MONTREAL, Sept. 7, 2012 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the second quarter ended July 28, 2012 amounted to $72.5 million, a decrease of 14.5% from $84.8 million for the second quarter ended July 30, 2011. Comparable store sales decreased 14.4% for the second quarter versus the same period a year ago.
Net earnings for the second quarter amounted to $1.3 million or $0.05 per share (diluted) compared to net earnings of $3.5 million or $0.14 per share the previous year. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the second quarter amounted to $8.5 million or 11.7% of sales, compared to $10.4 million or 12.3% of sales last year.
Six-month Results
Net loss for the six-month period ended July 28, 2012 amounted to $5.3 million or $(0.21) per share (diluted) compared to net earnings of $615,000 or $0.02 per share the previous year. EBITDA for the first six months amounted to $5.3 million or 4.1% of sales, compared to $11.5 million or 7.7% of sales last year.
Sales for the six months ended July 28, 2012 decreased 13.0% to $130.3 million from $149.8 million last year. Comparable store sales decreased 13.8% versus the same period a year ago.
During the first six months of the year, the Company opened one new store and closed eight stores. Total square footage for the Le Château network at the end of the second quarter ended July 28, 2012 amounted to 1,275,000 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 236 retail locations, of which 235 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 10 stores under license in the Middle East. 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 52-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; 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 unaudited interim condensed financial statements and Management's Discussion and Analysis for the second quarter ended July 28, 2012 are available online at www.sedar.com
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) (In thousands of Canadian dollars) |
As at July 28, 2012 |
As at July 30, 2011 |
As at January 28, 2012 |
|||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,569 | $ | 7,305 | $ | 7,193 | ||
| Short-term investments | - | 18,580 | - | |||||
| Accounts receivable | 1,665 | 3,299 | 2,358 | |||||
| Income taxes refundable | 3,114 | 4,878 | 2,137 | |||||
| Derivative financial instruments | 69 | - | 129 | |||||
| Inventories | 127,651 | 103,194 | 119,325 | |||||
| Prepaid expenses | 2,101 | 2,104 | 1,564 | |||||
| Total current assets | 138,169 | 139,360 | 132,706 | |||||
| Property and equipment | 91,888 | 96,436 | 95,744 | |||||
| Intangible assets | 5,418 | 5,629 | 5,344 | |||||
| Deferred income taxes | - | 169 | - | |||||
| $ | 235,475 | $ | 241,594 | $ | 233,794 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current liabilities | ||||||||
| Bank indebtedness | $ | 18,808 | $ | - | $ | - | ||
| Trade and other payables | 19,367 | 28,563 | 21,820 | |||||
| Dividend payable | - | 4,338 | - | |||||
| Deferred revenue | 3,186 | 3,453 | 3,918 | |||||
| Current portion of provisions | 160 | 842 | 300 | |||||
| Derivative financial instruments | - | 579 | - | |||||
| Current portion of long-term debt | 13,450 | 17,129 | 16,323 | |||||
| Total current liabilities | 54,971 | 54,904 | 42,361 | |||||
| Long-term debt | 23,353 | 20,452 | 29,145 | |||||
| Provisions | 271 | 75 | 120 | |||||
| Deferred income taxes | 2,936 | 2,883 | 2,954 | |||||
| Deferred lease credits | 16,033 | 15,805 | 16,109 | |||||
| Total liabilities | 97,564 | 94,119 | 90,689 | |||||
| Shareholders' equity | ||||||||
| Share capital | 37,729 | 37,729 | 37,729 | |||||
