LE CHÂTEAU REPORTS YEAR-END RESULTS

MONTREAL, April 8 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the year ended January 29, 2011 decreased 0.8% to $319.0 million from $321.7 million for the year ended January 30, 2010. Comparable store sales decreased by 4.2% versus the same period a year ago.

Net earnings for the year ended January 29, 2011 were $19.1 million compared to $29.8 million for the year ended January 30, 2010. Earnings per share (diluted) for the year were $0.77 per share versus $1.22 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the year amounted to $46.9 million or 14.7% of sales, compared to $61.7 million or 19.2% of sales last year.

During the year, the Company opened 13 stores, closed 5 and expanded 17 existing locations, resulting in the addition of 76,000 square feet or 6.6% to the Le Château network, bringing the total floor space at end of period to 1,222,000 square feet.

Brand Repositioning Accelerated
Le Château's financial performance in the second half of 2010 was disappointing, particularly after an encouraging second quarter. A soft second half necessitated heavy discounting in the fourth quarter which negatively impacted gross margins and net earnings.

Building on the preliminary success of our brand repositioning, we will continue to move the strategy forward into a higher quality, European-inspired style brand with broader lifestyle appeal to a larger demographic. This repositioning in the ladies' segment, although not fully completed, did translate into positive growth of 0.3% in comparable store sales in 2010. We are therefore accelerating this brand repositioning to all divisions: menswear, footwear, and accessories. The Company believes that this strategy will restore positive overall growth.

Le Château is renowned as an exciting place to shop and the Company's core strengths, including a solid management and design team, a wide network of retail stores, powerful name recognition, vertical integration and a strong financial position, are all firmly in place.

Fourth Quarter Results
Sales decreased 6.5% to $87.1 million for the fourth quarter ended January 29, 2011, compared to $93.2 million for the fourth quarter ended January 30, 2010. Comparable store sales decreased 8.8% versus the same period a year ago.

Net earnings for the fourth quarter ended January 29, 2011 were $3.8 million or $0.15 per share (diluted) compared to $11.4 million or $0.46 per share for the fourth quarter ended January 30, 2010. EBITDA for the fourth quarter amounted to $10.6 million or 12.1% of sales, compared to $20.7 million or 22.2% of sales last year.

Dividend declaration
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 70th consecutive dividend declared by Le Château, and is payable on May 17, 2011 to the shareholders of record at the close of business on May 3, 2011.

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 synonymous with ageless fashion at accessible prices and is sold exclusively through the Company's 240 retail locations, of which 238 are located in Canada and 2 in the New York City area. The Company's outlets 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
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
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 full financial statements and Management's Discussion and Analysis for the year ended January 29, 2011 are available online at www.sedar.com

CONSOLIDATED BALANCE SHEETS            
    As at     As at  
(Unaudited)
(In thousands of dollars)
  January 29, 2011     January 30, 2010  
ASSETS                  
Current            
Cash and cash equivalents $  17,661   $   23,411  
Short-term investments   30,300     45,000  
Accounts receivable   2,439     2,454  
Income taxes refundable   3,602     1,602  
Derivative financial instruments   -             59  
Inventories   91,773     61,234  
Future income taxes   35     -  
Prepaid expenses   1,704                      1,308  
Total current assets   147,514     135,068  
Long-term investments   -     10,000  
Fixed assets   94,133     88,437  
Intangible assets   5,240     2,527  
  $ 246,887   $  236,032  
             
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current            
Accounts payable and accrued liabilities $  29,599   $ 27,151  
Dividend payable   4,338     4,293  
Derivative financial instruments   118     -  
Current portion of long-term debt   15,920     11,752  
Future income taxes   -     19  
Total current liabilities   49,975     43,215  
Long-term debt   20,260     21,464  
Future income taxes   4,745     3,910  
Deferred lease inducements   9,758     10,222  
Total liabilities   84,738     78,811  
             
Shareholders' equity            
Capital stock   37,729     34,335  
Contributed surplus   2,006     2,159  
Retained earnings   122,497     120,687  
Accumulated other comprehensive income   (83)     40  
Total shareholders' equity   162,149     157,221  
  $  246,887   $  236,032  

 CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
  For the three months ended   For the year ended
(Unaudited)
(In thousands of dollars)
    January 29, 2011
(13 weeks)
    January 30, 2010
(13 weeks)
    January 29, 2011
(52 weeks)
    January 30, 2010
(52 weeks)
Balance, beginning of period   $ 123,053   $ 113,592   $ 120,687   $ 107,914
Net earnings     3,782     11,388     19,109     29,837
      126,835     124,980     139,796     137,751
Dividends declared     4,338     4,293     17,299     17,064
Balance, end of period   $ 122,497   $ 120,687   $ 122,497   $ 120,687

