Le Château reports fourth quarter and year-end results

MONTREAL, April 12, 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 fourth quarter ended January 26, 2013.

Sales for the fourth quarter ended January 26, 2013 amounted to $80.8 million, a decrease of 2.1% from $82.5 million for the fourth quarter ended January 28, 2012. Comparable store sales decreased 0.6% for the fourth quarter versus the same period a year ago. Included in comparable store sales are online sales which increased 210% for the fourth 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.

A positive trend was observed in the second of half of 2012 as an increasing number of regular stores presented 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.

Net earnings for the fourth quarter amounted to $158,000 or $0.01 per share (diluted) compared to net earnings of $1.1 million or $0.05 per share the previous year. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the fourth quarter amounted to $7.1 million or 8.8% of sales, compared to $8.8 million or 10.6% of sales last year. The decrease of $1.7 million in EBITDA for the fourth quarter was primarily attributable to the decrease of $6.8 million in gross margin offset by cost reduction initiatives in selling, general and administrative expenses of $5.1 million.

Year-end Results
Net loss for the year ended January 26, 2013 amounted to $8.7 million or $(0.34) per share (diluted) compared to a net loss of $2.4 million or $(0.10) per share the previous year. EBITDA for the year amounted to $12.7 million or 4.6% of sales, compared to $20.2 million or 6.7% of sales last year. The decrease of $7.5 million in EBITDA for the year was primarily attributable to the decrease of $24.3 million in gross margin offset by cost reduction initiatives in selling, general and administrative expenses of $16.8 million.

Sales for the year ended January 26, 2013 decreased 9.2% to $274.8 million from $302.7 million last year. Comparable store sales decreased 9.1% versus the same period a year ago.

During the year, the Company opened two new stores and, as planned, closed ten stores. Total square footage for the Le Château network at the end of the fourth quarter ended January 26, 2013 amounted to 1,282,000 square feet.

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 11 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 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 consolidated financial statements and Management's Discussion and Analysis for the year ended January 26, 2013 will be available online at www.sedar.com

CONSOLIDATED BALANCE SHEETS
(Unaudited) (In thousands of Canadian dollars)		As at January 26, 2013			As at January 28, 2012
ASSETS
Current assets
Cash and cash equivalents	$	1,783		$	7,193
Accounts receivable		1,906			2,358
Income taxes refundable		3,211			2,137
Derivative financial instruments		215			129
Inventories		123,218			119,325
Prepaid expenses		1,890			1,564
Total current assets		132,223			132,706
Property and equipment		83,315			95,744
Intangible assets		4,672			5,344
	$	220,210		$	233,794
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness	$	13,034		$	-
Trade and other payables		20,718			21,820
Deferred revenue		3,558			3,918
Current portion of provisions		228			300
Current portion of long-term debt		9,844			16,323
Total current liabilities		47,382			42,361
Long-term debt		14,290			29,145
Provisions		530			120
Deferred income taxes		2,298			2,954
Deferred lease credits		15,912			16,109
Total liabilities		80,412			90,689
Shareholders' equity
Share capital		42,740			37,729
Contributed surplus		2,664			2,328
Retained earnings		94,239			102,956
Accumulated other comprehensive income		155			92
Total shareholders' equity		139,798			143,105
	$	220,210		$	233,794