| Contributed surplus | 2,426 | 2,216 | 2,328 | |||||
| Retained earnings | 97,706 | 107,940 | 102,956 | |||||
| Accumulated other comprehensive income (loss) | 50 | (410) | 92 | |||||
| Total shareholders' equity | 137,911 | 147,475 | 143,105 | |||||
| $ | 235,475 | $ | 241,594 | $ | 233,794 | |||
| CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) | |||||||||||||
| (Unaudited) | For the three months ended | For the six months ended | |||||||||||
| (In thousands of Canadian dollars, except per share information) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||
| Sales | $ | 72,514 | $ | 84,810 | $ | 130,291 | $ | 149,769 | |||||
| Cost of sales and expenses | |||||||||||||
| Cost of sales | 22,503 | 29,203 | 40,521 | 48,515 | |||||||||
| Selling | 38,381 | 40,819 | 76,864 | 80,309 | |||||||||
| General and administrative | 8,716 | 9,473 | 18,376 | 19,276 | |||||||||
| 69,600 | 79,495 | 135,761 | 148,100 | ||||||||||
| Results from operating activities | 2,914 | 5,315 | (5,470) | 1,669 | |||||||||
| Finance costs | 879 | 502 | 1,568 | 987 | |||||||||
| Finance income | (7) | (91) | (8) | (183) | |||||||||
| Earnings (loss) before income taxes | 2,042 | 4,904 | (7,030) | 865 | |||||||||
| Income tax expense (recovery) | 760 | 1,420 | (1,780) | 250 | |||||||||
| Net earnings (loss) | $ | 1,282 | $ | 3,484 | $ | (5,250) | $ | 615 | |||||
| Net earnings (loss) per share | |||||||||||||
| Basic | $ | 0.05 | $ | 0.14 | $ | (0.21) | $ | 0.02 | |||||
| Diluted | 0.05 | 0.14 | (0.21) | 0.02 | |||||||||
| Weighted average number of shares outstanding ('000) | 24,789 | 24,789 | 24,789 | 24,789 | |||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||||||||
| (Unaudited) | For the three months ended | For the six months ended | |||||||||||
| (In thousands of Canadian dollars) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||
| Net earnings (loss) | $ | 1,282 | $ | 3,484 | $ | (5,250) | $ | 615 | |||||
| Other comprehensive income (loss) | |||||||||||||
| Change in fair value of forward exchange contracts | 295 | 29 | (98) | (1,459) | |||||||||
| Income tax (expense) recovery | (82) | (8) | 28 | 423 | |||||||||
| 213 | 21 | (70) | (1,036) | ||||||||||
| Realized forward exchange contracts reclassified to net earnings (loss) | 167 | 867 | 38 | 998 | |||||||||
| Income tax expense | (47) | (251) | (10) | (289) | |||||||||
| 120 | 616 | 28 | 709 | ||||||||||
| Total other comprehensive income (loss) | 333 | 637 | (42) | (327) | |||||||||
| Comprehensive income (loss) | $ | 1,615 | $ | 4,121 | $ | (5,292) | $ | 288 | |||||
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY | |||||||||||||
| (Unaudited) | For the three months ended | For the six months ended | |||||||||||
| (In thousands of Canadian dollars) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||
| SHARE CAPITAL | $ | 37,729 | $ | 37,729 | $ | 37,729 | $ | 37,729 | |||||
| CONTRIBUTED SURPLUS | |||||||||||||
| Balance, beginning of period | $ | 2,374 | $ | 2,129 | $ | 2,328 | $ | 2,006 | |||||
| Stock-based compensation expense | 52 | 87 | 98 | 210 | |||||||||
| Balance, end of period | $ | 2,426 | $ | 2,216 | $ | 2,426 | $ | 2,216 | |||||
| RETAINED EARNINGS | |||||||||||||
| Balance, beginning of period | $ | 96,424 | $ | 108,794 | $ | 102,956 | $ | 116,001 | |||||
| Net earnings (loss) | 1,282 | 3,484 | (5,250) | 615 | |||||||||
| Dividends declared | - | (4,338) | - | (8,676) | |||||||||
| Balance, end of period | $ | 97,706 | $ | 107,940 | $ | 97,706 | $ | 107,940 | |||||
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |||||||||||||
| Balance, beginning of period | $ | (283) | $ | (1,047) | $ | 92 | $ | (83) | |||||
