Toronto Stock Exchange Symbol: WXX
- Company's financial results on par with the first quarter a year ago -
BURLINGTON, ON, June 10 /CNW/ - West 49 Inc. (TSX: WXX) (the "Company"), Canada's leading action sport retailer, today reported its financial results for its first quarter ended May 1, 2010. All comparisons are to the first quarter of fiscal 2010, ended May 2, 2009.
First quarter highlights:
- Net sales increased 0.2% to $40.9 million;
- Selling, general and administrative ("SG&A") expense reductions
offset gross margin decreases;
- EBITDA loss improved slightly to $2.1 million from $2.2 million for
the first quarter of last year; and
- The Company opened three new stores, relocated and expanded a store
and closed a store during the quarter.
"While we had slight improvements in a few areas, our financial results were essentially flat to the first quarter of last year," said Sam Baio, Chief Executive Officer of West 49 Inc. "We did, however, continue to gain efficiencies in our operations and offer unique marketing promotions, which continue to set us apart from other tween and teen retailers."
Financial Results
(Amounts in thousands of Canadian $
except per share amounts and weighted averages)
First Quarter Ended
May 1, 2010 May 2, 2009
Net sales 40,873 40,828
Gross margin 7,342 7,416
EBITDA(1) (2,054) (2,208)
Net income (loss) (2,643) (2,617)
Basic income (loss) per share ($0.04) ($0.04)
Weighted average common shares outstanding 63,803,519 63,803,519
Net sales for the quarter increased $0.1 million, or 0.2%, to $40.9 million. Consolidated comparable store sales decreased 2.6%, with the core West 49 banner experiencing a decrease of 3.0%, compared to last year, with comparable store sales growth of 2.9% on a consolidated basis and growth of 7.7% for the West 49 banner. Sales results were particularly challenged in Alberta and British Columbia largely due to weather and the economy.
Gross margin decreased $0.1 million, to $7.3 million. As a rate to net sales, gross margin decreased by 30 basis points to 17.8% as a result of continued pressure in a competitive retail landscape. SG&A expenses decreased $0.2 million to $9.4 million, or 23.0% of net sales.
EBITDA for the quarter was a loss of $2.1 million, slightly improved from the loss of $2.2 million for the first quarter a year ago. The Company had a net loss for the quarter of $2.6 million, or $0.04 per share, unchanged from the prior year.
Store Real Estate Activity
During the quarter, the Company opened a West 49 store at Shoppers' Mall, in Brandon, Manitoba, and two West 49 Outlets: one at Signal Hill Shopping Centre, in Calgary, Alberta and one at Riocan Durham Centre in Ajax, Ontario. The Company also relocated and expanded a D-Tox store in Carrefour Angrignon, Montreal, Quebec. An Off The Wall store was closed in Coquitlam, British Columbia as a result of a lease expiry in an underperforming location.
Outlook
"Our outlook remains cautiously optimistic." said Mr. Baio. "We continue to operate in a retail environment where overall consumer confidence has yet to be restored. Until then, we will remain focused on our unique marketing programs and offering our customers exceptional value. We also remain committed to real estate growth opportunities, mainly in our core West 49 banner, and have plans to open up to four more stores and relocate and expand as many as five more stores this year."
Notice of Conference Call
The Company will host a conference call on Thursday, June 10, 2010 at 9:00 a.m. (ET) to discuss its fiscal 2011 first quarter results. To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. The conference call will be archived for replay until Wednesday, June 17, 2010 at midnight. To access the archived conference call, dial 416-849-0833 or 1-800-642-1687 and enter the reservation number 79269749 followed by the number sign.
A live audio webcast of the Company's first quarter results conference call will be available at http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=3102000. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that maybe required to join the webcast. The webcast will be archived at the above web site for 90 days.
About West 49 Inc.
