MONTREAL, June 9 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the first quarter ended May 1, 2010 decreased 1.2% to $70.9 million from $71.8 million for the first quarter ended May 2, 2009. Comparable store sales decreased by 4.9% versus the same period a year ago.
Net earnings for the first quarter ended May 1, 2010 were $4.5 million compared to $5.1 million for the first quarter ended May 2, 2009. Earnings per share (diluted) for the first quarter were $0.18 per share versus $0.21 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first quarter amounted to $11.0 million or 15.5% of sales, compared to $12.0 million or 16.7% of sales last year.
During the first quarter, the Company opened one store, closed one and expanded nine existing locations, resulting in the addition of 23,000 square feet or 2.0% to the Le Château network, bringing the total floor space at end of period to 1,169,000 square feet.
Dividend declaration
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The Board of Directors has declared a quarterly dividend (constituting eligible dividends for income tax purposes) of $0.175 per Class A subordinate voting share and Class B voting share. This is the 67th consecutive dividend declared by Le Château, and is payable on August 17, 2010 to the shareholders of record at the close of business on July 30, 2010.
Normal course issuer bid
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The Company announced today that it intends, subject to the approval of the Toronto Stock Exchange, to proceed with a normal course issuer bid. Under the bid, the Company may purchase up to 5% of the issued and outstanding Class A subordinate voting shares of the Company. If approved by the TSX, the bid will commence on June 19, 2010 and may continue to June 18, 2011.
The directors of the Company have concluded that purchases of up to 5% of the issued and outstanding Class A subordinate voting shares, in the appropriate circumstances, would be a desirable use of the Company's available funds and, therefore, would be in the best interests of the shareholders. As a result of such purchases, the number of issued shares would be decreased and, consequently, the proportionate share interest of all remaining shareholders would be increased on a pro rata basis.
Annual General Meeting
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The Company's annual general meeting is scheduled for June 16, 2010 at its head office located at 8300 Décarie Boulevard. The record date for this meeting was May 12, 2010.
Profile
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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 synonymous with ageless fashion at accessible prices and is sold exclusively through the Company's 231 retail locations, of which 228 are located in Canada and 3 in the New York City area. The Company's stores are primarily found in major urban shopping malls, complemented with high pedestrian-traffic, street-front locations. In addition, the Company has 9 stores under license in the Middle East.
The Company's 50-year tradition of vertical integration, a design and manufacturing approach to retailing, makes it unique among Canadian fashion merchants.
Non-GAAP Measures
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In addition to discussing earnings measures in accordance with Canadian generally accepted accounting principles ("GAAP"), this press release provides earnings before interest, income taxes, depreciation and amortization ("EBITDA") as a supplementary earnings measure. Depreciation and amortization include the write-off of fixed assets. 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 opened for at least one year.
The above measures do not have a standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies.
Forward-Looking Statements
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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; customer preferences towards product offerings; seasonal weather patterns; fluctuations in foreign currency exchange rates; changes in the Company's relationship with its suppliers; interest rate fluctuations and other changes in borrowing costs; and changes in laws, rules and regulations applicable to the Company.
The Company's financial statements and Management's Discussion and Analysis for the first quarter ended May 1, 2010 are available online at www.sedar.com
CONSOLIDATED BALANCE SHEETS
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As at As at As at
(Unaudited) May 1, May 2, January 30,
(In thousands of dollars) 2010 2009 2010
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ASSETS
Current
Cash and cash equivalents $ 8,163 $ 20,158 $ 23,411
Short-term investments 46,000 20,000 45,000
Accounts receivable 2,811 3,616 2,454
Income taxes refundable 2,484 1,371 1,602
Derivative financial instruments 158 - 59
Inventories 71,453 57,590 61,234
Future income taxes - 149 -
Prepaid expenses 7,752 6,950 1,308
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Total current assets 138,821 109,834 135,068
Long-term investments - 10,000 10,000
Fixed assets 92,580 87,659 88,437
Intangible assets 2,724 2,255 2,527
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$ 234,125 $ 209,748 $ 236,032
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities $ 27,467 $ 24,457 $ 27,151
Dividend payable 4,310 4,239 4,293
Derivative financial instruments - 470 -
Current portion of capital lease
obligations - 677 -
Current portion of long-term debt 11,938 7,885 11,752
Future income taxes 47 - 19
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Total current liabilities 43,762 37,728 43,215
Long-term debt 18,009 17,267 21,464
Future income taxes 3,910 3,176 3,910
Deferred lease inducements 10,056 9,513 10,222
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Total liabilities 75,737 67,684 78,811
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Shareholders' equity