| Other comprehensive income (loss) for the period | 333 | 637 | (42) | (327) | |||||||||
| Balance, end of period | $ | 50 | $ | (410) | $ | 50 | $ | (410) | |||||
| Total shareholders' equity | $ | 137,911 | $ | 147,475 | $ | 137,911 | $ | 147,475 | |||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
| (Unaudited) | For the three months ended | For the six months ended | |||||||||||
| (In thousands of Canadian dollars) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||
| OPERATING ACTIVITIES | |||||||||||||
| Net earnings (loss) | $ | 1,282 | $ | 3,484 | $ | (5,250) | $ | 615 | |||||
| Adjustments to determine net cash from operating activities | |||||||||||||
| Depreciation and amortization | 4,969 | 4,867 | 9,919 | 9,571 | |||||||||
| Write-off and impairment of property and equipment | 607 | 255 | 836 | 255 | |||||||||
| Amortization of deferred lease credits | (310) | (239) | (576) | (479) | |||||||||
| Deferred lease credits | 481 | 240 | 500 | 348 | |||||||||
| Stock-based compensation | 52 | 87 | 98 | 210 | |||||||||
| Provisions | 214 | (251) | 11 | (557) | |||||||||
| Finance costs | 879 | 502 | 1,568 | 987 | |||||||||
| Finance income | (7) | (91) | (8) | (183) | |||||||||
| Interest paid | (744) | (508) | (1,433) | (999) | |||||||||
| Interest received | 5 | 31 | 12 | 379 | |||||||||
| Income tax expense (recovery) | 760 | 1,420 | (1,780) | 250 | |||||||||
| 8,188 | 9,797 | 3,897 | 10,397 | ||||||||||
| Net change in non-cash working capital items related to operations | (1,236) | (1,172) | (11,684) | (10,538) | |||||||||
| 6,952 | 8,625 | (7,787) | (141) | ||||||||||
| Income taxes refunded (paid) | 489 | (1,423) | 993 | (1,499) | |||||||||
| Cash flows related to operating activities | 7,441 | 7,202 | (6,794) | (1,640) | |||||||||
| FINANCING ACTIVITIES | |||||||||||||
| Proceeds of long-term debt | - | - | - | 10,024 | |||||||||
| Repayment of long-term debt | (4,205) | (4,530) | (8,665) | (8,623) | |||||||||
| Dividends paid | - | (4,338) | - | (8,676) | |||||||||
| Cash flows related to financing activities | (4,205) | (8,868) | (8,665) | (7,275) | |||||||||
| INVESTING ACTIVITIES | |||||||||||||
| Decrease in short-term investments | - | - | - | 11,720 | |||||||||
| Additions to property and equipment and intangible assets | (3,594) | (6,335) | (6,973) | (13,161) | |||||||||
| Cash flows related to investing activities | (3,594) | (6,335) | (6,973) | (1,441) | |||||||||
| Decrease in cash and cash equivalents, net of bank indebtedness | (358) | (8,001) | (22,432) | (10,356) | |||||||||
| Cash and cash equivalents, net of bank indebtedness, beginning of period | (14,881) | 15,306 | 7,193 | 17,661 | |||||||||
| Cash and cash equivalents, net of bank indebtedness, end of period | $ | (15,239) | $ | 7,305 | $ | (15,239) | $ | 7,305 | |||||
| TOTAL SALES BY DIVISION | |||||||||||||
| (Unaudited) | For the three months ended | For the six months ended | |||||||||||
| (In thousands of Canadian dollars) | July 28, 2012 | July 30, 2011 | July 28, 2012 | July 30, 2011 | |||||||||
| Ladies' Clothing | $ | 40,915 | $ | 48,562 | $ | 75,317 | $ | 87,881 | |||||
| Men's Clothing | 13,925 | 15,166 | 23,417 | 25,340 | |||||||||
| Footwear | 7,453 | 8,751 | 13,815 | 15,426 | |||||||||
| Accessories | 10,221 | 12,331 | 17,742 | 21,122 | |||||||||
| $ | 72,514 | $ | 84,810 | $ | 130,291 | $ | 149,769 | ||||||
SOURCE: LE CHATEAU INC.
Emilia Di Raddo, CPA, CA, President (514) 738-7000
Johnny Del Ciancio, CPA, CA, Vice-President, Finance, (514) 738-7000
MaisonBrison: Pierre Boucher, (514) 731-0000
Source: Le Château Inc.
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