MONTREAL, Dec. 10 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the third quarter ended October 30, 2010 decreased 1.2% to $74.4 million from $75.3 million for the third quarter ended October 31, 2009. Comparable store sales decreased by 3.5% versus the same period a year ago.
Net earnings for the third quarter ended October 30, 2010 decreased to $2.7 million from $5.6 million for the third quarter ended October 31, 2009. Earnings per share (diluted) for the third quarter were $0.11 per share versus $0.23 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the third quarter amounted to $8.7 million or 11.7% of sales, compared to $12.8 million or 17.0% of sales last year.
Nine-month Results
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Net earnings for the nine-month period were $15.3 million or $0.62 per share (diluted) compared to $18.4 million or $0.76 per share the previous year. EBITDA for the first nine months amounted to $36.3 million or 15.7% of sales, compared to $41.1 million or 18.0% of sales last year.
Sales increased 1.5% to $231.9 million for the nine months ended October 30, 2010, compared to $228.5 million last year. Comparable store sales decreased 2.3% versus the same period a year ago.
During the first nine months of the year, the Company opened 9 stores, closed 4 and expanded 17 existing locations, resulting in the addition of 66,000 square feet or 5.8% to the Le Château network, bringing the total floor space at end of period to 1,212,000 square feet.
In June 2010, the Toronto Stock Exchange approved the Company's previously announced normal course issuer bid to purchase up to 1,003,328 Class A subordinate voting shares. Since June 21, 2010, no Class A subordinate voting shares have been purchased by the Company.
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 69th consecutive dividend declared by Le Château, and is payable on February 15, 2011 to the shareholders of record at the close of business on January 28, 2011.
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 238 retail locations, of which 236 are located in Canada and 2 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 51-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 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 third quarter ended October 30, 2010 are available online at www.sedar.com
CONSOLIDATED BALANCE SHEETS
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As at As at As at
(Unaudited) October 30, October 31, January 30,
(In thousands of dollars) 2010 2009 2010
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ASSETS
Current
Cash and cash equivalents $ 9,746 $ 23,510 $ 23,411
Short-term investments 25,300 30,000 45,000
Accounts receivable 3,062 2,638 2,454
Income taxes refundable 3,608 5,278 1,602
Derivative financial instruments 75 254 59
Inventories 92,281 62,750 61,234
Prepaid expenses 2,392 1,396 1,308
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Total current assets 136,464 125,826 135,068
Long-term investments - 10,000 10,000
Fixed assets 95,161 89,585 88,437
Intangible assets 4,824 2,251 2,527
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$ 236,449 $ 227,662 $ 236,032
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities $ 30,848 $ 24,859 $ 27,151
Dividend payable 4,338 4,269 4,293
Current portion of long-term debt 12,246 11,803 11,752
Future income taxes 22 81 19
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Total current liabilities 47,454 41,012 43,215
Long-term debt 12,217 24,060 21,464
Future income taxes 3,910 3,176 3,910
Deferred lease inducements 10,175 10,491 10,222
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Total liabilities 73,756 78,739 78,811
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Shareholders' equity
Capital stock 37,707 32,683 34,335
Contributed surplus 1,880 2,475 2,159
Retained earnings 123,053 113,592 120,687
Accumulated other comprehensive
income 53 173 40
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Total shareholders' equity 162,693 148,923 157,221
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$ 236,449 $ 227,662 $ 236,032
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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For the For the
(Unaudited) three months ended nine months ended
(In thousands October 30, October 31, October 30, October 31,
of dollars) 2010 2009 2010 2009
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Balance, beginning
of period $ 124,705 $ 112,263 $ 120,687 $ 107,914
Net earnings 2,686 5,599 15,327 18,449
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127,391 117,862 136,014 126,363
Dividends declared 4,338 4,270 12,961 12,771
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Balance, end of
period $ 123,053 $ 113,592 $ 123,053 $ 113,592
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CONSOLIDATED STATEMENTS OF EARNINGS
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(Unaudited) For the For the
(In thousands of three months ended nine months ended
dollars, except October 30, October 31, October 30, October 31,
per share data) 2010 2009 2010 2009
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Sales $ 74,458 $ 75,305 $ 231,890 $ 228,517
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Cost of sales and
expenses
Cost of sales and
selling, general
and administrative 65,722 62,509 195,588 187,457
Depreciation and
amortization 4,470 4,256 13,029 13,043
Write-off of fixed
assets 168 78 383 167
