent of sales was 57.9%.

·

Selling, general and administration expenses (“SG&A”) decreased to C$22.0 million from C$22.3 million in the fourth quarter of fiscal 2014. Excluding one-time costs, SG&A increased to C$26.0 million from C$20.6 million in the fourth quarter of fiscal 2014. As a percent of sales, SG&A excluding these one-time costs, increased to 34.3% from 33.3%, due primarily to public company related costs and higher wage and compensation costs.

·

Results from operating activities were C$20.2 million as compared to C$12.6 million in the fourth quarter of fiscal 2014. Excluding one-time costs, results from operating activities improved to C$16.2 million from C$14.3 million in the fourth quarter of fiscal 2014.

·

The Company opened 10 new stores in the fourth quarter and ended the quarter for a total of 193 stores in Canada and the U.S. This represents an increase of 25% from the end of the fourth quarter of fiscal 2014.

·

Adjusted EBITDA was C$18.9 million compared to C$16.5 million in the fourth quarter of fiscal 2014. Adjusted EBITDA excludes IPO-related and other non-cash or one-time costs (see Reconciliation of Adjusted EBITDA table).

·

Net income was C$14.8 million compared to C$7.9 million in the fourth quarter of fiscal 2014. Adjusted net income, which excludes IPO-related and other one-time income or expenses (see Reconciliation of IFRS basis to Adjusted net income(loss) table), was C$11.8 million compared to C$11.4 million in the fourth quarter of fiscal 2014.

·

Fully diluted income per common share was C$0.57 compared to C$0.64 in the fourth quarter of fiscal 2014. Adjusted fully diluted income per common share, which is adjusted net income on an adjusted fully diluted weighted average shares outstanding basis (see Reconciliation of fully diluted weighted average common shares outstanding table), was  C$0.45 per share compared to  C$0.46 per share in the fourth quarter of fiscal 2014.

·

Sales increased by 27.3% to  C$180.7 million from  C$141.9 million in fiscal 2014. Comparable sales increased by 6.6%.

·

Gross profit increased by 22.7% to  C$95.3 million from  C$77.7 million in fiscal 2014, while gross profit as a percent of sales decreased to 52.8% from 54.8% in fiscal 2014. The decrease in gross profit as a percent of sales was driven primarily by the adverse impact from the stronger U.S. dollar on U.S. dollar denominated purchases during the year ended January 30, 2016. On a constant currency basis, gross profit as a percent of sales was 55.2%.

·

SG&A increased to  C$80.1 million from  C$66.6 million in fiscal 2014. Excluding one-time costs, SG&A increased to C$79.8 million from C$63.0 million in fiscal 2014. As a percent of sales, SG&A, excluding these one-time costs, decreased to 44.2% from 44.4%, due primarily to leveraging of fixed expenses.

·

Results from operating activities were C$15.2 million as compared to C$11.1 million in fiscal 2014. Excluding one-time costs, results from operating activities increased to C$15.5 million from C$14.7 million in fiscal 2014.

·

The Company opened 39 net new stores in the year ended January 30, 2016, and ended the year with a total of 193 stores in Canada and the U.S. This represents an increase of 25% from fiscal 2014.

·

Adjusted EBITDA was  C$24.6 million compared to  C$21.9 million in fiscal 2014. Adjusted EBITDA excludes IPO-related and other non-cash or one-time costs (see Reconciliation of Adjusted EBITDA table).

·

Net loss was  C($131.4) million compared to net income of C$6.5 million in fiscal 2014. The decrease in net income in fiscal 2015 is primarily due to a  C$140.9 million non-cash loss in the second quarter of fiscal 2015 associated with the embedded derivative on Series A, A-1 and A-2 preferred shares. In conjunction with the IPO transaction, all preferred shares were converted into common shares. As a result, this charge will not reoccur. Adjusted net income, which excludes IPO-related and other one-time costs for the year ended January 30, 2016 (see Reconciliation of IFRS basis to Adjusted net income table), was C$10.5 million compared to C$9.6 million in fiscal 2014.

·

Fully diluted income (loss) per common share was C$(6.65) compared to  C$0.45 in fiscal 2014. Adjusted fully diluted income per common share, which is adjusted net income on an adjusted fully diluted weighted average shares outstanding basis (see Reconciliation of fully diluted weighted average common shares outstanding table), was C$0.40 per share compared to  C$0.38 per share in fiscal 2014.

·

Cash: C$72.5 million.