West 49 Inc. is a leading Canadian specialty retailer of apparel, footwear, accessories and equipment related to the youth action sports lifestyle. The Company's stores, which are primarily mall-based, carry a variety of high-performance, premium brand name and private label products that fulfill the lifestyle needs of identified target markets, primarily tweens and teens. At May 1, 2010, the Company operated 138 stores in nine provinces, under the banners West 49, Billabong, Off The Wall, Amnesia/Arsenic and D-Tox. The Company's common shares are listed on the Toronto Stock Exchange under the symbol WXX. The Company has approximately 64 million shares outstanding.
Follow West 49 Inc. on Twitter at http://twitter.com/West49Inc
Forward-Looking Statements
Information in this news release that is not current or historical factual information may constitute forward-looking information. Implicit in this information, particularly in respect of future operating results and economic performance of the Company are assumptions regarding projected revenue, gross margin and expenses. The assumptions, although considered reasonable by the Company at the time of preparation, may prove to be incorrect. Investors are cautioned that forward-looking information involves known and unknown risks, uncertainties and numerous other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. When used in this news release, such statements can be identified by such words as "may", "will", "expect", "believe", "plan", "anticipate", "intend", "estimate" and other similar terminology and include, but are not limited in any manner to, those with respect to the Company's objectives and strategies, target markets, product margins, growth and timing of sales, timing of cash flows, capital and operating expenditures, timing of geographic expansion and the Company's competitiveness. The following includes some of the risk factors that could cause actual results, performance or achievements to differ materially from those expressed in or implied by any forward-looking statements made by or on behalf of the Company: competition, changes in demographic trends, changes in consumer preferences and discretionary spending patterns, changes in business and economic conditions, human resource matters, legal proceedings, challenges to intellectual property rights, and changes in laws, regulations, and accounting policies and practices. The foregoing list of risk factors is not exhaustive. In formulating the forward-looking information contained herein, management has assumed that business and economic conditions affecting the Company's operations will continue substantially in the ordinary course, including without limitation with respect to industry conditions, general levels of economic activity, laws, regulations, taxes, foreign exchange rates, minimum wage rates and interest rates, weather, that there will be no outbreaks of disease or public safety issues, and that there will be no unplanned material changes in its facilities, equipment, supplies, with respect to relations with customers, suppliers, landlords and employees, or with respect to credit availability, among other things. These assumptions, although considered reasonable by management at the time of preparation, may prove to be incorrect. Accordingly, investors should not place undue reliance on forward-looking information. The Company includes in publicly available documents filed from time to time with securities commissions and the Toronto Stock Exchange, a thorough discussion of the risk factors that can cause anticipated outcomes to differ from actual outcomes. Forward-looking information is provided as of the date of this news release only, it should not be relied upon as of any other date, and the Company assumes no obligation to update or revise this information to reflect new events or circumstances, except as expressly required by law.
(1) EBITDA, which is defined as earnings (loss) before interest, taxes,
dividends, depreciation and amortization, is not a financial measure
recognized by Canadian generally accepted accounting principles
("GAAP") and does not have a standardized meaning prescribed by GAAP.
The Company believes that this Non-GAAP financial measure provides
meaningful information on the Company's performance and operating
results. Readers are cautioned that EBITDA has no standardized
meaning as prescribed by GAAP and may not be comparable to similar
measures presented by other companies. Further, readers are cautioned
that EBITDA should not replace net income or loss or cash flows from
operating, investing and financing activities (as determined in
accordance with GAAP), as an indicator of the Company's performance.
Financial Information
For convenience, this press release includes the Company's Fiscal 2011 First Quarter Unaudited Consolidated Balance Sheets, Statements of Operations and Comprehensive Loss and Statements of Cash Flows.
WEST 49 INC.