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)	For the three months ended				For the year ended
(In thousands of Canadian dollars, except per share information)	January 26, 2013		January 28, 2012		January 26, 2013		January 28, 2012
Sales	$	80,800	$	82,526	$	274,827	$	302,707
Cost of sales and expenses
Cost of sales		30,733		25,681		92,565		96,145
Selling		40,540		44,169		155,561		168,035
General and administrative		8,457		10,165		35,847		39,752
		79,730		80,015		283,973		303,932
Results from operating activities		1,070		2,511		(9,146)		(1,225)
Finance costs		672		532		3,063		1,974
Finance income		(11)		(7)		(23)		(217)
Earnings (loss) before income taxes		409		1,986		(12,186)		(2,982)
Income tax expense (recovery)		251		844		(3,469)		(596)
Net earnings (loss)	$	158	$	1,142	$	(8,717)	$	(2,386)
Net earnings (loss) per share
Basic	$	0.01	$	0.05	$	(0.34)	$	(0.10)
Diluted		0.01		0.05		(0.34)		(0.10)
Weighted average number of shares outstanding ('000)		27,243		24,789		25,659		24,789
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)	For the three months ended				For the year ended
(In thousands of Canadian dollars)	January 26, 2013		January 28, 2012		January 26, 2013		January 28, 2012
Net earnings (loss)	$	158	$	1,142	$	(8,717)	$	(2,386)
Other comprehensive income (loss)
Change in fair value of forward exchange contracts		133		(17)		223		(949)
Income tax (expense) recovery		(37)		5		(62)		275
		96		(12)		161		(674)
Realized forward exchange contracts reclassified to net earnings (loss)		(106)		(298)		(137)		1,196
Income tax (expense) recovery		30		86		39		(347)
		(76)		(212)		(98)		849
Total other comprehensive income (loss)		20		(224)		63		175
Comprehensive income (loss)	$	178	$	918	$	(8,654)	$	(2,211)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)		For the three months ended				For the year ended
(In thousands of Canadian dollars)		January 26, 2013		January 28, 2012		January 26, 2013		January 28, 2012
SHARE CAPITAL		$	42,740	$	37,729	$	37,729	$	37,729
Balance, beginning of period
Issuance of subordinate voting shares upon conversion of long-term debt			-		-		5,011		-
Balance, end of period		$	42,740	$	37,729	$	42,740	$	37,729
CONTRIBUTED SURPLUS
Balance, beginning of period		$	2,544	$	2,287	$	2,328	$	2,006
Stock-based compensation expense			120		41		336		322
Balance, end of period		$	2,664	$	2,328	$	2,664	$	2,328
RETAINED EARNINGS
Balance, beginning of period		$	94,081	$	101,814	$	102,956	$	116,001
Net earnings (loss)			158		1,142		(8,717)		(2,386)
Dividends declared			-		-		-		(10,659)
Balance, end of period		$	94,239	$	102,956	$	94,239	$	102,956
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance, beginning of period		$	135	$	316	$	92	$	(83)
Other comprehensive income (loss) for the period			20		(224)		63		175
Balance, end of period		$	155	$	92	$	155	$	92
Total shareholders' equity		$	139,798	$	143,105	$	139,798	$	143,105
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)		For the three months ended				For the year ended
(In thousands of Canadian dollars)		January 26, 2013		January 28, 2012		January 26, 2013		January 28, 2012
OPERATING ACTIVITIES
Net earnings (loss)		$	158	$	1,142	$	(8,717)	$	(2,386)
Adjustments to determine net cash from operating activities
	Depreciation and amortization		4,806		4,959		19,574		19,364
	Write-off and impairment of property and equipment		1,157		1,311		2,142		2,033
	Loss on disposal of property and equipment		108		-		108		-
	Amortization of deferred lease credits		(371)		(272)		(1,285)		(1,127)
	Deferred lease credits		106		774		1,088		1,300
	Stock-based compensation		120		41		336		322
	Provisions		271		(357)		338		(1,054)
	Finance costs		672		532		3,063		1,974
	Finance income		(11)		(7)		(23)		(217)
	Interest paid		(610)		(538)		(2,863)		(1,998)
	Interest received		11		1		28		513
	Income tax expense (recovery)		251		844		(3,469)		(596)
			6,668		8,430		10,320		18,128
Net change in non-cash working capital items related to operations			12,046		(5,796)		(5,774)		(31,976)
			18,714		2,634		4,546		(13,848)
Income taxes refunded			438		3,705		2,056		2,544
Cash flows related to operating activities			19,152		6,339		6,602		(11,304)
FINANCING ACTIVITIES
Proceeds of long-term debt			-		17,522		-		27,546
Repayment of long-term debt			(3,400)		(5,044)		(16,323)		(18,258)
Dividends paid			-		(1,983)		-		(14,997)
Cash flows related to financing activities			(3,400)		10,495		(16,323)		(5,709)
INVESTING ACTIVITIES
Decrease in short-term investments			-		-		-		30,300
Additions to property and equipment and intangible assets			(972)		(4,428)		(9,237)		(23,755)
Proceeds from disposal of property and equipment			514		-		514		-
Cash flows related to investing activities			(458)		(4,428)		(8,723)		6,545
Increase (decrease) in cash and cash equivalents, net of bank indebtedness			15,294		12,406		(18,444)		(10,468)
Cash and cash equivalents, net of bank indebtedness, beginning of period			(26,545)		(5,213)		7,193		17,661
Cash and cash equivalents, net of bank indebtedness, end of period		$	(11,251)	$	7,193	$	(11,251)	$	7,193

 

 

 

 

 

 

SOURCE: LE CHATEAU INC.

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