·

Total liquidity (cash plus availability on a C$20.0 million revolving facility): C$92.5 million.

·

Adjusted EBITDA, Adjusted net income(loss), and Adjusted fully diluted income(loss) per share do not reflect changes in, or cash requirements for, our working capital needs; and

·

Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements.

As at

As at

January 30, 

2016

January 31, 2015

$

$

ASSETS

Current

Cash

Accounts and other receivables

Inventories

Income tax receivable

Prepaid expenses and deposits

Derivative financial instruments

 —

Total current assets

Property and equipment

Intangible assets

Deferred income tax assets

Total assets

LIABILITIES AND EQUITY (DEFICIENCY)

Current

Trade and other payables

Deferred revenue

Income taxes payable

Current portion of provisions

Current portion of long-term debt and finance lease obligations

 —

Total current liabilities

Deferred rent and lease inducements

Provisions

Long-term debt and finance lease obligations

 —

Deferred income tax liabilities

 —

Loan from the controlling shareholder

 —

Preferred shares — Series A, A-1 and A-2

 —

Financial derivative liability embedded in preferred shares — Series A, A-1 and A-2

 —

Total liabilities

Equity (deficiency)

Share capital

Contributed surplus

Deficit

Accumulated other comprehensive income

Total equity (deficiency)

For the three months ended

For the year ended

January 30, 

2016

January 31, 

2015

January 30, 2016

January 31, 2015

$

$

$

$

Sales

Cost of sales

Gross profit

Selling, general and administration expenses

Results from operating activities

Finance costs

Finance income

Accretion of preferred shares

 —

Loss from embedded derivative on Series A, A-1 and A-2 preferred shares

 —

IPO-related costs

 —

 —

Settlement cost related to former option holder

 —

 —

 —

Income (loss) before income taxes

Provision for income tax (recovery)

Net income (loss)

Other comprehensive income

Items to be reclassified subsequently to income:

Unrealized gain on forward exchange contracts

 —

 —

Realized net gain on forward exchange contracts reclassified to inventory

 —

 —

Provision for income tax on comprehensive income

 —

 —

Provision for income tax recovery on comprehensive income

 —

 —

Cumulative translation adjustment

Other comprehensive income, net of tax

Total comprehensive income (loss)

Net Income (loss) per share:

Basic

Fully diluted

Weighted average number of shares outstanding

— basic

— fully diluted

For the three months ended

For the year ended

January 30,

 2016

January 31, 

2015

January 30,

 2016

January 31,

 2015

$

$

$

$

OPERATING ACTIVITIES

Net income (loss)

Items not affecting cash:

Depreciation of property and equipment

Amortization of intangible assets

Loss on disposal of property and equipment

Impairment of property and equipment

 —

 —

Deferred rent

Provision (recovery) for onerous contracts

 —

Stock-based compensation expense

Settlement related to cashless exercise of stock options, net of income taxes recovered

 —

 —

Settlement cost related to former option holder

 —

 —

 —

Amortization of financing fees

Accretion of preferred shares

 —

Loss from embedded derivative on Series A, A-1 and A-2 preferred shares

 —

Deferred income taxes (recovered)

Net change in other non-cash working capital balances related to operations

Cash flows related to operating activities

FINANCING ACTIVITIES

Repayment of finance lease obligations

 —

Proceeds from issuance of long-term debt

 —

 —

 —

Repayment of long-term debt

 —

Repayment of loan from the controlling shareholder

 —

 —

 —

Proceeds from issuance of common shares pursuant to exercise of stock options

 —

Proceeds from issuance of Series A-1 and A-2 preferred shares

 —

 —

Gross proceeds of initial public offering

 —

 —

 —

Issuance costs paid on initial public offering

 —

 —

Financing fees

Cash flows related to financing activities

INVESTING ACTIVITIES

Additions to property and equipment

Additions to intangible assets

Cash flows related to investing activities

Increase in cash during the period

Cash, beginning of period

Cash, end of period

For the three months ended

For the year ended

(in thousands)

January 30, 

2016

January 31, 

2015

January 30, 2016

January 31, 2015

Net income (loss)

$

$

$

$

Finance costs

Finance income

Depreciation and amortization

Loss on disposal of property and equipment

Provision for income tax (recovery)

EBITDA

$

$

$

$

Additional adjustments :

Stock-based compensation expense (a)

Settlement related to cashless exercise of employee stock options (b)

 —

 —

 —

Impairment of property and equipment (c)

 —

 —

Provision (recovery) for onerous contracts (d)

 —

Deferred rent (e)

Loss on disposal of property and equipment (f)

 —

 —

 —

Accretion of preferred shares (g)

 —

Loss from embedded derivative on Series A, A-1 and A-2 preferred shares (h)

 —

IPO-related costs (i)

 —

 —

Settlement costs related to former option holder (j)

 —

 —

 —

Adjusted EBITDA

$

$

$

$

(a)

Represents non-cash stock-based compensation expense.

