Le Château Reports First Quarter Results

MONTREAL, June 7, 2013 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A), a leading Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories and footwear for style-conscious women and men, today reported its results for the first quarter ended April 27, 2013.

Sales for the first quarter ended April 27, 2013 amounted to $56.9 million, a decrease of 1.5% from $57.8 million for the first quarter ended April 28, 2012. Comparable store sales decreased 0.7% for the first quarter versus the same period a year ago. Included in comparable store sales are online sales which increased 185% for the first quarter. While the contribution from online sales remains a small percentage of overall sales, the e-commerce business continues to gain traction and is expanding customer reach.

The positive trend observed in the second half of 2012 continued into the first quarter of 2013, and to date, with an increasing number of regular stores reporting positive comparable sales over last year. This reflects product assortment improvements, some regional strengths, the performance of new concept stores and momentum of top-tier performing stores.

Loss before interest, income taxes, depreciation and amortization for the first quarter amounted to $4.8 million, compared to loss before interest, income taxes, depreciation and amortization of $3.2 million last year. Net loss for the first quarter amounted to $8.2 million or $(0.30) per share (diluted) compared to a net loss of $6.5 million or $(0.26) per share (diluted) the previous year. Earnings for the first quarter were negatively impacted by increased promotional activity and an increase of $454,000 in write-off and impairment of property and equipment.

During the first quarter of 2013, the Company opened one new store and closed one. Total square footage for the Le Château network at the end of the first quarter ended April 27, 2013 amounted to 1,280,000 square feet.

During the three month period ended April 27, 2013, the repayment terms of the $5.0 million outstanding loan from a company that is controlled by a director of the Company were modified to provide for an obligation to repay the principal in full at maturity in January 2016 instead of monthly principal repayments commencing in February 2013.

Second Quarter of Fiscal 2013
For the first five weeks ended June 1, 2013, total retail sales increased 4.9% and comparable store sales increased 5.1% compared to the same period last year.

Profile
Le Château is a leading Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories and footwear for style-conscious women and men. The Le Château brand is sold exclusively through the Company's 235 retail locations, of which 234 are located in Canada. The Company's retail locations are primarily found in major urban shopping malls, as well as street-front locations with high pedestrian traffic. In addition, the Company has 5 stores under license in the Middle East and Asia. Le Château's web-based marketing is further broadening the Company's customer base among internet shoppers in both Canada and the United States. With its 53-year tradition of vertical integration, emphasizing a design and manufacturing approach to retailing, Le Château is unique among Canadian fashion merchants. 

Non-GAAP Measures
In addition to discussing earnings measures in accordance with IFRS, this press release provides earnings before interest, income taxes, depreciation and amortization ("EBITDA") as a supplementary earnings measure. Depreciation and amortization includes the write-off and impairment of property and equipment. EBITDA is provided to assist readers in determining the ability of the Company to generate cash from operations and to cover financial charges. It is also widely used for valuation purposes for public companies in our industry.

The Company also discloses comparable store sales which are defined as sales generated by stores that have been open for at least one year.

The above measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Forward-Looking Statements
This news release may contain forward-looking statements relating to the Company and/or the environment in which it operates that are based on the Company's expectations, estimates and forecasts. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond the Company's control. A number of factors may cause actual outcomes and results to differ materially from those expressed. These factors include those set forth in other public filings of the Company. Therefore, readers should not place undue reliance on these forward-looking statements. In addition, these forward-looking statements speak only as of the date made and the Company disavows any intention or obligation to update or revise any such statements as a result of any event, circumstance or otherwise except to the extent required under applicable securities law.

Factors which could cause actual results or events to differ materially from current expectations include, among other things: the ability of the Company to successfully implement its business initiatives and whether such business initiatives will yield the expected benefits; competitive conditions in the businesses in which the Company participates; changes in consumer spending; general economic conditions and normal business uncertainty; seasonal weather patterns; fluctuations in foreign currency exchange rates; changes in the Company's relationship with its suppliers; interest rate fluctuations; and changes in laws, rules and regulations applicable to the Company.

The Company's unaudited interim condensed financial statements and Management's Discussion and Analysis for the first quarter ended April 27, 2013 are available online at www.sedar.com

CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands of Canadian dollars)	As at April 27, 2013		As at April 28, 2012		As at January 26, 2013
ASSETS Current assets
Cash	$	2,855	$	4,919	$	1,783
Accounts receivable		1,936		1,595		1,906
Income taxes refundable		6,216		4,248		3,211
Derivative financial instruments		-		-		215
Inventories		131,365		127,448		123,218
Prepaid expenses		2,424		2,030		1,890
Total current assets		144,796		140,240		132,223
Property and equipment		81,141		94,002		83,315
Intangible assets		4,481		5,286		4,672
Deferred income taxes		-		110		-
	$	230,418	$	239,638	$	220,210
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities
Bank indebtedness	$	35,366	$	19,800	$	13,034
Trade and other payables		20,076		19,760		20,718
Deferred revenue		3,141		3,437		3,558
Current portion of provisions		229		109		228
Derivative financial instruments		3		393		-
Current portion of long-term debt		8,054		14,910		9,844
Total current liabilities		66,869		58,409		47,382
Long-term debt		13,783		26,098		14,290
Provisions		475		108		530
Deferred income taxes		2,237		2,917		2,298
Deferred lease credits		15,480		15,862		15,912
Total liabilities		98,844		103,394		80,412
Shareholders' equity
Share capital		42,740		37,729		42,740
Contributed surplus		2,784		2,374		2,664
Retained earnings		86,052		96,424		94,239
Accumulated other comprehensive income (loss)		(2)		(283)		155
Total shareholders' equity		131,574		136,244		139,798
	$	230,418	$	239,638	$	220,210

CONSOLIDATED STATEMENTS OF LOSS
(Unaudited)				For the three months ended
(In thousands of Canadian dollars, except per share information)				April 27, 2013		April 28, 2012
Sales			$	56,882	$	57,777
Cost of sales and expenses
Cost of sales				19,680		18,018
Selling				38,604		38,483
General and administrative				9,028		9,660
				67,312		66,161
Results from operating activities				(10,430)		(8,384)
Finance costs				690		689
Finance income				(3)		(1)
Loss before income taxes				(11,117)		(9,072)
Income tax recovery				(2,930)		(2,540)
Net loss			$	(8,187)	$	(6,532)
Net loss per share
	Basic		$	(0.30)	$	(0.26)
	Diluted			(0.30)		(0.26)
Weighted average number of shares outstanding ('000)				27,243		24,789

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)			For the three months ended
(In thousands of Canadian dollars)			April 27, 2013		April 28, 2012
Net loss		$	(8,187)	$	(6,532)
Other comprehensive loss
Change in fair value of forward exchange contracts			(3)		(393)
Income tax recovery			1		110
			(2)		(283)
Realized forward exchange contracts reclassified to net loss			(215)		(129)
Income tax recovery			60		37
			(155)		(92)
Total other comprehensive loss			(157)		(375)
Comprehensive loss		$	(8,344)	$	(6,907)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)		For the three months ended
(In thousands of Canadian dollars)		April 27, 2013		April 28, 2012
SHARE CAPITAL		$	42,740	$	37,729
CONTRIBUTED SURPLUS
Balance, beginning of period		$	2,664	$	2,328
Stock-based compensation expense			120		46
Balance, end of period		$	2,784	$	2,374
RETAINED EARNINGS
Balance, beginning of period		$	94,239	$	102,956
Net loss			(8,187)		(6,532)
Balance, end of period		$	86,052	$	96,424
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance, beginning of period		$	155	$	92
Other comprehensive loss for the period			(157)		(375)
Balance, end of period		$	(2)	$	(283)
Total shareholders' equity		$	131,574	$	136,244

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)				For the three months ended
(In thousands of Canadian dollars)				April 27, 2013		April 28, 2012
OPERATING ACTIVITIES
Net loss			$	(8,187)	$	(6,532)
Adjustments to determine net cash from operating activities
	Depreciation and amortization			4,772		4,950
	Write-off and impairment of property and equipment			841		229
	Amortization of deferred lease credits			(432)		(266)
	Deferred lease credits			-		19
	Stock-based compensation expense			120		46
	Provisions			(54)		(203)
	Finance costs			690		689
	Finance income			(3)		(1)
	Interest paid			(570)		(689)
	Interest received			3		7
	Income tax recovery			(2,930)		(2,540)
				(5,750)		(4,291)
Net change in non-cash working capital items related to operations				(9,965)		(10,448)
				(15,715)		(14,739)
Income taxes refunded				-		504
Cash flows related to operating activities				(15,715)		(14,235)
FINANCING ACTIVITIES
Repayment of long-term debt				(2,297)		(4,460)
Cash flows related to financing activities				(2,297)		(4.460)
INVESTING ACTIVITIES
Additions to property and equipment and intangible assets				(3,248)		(3,379)
Cash flows related to investing activities				(3,248)		(3,379)
Decrease in cash, net of bank indebtedness				(21,260)		(22,074)
Cash, net of bank indebtedness, beginning of period				(11,251)		7,193
Cash, net of bank indebtedness, end of period			$	(32,511)	$	(14,881)

 

 

SOURCE: Le Château Inc.

Emilia Di Raddo, CPA, CA, President [phone]
Johnny Del Ciancio, CPA, CA, Vice-President, Finance, [phone]
MaisonBrison:  Pierre Boucher, [phone]