CONSOLIDATED BALANCE SHEETS
AS AT
(Unaudited, in thousands of dollars) May 1, January 30,
2010 2010
----------- -----------
Assets
Current
Cash and cash equivalents $ - $ 7,797
Accounts receivable 1,554 891
Income taxes receivable 247 247
Inventories 36,605 35,497
Future income taxes 2,882 1,720
Prepaid expenses 3,985 937
----------- -----------
45,273 47,089
Capital assets 26,558 26,560
Deferred costs 674 475
Due from related parties 182 112
Future income taxes 1,064 1,064
Goodwill 12,580 12,580
Intangible assets 13,829 13,829
----------- -----------
$ 100,160 $ 101,709
----------- -----------
----------- -----------
Liabilities
Current
Bank indebtedness $ 9,039 $ -
Accounts payable and accrued charges 33,200 36,009
Term debt - 5,522
Current portion of deferred lease obligations 1,006 934
Current preferred shares - 18
----------- -----------
43,245 42,483
Deferred lease obligations 8,486 8,159
Preferred shares 5,190 5,190
----------- -----------
56,921 55,832
----------- -----------
----------- -----------
Shareholders' Equity
Share capital 63,371 63,371
Contributed surplus 2,082 2,077
Deficit (22,214) (19,571)
----------- -----------
43,239 45,877
----------- -----------
----------- -----------
$ 100,160 $ 101,709
----------- -----------
----------- -----------
WEST 49 INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE 13 WEEK PERIODS ENDED
(Unaudited, in thousands of dollars except per share amounts)
May 1, May 2,
2010 2009
----------- -----------
Net sales $ 40,873 $ 40,828
Cost of sales 33,531 33,412
----------- -----------
Gross margin 7,342 7,416
Selling, general and administrative expenses 9,396 9,624
----------- -----------
Loss before other expenses (2,054) (2,208)
----------- -----------
Other expenses:
Dividends on preferred shares 55 60
Interest and other financing costs 105 147
Amortization of capital assets 1,591 1,388
Restructuring costs (Note 6) - -
Goodwill and intangible assets impairment
(Notes 9 & 10) - -
----------- -----------
1,751 1,595
----------- -----------
Loss before income taxes (3,805) (3,803)
Income tax recovery (1,162) (1,186)
----------- -----------
loss $ (2,643) $ (2,617)
----------- -----------
----------- -----------
Basic and diluted loss per share $ (0.04) $ (0.04)
----------- -----------
----------- -----------
WEST 49 INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE 13 WEEK PERIODS ENDED
(Unaudited, in thousands of dollars)
May 1, May 2,
2010 2009
----------- -----------
Operating Activities
Net loss $ (2,643) $ (2,617)
Non-cash items included above:
Amortization of capital assets 1,591 1,388
Amortization of deferred costs 133 54
Amortization of deferred lease inducements (245) (244)
Future income taxes (1,162) (1,168)
Impairment or disposition of store assets - 175
Straight-line rent expense (12) 60
Stock based compensation 5 6
----------- -----------
(2,333) (2,346)
Changes in non-cash working capital from
operations (7,621) (5,630)
----------- -----------
Net cash flows used by operating activities (9,954) (7,976)
----------- -----------
Financing Activities
Due from related parties (70) (32)
Increase in deferred costs (332) -
Redemption of preferred shares (18) (15)
Repayment of term debt (5,522) (264)
----------- -----------
Net cash flows from financing activities (5,942) (311)
----------- -----------
Investing Activities
Additions to capital assets (1,503) (751)
Deferred lease inducements 563 66
----------- -----------
Net cash flows from investing activities (940) (685)
----------- -----------
Net change in cash and cash equivalents (16,836) (8,972)
Cash and cash equivalents, beginning of period 7,797 6,788
----------- -----------
Cash and cash equivalents, end of period $ (9,039) $ (2,184)
----------- -----------
----------- -----------
Supplemental Disclosure
Interest paid $ 73 $ 190
Eligible dividends paid on preferred shares 55 69
Income taxes paid - -
For further information: Rhonda Biddix, Chief Financial Officer and Corporate Secretary, West 49 Inc., (905) 336-5454 ext. 224, E-mail: [email protected]; Trevor Heisler, Investor Relations, The Equicom Group Inc., (416) 815-0700 ext. 270, E-mail: [email protected]
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