Interest on long-term
debt and capital
lease obligations 363 298 1,209 1,001
Interest income (146) (170) (456) (605)
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70,577 66,971 209,753 201,063
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Earnings before
income taxes 3,881 8,334 22,137 27,454
Provision for income
taxes 1,195 2,735 6,810 9,005
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Net earnings $ 2,686 $ 5,599 $ 15,327 $ 18,449
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Net earnings per share
Basic $ 0.11 $ 0.23 $ 0.62 $ 0.76
Diluted 0.11 0.23 0.62 0.76
Weighted average
number of shares
outstanding ('000) 24,700 24,365 24,628 24,300
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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For the For the
(Unaudited) three months ended nine months ended
(In thousands October 30, October 31, October 30, October 31,
of dollars) 2010 2009 2010 2009
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Net earnings $ 2,686 $ 5,599 $ 15,327 $ 18,449
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Other comprehensive
income
Change in fair value
of forward exchange
contracts 73 329 368 (1,374)
Realized forward
exchange contracts
reclassified to
net earnings (256) 1,202 (352) 98
Income tax recovery
(expense) 55 (487) (3) 406
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(128) 1,044 13 (870)
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Comprehensive income $ 2,558 $ 6,643 $ 15,340 $ 17,579
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the For the
(Unaudited) three months ended nine months ended
(In thousands October 30, October 31, October 30, October 31,
of dollars) 2010 2009 2010 2009
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OPERATING ACTIVITIES
Net earnings $ 2,686 $ 5,599 $ 15,327 $ 18,449
Adjustments to
determine net cash
from operating
activities
Depreciation and
amortization 4,470 4,256 13,029 13,043
Write-off of
fixed assets 168 78 383 167
Amortization of
deferred lease
inducements (431) (392) (1,300) (1,121)
Stock-based
compensation 154 160 377 323
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7,047 9,701 27,816 30,861
Net change in
non-cash working
capital items
related to operations (13,608) (610) (31,048) (15,310)
Deferred lease
inducements 578 745 1,253 1,921
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Cash flows related to
operating activities (5,983) 9,836 (1,979) 17,472
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FINANCING ACTIVITIES
Repayment of capital
lease obligations - (341) - (1,008)
Proceeds of long-term
debt - 15,000 - 15,000
Repayment of long-term
debt (2,560) (2,231) (8,753) (6,865)
Issue of capital
stock upon exercise
of options 1,646 368 2,716 1,378
Dividends paid (4,313) (4,263) (12,916) (12,741)
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Cash flows related to
financing activities (5,227) 8,533 (18,953) (4,236)
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INVESTING ACTIVITIES
Decrease (increase) in
short-term investments 13,320 (10,000) 19,700 26,643
Decrease (increase) in
long-term investments - - 10,000 (10,000)
Additions to fixed
assets and intangible
assets (8,331) (4,485) (22,433) (16,403)
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Cash flows related to
investing activities 4,989 (14,485) 7,267 240
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Increase (decrease)
in cash and cash
equivalents (6,221) 3,884 (13,665) 13,476
Cash and cash
equivalents,
beginning of period 15,967 19,626 23,411 10,034
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Cash and cash
equivalents, end
of period $ 9,746 $ 23,510 $ 9,746 $ 23,510
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Supplementary
information:
Interest paid during
the period $ 363 $ 298 $ 1,209 $ 1,001
Income taxes paid
during the period 2,863 4,675 8,456 16,019
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SEGMENTED INFORMATION
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For the For the
(Unaudited) three months ended nine months ended
(In thousands October 30, October 31, October 30, October 31,
of dollars) 2010 2009 2010 2009
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Sales by country
Canada $ 73,903 $ 74,425 $ 229,538 $ 224,943
United States 555 880 2,352 3,574
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$ 74,458 $ 75,305 $ 231,890 $ 228,517
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Sales by division
Ladies' Clothing $ 43,635 $ 42,118 $ 136,691 $ 128,690
Men's Clothing 12,315 12,088 37,512 37,507
Footwear 8,166 9,055 24,364 25,767
Accessories 10,342 12,044 33,323 36,553
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$ 74,458 $ 75,305 $ 231,890 $ 228,517
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Net earnings (loss)
Canada $ 3,215 $ 6,158 $ 16,654 $ 19,585
United States (529) (559) (1,327) (1,136)
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$ 2,686 $ 5,599 $ 15,327 $ 18,449
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Fixed assets and
intangible assets
Canada $ 99,416 $ 91,037 $ 99,416 $ 91,037
United States 569 799 569 799
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$ 99,985 $ 91,836 $ 99,985 $ 91,836
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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; MaisonBrison: Pierre Boucher, (514) 731-0000; Source: Le Château Inc.
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