West 49 Inc. reports third quarter results

- Fashion & apparel retailer achieves comparable store sales growth of
    2.1% -

    Toronto Stock Exchange Symbol: WXXBURLINGTON, ON, Dec. 5 /CNW/ - West 49 Inc. (TSX: WXX) (the "Company"),
Canada's leading action sport retailer, today reported its financial results
for its fiscal 2009 third quarter ended October 25, 2008. All figures are
reported in Canadian dollars.Third quarter highlights:

    -   Net sales growth of 4.4% to $61.7 million;
    -   Higher units per transaction resulted in consolidated comparable
        store sales growth of 2.1%;
    -   50 basis point reduction in selling, general and administrative
        expenses as rate to net sales, on a normalized(1) basis;
    -   Net income of $2.1 million, or $0.03 per share."Focused execution of our strategy yielded top line growth for the
quarter, despite the challenging economic landscape," said Sam Baio, Chief
Executive Officer of West 49 Inc. "Of particular note, our exceptional branded
merchandise and competitive prices, as well as the success of our store
associate sales incentive program, resulted in higher units per transaction
and growth in comparable store sales. However, our gross margin rate was down
primarily due to higher freight costs and pricing strategies to drive our top
line during what was one of the most challenging Back-to-School retail
environments in the history of our Company. Additionally, this marked the
third consecutive quarter that we have reduced our selling, general and
administrative expenses as a rate to net sales compared to the same periods
last year."

    Third Quarter Financial Results

    Net sales for the third quarter increased 4.4% to $61.7 million from
$59.1 million for the third quarter of last year. Competitive pricing of
branded merchandise and the Company's store associate sales incentive program
drove year-over-year growth in units per transaction, helping mitigate the
effects of falling consumer confidence. Comparable store sales increased 2.1%
on a consolidated basis, including growth of 0.7% for the West 49 banner.
    Gross margin for the quarter decreased $0.7 million to $16.1 million from
$16.8 million a year ago. As a rate to net sales, gross margin decreased 230
basis points to 26.1% due primarily to higher freight costs and lower product
margins as merchandise was strategically priced in order to compete in the
current economic environment.
    EBITDA(2) for the quarter was $4.8 million compared to $5.8 million,
normalized, for the same quarter last year. The decrease was primarily
attributable to the lower gross margin for the quarter.
    Net income for the quarter was $2.1 million, or $0.03 per share, compared
to normalized net income of $2.6 million, or $0.04 per share, for the third
quarter of last year.
    The following table provides a comparison of the Company's financial
results for the third quarter and nine month period to normalized results for
the corresponding periods in the prior year:(Amounts in thousands of Canadian $ except per share amounts and weighted
    averages)
    -------------------------------------------------------------------------
                                   Fiscal 2009               Fiscal 2008
    -------------------------------------------------------------------------
                                Third         Nine        Third         Nine
                              Quarter       Months      Quarter       Months
    -------------------------------------------------------------------------
    Net sales                  61,723      145,658       59,082      142,505
    -------------------------------------------------------------------------
    Gross margin               16,139       30,567       16,811       35,032
    -------------------------------------------------------------------------
    EBITDA (loss)               4,844         (120)       5,711        3,356
    -------------------------------------------------------------------------
    EBITDA (loss), normalized   4,844         (120)       5,754        4,101
    -------------------------------------------------------------------------
    Net income (loss)           2,074       (3,874)       2,591       (1,186)
    -------------------------------------------------------------------------
    Net income (loss),
     normalized                 2,074       (3,874)       2,619         (701)
    -------------------------------------------------------------------------
    Basic income per share      $0.03       ($0.06)       $0.04       ($0.02)
    -------------------------------------------------------------------------
    Basic income per share,
     normalized                 $0.03       ($0.06)       $0.04       ($0.01)
    -------------------------------------------------------------------------
    Weighted average
     common shares
     outstanding           63,544,818   63,544,818   63,315,747   63,259,415
    -------------------------------------------------------------------------Store Real Estate Activity

    In line with the Company's stated objective of maximizing returns from
existing stores, it expanded an Amnesia store in the Carrefour Laval Mall in
Laval, Quebec and relocated a D-Tox store in the Mapleview Mall in Burlington,
Ontario during the quarter.
    At the end of the quarter the Company was operating 134 stores compared
to 133 stores at the end of the third quarter of fiscal 2008.