(b)

Represents settlement related to cashless exercise of employee stock options.

(c)

Represents costs related to impairment of property, equipment and intangible assets for stores in the United States.

(d)

Represents provision and non-cash recovery related to certain stores where the unavoidable costs of meeting the obligations under the lease agreements are expected to exceed the economic benefits expected to be received from the contract.

(e)

Represents the extent to which our annual rent expense has been above or below our cash rent.

(f)

Represents non-cash costs related to closure of one store due to termination of sub-lease.

(g)

Represents non-cash accretion expense on our preferred shares. In connection with the completion of our initial public offering on June 10, 2015, all of our outstanding preferred shares were converted automatically into common shares.

(h)

Represents non-cash market loss for the conversion feature of the Series A, A-1 and A-2 preferred shares. In connection with our initial public offering, this liability was converted into equity.

(i)

Represents fees and expenses incurred in connection with our initial public offering.

(j)

Represents costs incurred to settle a dispute with a former option holder.

For the three months ended

For the year ended

January 30, 

2016

January 31, 

2015

January 30, 

2016

January 31, 

2015

Net income (loss)

Settlement related to cashless exercise of employee stock options (a)

 —

 —

 —

Finance costs related to preferred shares (b)

 —

Impairment of property and equipment (c)

 —

 —

Provision for onerous contracts (d)

 —

 —

Loss on disposal of property and equipment (e)

 —

 —

 —

Accretion of preferred shares (f)

 —

Loss from embedded derivative on Series A, A-1 and A-2 preferred shares (g)

 —

IPO-related costs (h)

 —

 —

Settlement costs related to former option holder (i)

 —

 —

 —

Recognition of previously unrecognized U.S. tax losses (j)

 —

 —

Income tax expense adjustment (k)

Adjusted net income

(a)

Represents settlement related to cashless exercise of employee stock options.

(b)

Represents finance fees related to the preferred shares. Upon the completion of the initial public offering, we converted the liability associated with these preferred shares into equity.

(c)

Represents costs related to impairment of property, equipment and intangible assets for stores in the United States.

(d)

Represents provision related to certain stores where the unavoidable costs of meeting the obligations under the lease agreements are expected to exceed the economic benefits expected to be received from the contract.

(e)

Represents non-cash costs related to closure of one store due to termination of sub-lease.

(f)

Represents non-cash accretion expense on our preferred shares. In connection with the completion of our initial public offering on June 10, 2015, all of our outstanding preferred shares were converted automatically into common shares.

(g)

Represents non-cash market loss for the conversion feature of the Series A, A-1 and A-2 preferred shares. In connection with our initial public offering, this liability was converted into equity.

(h)

Represents fees and expenses incurred in connection with the initial public offering.

(i)

Represents costs incurred to settle a dispute with a former option holder.

(j)

Represents income tax recovery on recognition of U.S. tax loss carryovers.

(k)

Removes the income tax impact of the stock-based compensation expense for cashless exercise, impairment of property and equipment, provision for onerous contracts, loss on disposal of property and equipment, IPO-related costs and settlement costs related to former option holder, referenced in notes (a), (c), (d), (e), (h) and (i).

For the three months ended

For the year ended

January 30, 

2016

January 31, 

2015

January 30, 

2016

January 31, 

2015

Weighted average number of shares outstanding, fully diluted

Adjustments:

Adjustment for conversion of preferred shares Series A, A-1 and A-2 (a)

—

Initial public company share issuance (b)

—

Adjustment for anti-dilution (c)

 —

 —

 —

Adjusted weighted average number of shares outstanding, fully diluted

Net income (loss) per share, fully diluted

Adjusted net income per share, fully diluted

(a)

Reflects the impact of the conversion of Series A, A-1 and A-2 preferred shares into common shares, as if they had been available the entire period.

(b)

Reflects the number of common shares issued in the initial public offering, as if they had been available the entire period.

(c)

Reflects the diluted impact of stock options, utilizing the treasury method, and restricted stock units.