Capital stock 35,329 30,997 34,335
Contributed surplus 2,087 2,643 2,159
Retained earnings 120,861 108,745 120,687
Accumulated other comprehensive
income (loss) 111 (321) 40
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Total shareholders' equity 158,388 142,064 157,221
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$ 234,125 $ 209,748 $ 236,032
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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For the
three months ended
(Unaudited) May 1, May 2,
(In thousands of dollars) 2010 2009
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Balance, beginning of period $ 120,687 $ 107,914
Net earnings 4,484 5,070
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125,171 112,984
Dividends declared 4,310 4,239
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Balance, end of period $ 120,861 $ 108,745
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CONSOLIDATED STATEMENTS OF EARNINGS
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For the
(Unaudited) three months ended
(In thousands of dollars, except per May 1, May 2,
share data) 2010 2009
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Sales $ 70,896 $ 71,775
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Cost of sales and expenses
Cost of sales and selling, general and
administrative 59,920 59,798
Depreciation and amortization 4,214 4,303
Interest on long-term debt and capital lease
obligations 446 377
Interest income (163) (273)
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64,417 64,205
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Earnings before income taxes 6,479 7,570
Provision for income taxes 1,995 2,500
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Net earnings $ 4,484 $ 5,070
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Net earnings per share
Basic $ 0.18 $ 0.21
Diluted 0.18 0.21
Weighted average number of shares
outstanding ('000) 24,551 24,223
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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For the
three months ended
(Unaudited) May 1, May 2,
(In thousands of dollars) 2010 2009
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Net earnings $ 4,484 $ 5,070
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Other comprehensive income
Change in fair value of forward exchange
contracts 158 (551)
Realized forward exchange contracts reclassified
to net earnings (59) (1,449)
Income tax (expense) recovery (28) 636
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71 (1,364)
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Comprehensive income $ 4,555 $ 3,706
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the
three months ended
(Unaudited) May 1, May 2,
(In thousands of dollars) 2010 2009
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OPERATING ACTIVITIES
Net earnings $ 4,484 $ 5,070
Adjustments to determine net cash from
operating activities
Depreciation and amortization 4,214 4,303
Amortization of deferred lease inducements (402) (356)
Stock-based compensation 132 183
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8,428 9,200
Net change in non-cash working capital items
related to operations (17,586) (13,177)
Deferred lease inducements 236 178
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Cash flows related to operating activities (8,922) (3,799)
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FINANCING ACTIVITIES
Repayment of capital lease obligations - (331)
Repayment of long-term debt (3,269) (2,576)
Issue of capital stock upon exercise of options 790 -
Dividends paid (4,293) (4,239)
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Cash flows related to financing activities (6,772) (7,146)
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INVESTING ACTIVITIES
Decrease (increase) in short-term investments (1,000) 36,643
Decrease (increase) in long-term investments 10,000 (10,000)
Additions to fixed assets and intangible assets (8,554) (5,574)
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Cash flows related to investing activities 446 21,069
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Increase (decrease) in cash and cash equivalents (15,248) 10,124
Cash and cash equivalents, beginning of period 23,411 10,034
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Cash and cash equivalents, end of period $ 8,163 $ 20,158
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Supplementary information:
Interest paid during the period $ 446 $ 377
Income taxes paid during the period 2,730 6,096
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SEGMENTED INFORMATION
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For the
three months ended
(Unaudited) May 1, May 2,
(In thousands of dollars) 2010 2009
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Sales by country
Canada $ 69,954 $ 70,338
United States 942 1,437
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$ 70,896 $ 71,775
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Sales by division
Ladies' Clothing $ 43,335 $ 41,703
Men's Clothing 10,307 11,144
Footwear 7,310 7,661
Accessories 9,944 11,267
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$ 70,896 $ 71,775
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Net earnings (loss)
Canada $ 4,909 $ 5,308
United States (425) (238)
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$ 4,484 $ 5,070
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Fixed assets and intangible assets
Canada $ 94,670 $ 89,000
United States 634 914
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$ 95,304 $ 89,914
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For further information: Emilia Di Raddo, CA, President, (514) 738-7000; Johnny Del Ciancio, CA, Vice-President, Finance, (514) 738-7000; Maison Brison: Pierre Boucher, (514) 731-0000; Source: Le Château Inc.
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