    Outlook

    "We are much more competitive than we were last year at this time," added
Mr. Baio. "The economic slowdown notwithstanding, we remain steadfast on
driving continued growth in comparable store sales. Our focus on offering our
loyal customers the best brands on earth at the lowest prices ever, better
positions us for what is expected to be a very challenging holiday season for
retailers. Moreover, we will continue to drive units per transaction by
motivating our passionate store associates through our Platinum Club sales
incentive program. While there is always much uncertainty during volatile
times, we have every confidence that we will successfully weather the storm."

    Notice of Conference Call

    The Company will host a conference call at 9:00 a.m. Eastern Time, on
Friday, December 5, 2008 to discuss its fiscal 2009 third quarter results. To
access the conference call by telephone, dial 416-644-3419 or 1-800-731-6941.
Please connect approximately 15 minutes prior to the beginning of the call to
ensure participation. The conference call will be archived for replay until
Friday, December 12, 2008 at midnight. To access the archived conference call,
dial 416-640-1917 or 1-877-289-8525 and enter the reservation number 21289784
followed by the number sign.
    A live audio webcast of the Company's third quarter results conference
call will be available at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2483140. Please
connect at least 15 minutes prior to the conference call to ensure adequate
time for any software download that may be required to join the webcast. The
webcast will be archived at the above web site for 90 days.

    Financial Statements

    For convenience, this press release includes excerpts from the Company's
Fiscal 2009 Third Quarter Unaudited Consolidated Balance Sheets, Statements of
Operations and Comprehensive Income and Statements of Cash Flows.WEST 49 INC.
    CONSOLIDATED BALANCE SHEETS
    AS AT                                            October 25,  January 26,
    (Unaudited, in thousands of dollars)                   2008         2008
                                                    ------------ ------------
    ASSETS
      Current
        Cash and cash equivalents                     $       -    $   8,369
        Accounts receivable                               1,506        1,537
        Income taxes receivable                             548            -
        Inventory                                        39,676       24,998
        Future income taxes                               1,816            -
        Prepaid expenses                                    637          459
                                                    ------------ ------------
                                                         44,183       35,363

    Capital assets                                       27,554       28,205
    Deferred costs                                          693          755
    Due from related parties                                111          138
    Goodwill                                             21,054       21,054
    Other intangibles                                    17,398       17,595
                                                    ------------ ------------
                                                      $ 110,993    $ 103,110
                                                    ------------ ------------
                                                    ------------ ------------

    LIABILITIES
      Current
        Bank indebtedness                             $   3,735    $       -
        Accounts payable and accrued charges             30,574       23,203
        Income taxes payable                                  -          614
        Current portion of long-term debt                 1,614        1,023
        Current portion of deferred lease
         obligations                                        922          868
        Current preferred shares                             33           63
                                                    ------------ ------------
                                                         36,878       25,771

    Long-term debt                                        4,440        5,448
    Future income taxes                                   1,891        1,875
    Preferred shares                                      5,190        5,190
    Deferred lease obligations                            8,474        7,903
                                                    ------------ ------------
                                                         56,873       46,187
                                                    ------------ ------------
                                                    ------------ ------------

    SHAREHOLDERS' EQUITY
        Share capital                                    62,961       62,961
        Contributed surplus                               2,463        2,238
        Deficit                                         (11,304)      (8,276)
                                                    ------------ ------------
                                                         54,120       56,923
                                                    ------------ ------------
                                                      $ 110,993    $ 103,110
                                                    ------------ ------------
                                                    ------------ ------------



    WEST 49 INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
    (Unaudited, in thousands of dollars except per share amounts)

                               FOR THE 3-MONTH           FOR THE 9-MONTH
                                PERIOD ENDING             PERIOD ENDING
                           October 25,  October 27,  October 25,  October 27,
                                 2008         2007         2008         2007
                          ------------ ------------ ------------ ------------

    Net sales               $  61,723    $  59,082    $ 145,658    $ 142,505

    Cost of sales              45,584       42,271      115,091      107,473
                          ------------ ------------ ------------ ------------

    Gross margin               16,139       16,811       30,567       35,032

    Selling, general
     and administrative
     expenses                  11,295       11,100       30,687       31,676
                          ------------ ------------ ------------ ------------

    Income (loss) before
     other expenses             4,844        5,711         (120)       3,356
                          ------------ ------------ ------------ ------------

    Other expenses:
      Dividends on
       preferred shares            87          108          272          318
      Interest expense
       on long-term debt          148          116          478          451
      Amortization              1,405        1,302        4,447        4,117
                          ------------ ------------ ------------ ------------
                                1,640        1,526        5,197        4,886
                          ------------ ------------ ------------ ------------

    Income (loss) before
     income taxes               3,204        4,185       (5,317)      (1,530)

    Income taxes                1,130        1,594       (1,443)        (344)
                          ------------ ------------ ------------ ------------
    Net income (loss)
     and comprehensive
     income (loss)          $   2,074    $   2,591    $  (3,874)   $  (1,186)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------
    Basic and diluted
     income (loss)
     per share              $    0.03    $    0.04    $   (0.06)   $   (0.02)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------



    WEST 49 INC.
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited, in thousands of dollars)

                               FOR THE 3-MONTH           FOR THE 9-MONTH
                                PERIOD ENDING             PERIOD ENDING
                           October 25,  October 27,  October 25,  October 27,
                                 2008         2007         2008         2007
                          ------------ ------------ ------------ ------------
    OPERATING ACTIVITIES

    Net income (loss)       $   2,074    $   2,591    $  (3,874)   $  (1,186)
      Items not affecting
       cash:
      Amortization of
       capital assets           1,349        1,224        4,250        3,884
      Amortization of
       deferred costs              58           40          223          202
      Amortization of
       deferred lease
       inducements               (169)        (211)        (692)        (614)
      Amortization of
       other intangibles           56           78          197          233
      Future income taxes         468        1,427       (2,203)        (880)
      Loss (gain) from
       disposition of
       capital assets             168            3          323          (71)
      Straight-line rent
       expense                     58           94          236          391
      Stock based
       compensation                78          116          225          453
                          ------------ ------------ ------------ ------------
                                4,140        5,362       (1,315)       2,412

    Changes in non-cash
     working capital
     from operations           (1,774)      (3,183)      (7,368)      (7,688)
                          ------------ ------------ ------------ ------------

    Net cash flows provided
     by (used by) operating
     activities                 2,366        2,179       (8,683)      (5,276)
                          ------------ ------------ ------------ ------------

    FINANCING ACTIVITIES

      Due from related
       parties                     (5)          82           27          (59)
      Decrease (increase)
       in deferred costs          (94)           3         (167)         (11)
      Increase in long-term
       debt                         -        3,650            -        4,150
      Issuance of common
       stock                        -           18            -          123
      Redemption of
       preferred shares             -            -          (30)           -
      Repayment of long-
       term debt                 (202)         (77)        (417)      (1,410)
                          ------------ ------------ ------------ ------------
    Net cash flows (used by)
     provided by financing
     activities                  (301)       3,676         (587)       2,793
                          ------------ ------------ ------------ ------------

    INVESTING ACTIVITIES

      Additions to capital
       assets                    (655)      (2,498)      (3,793)      (6,517)
      Deferred lease
       inducements received        19          236          959          855
      Proceeds from
       disposition of
       capital assets               -            -            -           60
                          ------------ ------------ ------------ ------------
    Net cash flows
     used by investing
     activities                  (636)      (2,262)      (2,834)      (5,602)
                          ------------ ------------ ------------ ------------
    Increase (decrease)
     in cash and cash
     equivalents                1,429        3,593      (12,104)      (8,085)

    Cash and cash
     equivalents,
     beginning of
     period                    (5,164)      (6,265)       8,369        5,413
                          ------------ ------------ ------------ ------------
    Cash and cash
     equivalents, end
     of period              $  (3,735)   $  (2,672)   $  (3,735)   $  (2,672)
                          ------------ ------------ ------------ ------------
                          ------------ ------------ ------------ ------------

    SUPPLEMENTAL DISCLOSURE

      Interest paid         $     167    $     125    $     552    $     317
      Dividends paid on
       preferred shares            89          108          285          318
      Income taxes paid           478            -        1,985        2,829About West 49 Inc.

    West 49 Inc. is a leading Canadian multi-banner specialty retailer of
fashion and apparel, footwear, accessories and equipment related to music,
youth culture and action sports. The Company's stores, which are primarily
mall-based, carry a variety of high-performance, premium brand name and
private label products that fulfill the lifestyle needs of identified target
markets, primarily tweens and teens. As at October 25, 2008, the Company
operated 134 stores in nine provinces, under the banners West 49, Billabong,
Off The Wall, Amnesia/Arsenic, D-Tox and Duke's Northshore, as well as two
ecommerce sites, www.shop.west49.com and www.boardzone.com. The Company's
common shares are listed on the Toronto Stock Exchange under the symbol WXX.
The Company has approximately 64 million shares outstanding.

    Forward-Looking Statements

    Information in this news release that is not current or historical
factual information may constitute forward-looking information. Implicit in
this information, particularly in respect of future operating results and
economic performance of the Company are assumptions regarding projected
revenue, gross margin and expenses. The assumptions, although considered
reasonable by the Company at the time of preparation, may prove to be
incorrect. Investors are cautioned that forward-looking information involves
known and unknown risks, uncertainties and numerous other factors that may
cause actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by
the forward-looking information, including without limitation accounting
adjustments and changes in accounting policies and methods. Accordingly,
investors should not place undue reliance on forward-looking information. The
Company includes in publicly available documents filed from time to time with
securities commissions and the Toronto Stock Exchange, a thorough discussion
of the risk factors that can cause anticipated outcomes to differ from actual
outcomes. Forward-looking information is provided as of the date of this news
release only, it should not be relied upon as of any other date, and the
Company assumes no obligation to update or revise this information to reflect
new events or circumstances, except as expressly required by law.(1) Comparative results for the third quarter and first nine months have
        been normalized to exclude the impact of restructuring costs incurred
        in fiscal 2008.
    (2) EBITDA, which is defined as earnings (loss) before interest, taxes,
        dividends, depreciation and amortization, is not a financial measure
        recognized by Canadian generally accepted accounting principles
        ("GAAP") and does not have a standardized meaning prescribed by GAAP.
        The Company believes that this Non-GAAP financial measure provides
        meaningful information on the Company's performance and operating
        results. Readers are cautioned that EBITDA has no standardized
        meaning as prescribed by GAAP and may not be comparable to similar
        measures presented by other companies. Further, readers are cautioned
        that EBITDA should not replace net income or loss or cash flows from
        operating, investing and financing activities (as determined in
        accordance with GAAP), as an indicator of the Company's performance.
For further information: Investor Relations Contact: Rhonda Biddix,
Chief Financial Officer and Corporate Secretary, West 49 Inc., (905) 336-5454
ext. 224, E-mail: ir@west49.com; Trevor Heisler, Investor Relations, The
Equicom Group Inc., (416) 815-0700 ext. 270, E-mail:
theisler@equicomgroup.com