CONSOLIDATED STATEMENTS OF EARNINGS  
      For the three months ended     For the year ended
(Unaudited)
(In thousands of dollars, except per share data)
    January 29, 2011
(13 weeks)
    January 30, 2010
(13 weeks)
    January 29, 2011
(52 weeks)
    January 30, 2010
(52 weeks)
Sales   $ 87,149   $ 93,216   $ 319,039   $ 321,733
Cost of sales and expenses                        
Cost of sales and selling, general and administrative     76,575     72,553     272,163     260,010
Depreciation and amortization     4,566     4,173     17,595     17,216
Write-off of fixed assets     582     371     965     538
Interest on long-term debt     379     502     1,588     1,503
Interest income     (160)     (175)     (616)     (780)
      81,942     77,424     291,695     278,487
Earnings before income taxes     5,207     15,792     27,344     43,246
Provision for income taxes     1,425     4,404     8,235     13,409
Net earnings   $ 3,782   $ 11,388   $ 19,109   $ 29,837
                         
Net earnings per share                        
  Basic   $ 0.15   $                       0.47   $ 0.77   $                    1.23
  Diluted     0.15     0.46     0.77     1.22
                         
Weighted average number of shares outstanding ('000)     24,788     24,458     24,668     24,339

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME  
    For the three months ended   For the year ended
(Unaudited)
(In thousands of dollars)
  January 29, 2011
(13 weeks)
  January 30, 2010
(13 weeks)
  January 29, 2011
(52 weeks)
  January 30, 2010
(52 weeks)
Net earnings   $ 3,782   $ 11,388   $ 19,109   $ 29,837
Other comprehensive income                        
Change in fair value of forward exchange contracts     (211)     (27)     157     (1,401)
Income tax (expense) recovery     63     9     (47)     446
      (148)     (18)     110     (955)
Realized forward exchange contracts reclassified to net earnings     18     (168)     (334)     (70)
Income tax (expense) recovery     (6)     53     101     22
      12     (115)     (233)     (48)
Total other comprehensive loss     (136)     (133)     (123)     (1,003)
Comprehensive income   $ 3,646   $ 11,255   $ 18,986   $ 28,834
                         
                         
CONSOLIDATED STATEMENTS OF CASH FLOWS                        
    For the three months ended   For the year ended
(Unaudited)
(In thousands of dollars)
  January 29, 2011
(13 weeks)
  January 30, 2010
(13 weeks)
  January 29, 2011
(52 weeks)
  January 30, 2010
(52 weeks)
OPERATING ACTIVITIES                        
Net earnings   3,782   $ 11,388   $ 19,109   $ 29,837
Adjustments to determine net cash from operating activities                        
  Depreciation and amortization     4,566     4,173     17,595     17,216
  Write-off of fixed assets     582     371     965     538
  Amortization of deferred lease inducements     (585)     (419)     (1,885)     (1,540)
  Stock-based compensation     129     18     506     341
  Future income taxes     835     734     835       734 
      9,309     16,265     37,125     47,126
Net change in non-cash working capital items related to operations     576     7,756     (30,472)     (7,554)
Deferred lease inducements     168     150     1,421     2,071
Cash flows related to operating activities     10,053     24,171     8,074     41,643
                         
FINANCING ACTIVITIES                        
Repayment of capital lease obligations     -     -     -     (1,008)
Proceeds of long-term debt     15,000     -     15,000     15,000
Repayment of long-term debt     (3,283)     (2,647)     (12,036)     (9,512)
Issue of capital stock upon exercise of options     19     1,318     2,735     2,696
Dividends paid     (4,338)     (4,269)     (17,254)     (17,010)
Cash flows related to financing activities     7,398     (5,598)     (11,555)     (9,834)
                         
INVESTING ACTIVITIES                        
Decrease (increase) in short-term investments     (5,000)     (15,000)     14,700     11,643
Decrease (increase) in long-term investments     -     -     10,000     (10,000)
Additions to fixed assets and intangible assets     (4,536)     (3,672)     (26,969)     (20,075)
Cash flows related to investing activities     (9,536)     (18,672)     (2,269)     (18,432)
                         
Increase (decrease) in cash and cash equivalents     7,915     (99)     (5,750)     13,377
Cash and cash equivalents, beginning of period     9,746     23,510     23,411     10,034
Cash and cash equivalents, end of period     $17,661   $ 23,411   $ 17,661   $ 23,411
                         
Supplementary information:                        
Interest paid during the period     $379   $ 502   $ 1,588   $ 1,503
Income taxes paid during the period     923     (90)     9,379     15,929
                         
                         
SEGMENTED INFORMATION                        
    For the three months ended   For the year ended
(Unaudited)
(In thousands of dollars)
  January 29, 2011
(13 weeks)
  January 30, 2010
(13 weeks)
  January 29, 2011
(52 weeks)
  January 30, 2010
(52 weeks)
Sales by country                        
Canada   $ 86,619   $ 92,218   $ 316,157   $ 317,161
United States     530     998     2,882     4,572
    $ 87,149   $ 93,216   $ 319,039   $ 321,733
                         
Sales by division                        
Ladies' Clothing   $ 48,799   $ 50,468   $ 185,490   $ 179,158
Men's Clothing     15,616     16,179     53,128     53,686
Footwear     8,501     9,393     32,865     35,160
Accessories     14,233     17,176     47,556     53,729
    $ 87,149   $ 93,216   $ 319,039   $ 321,733
                         
Net earnings (loss)                        
Canada   $ 4,049   $ 11,810   $ 20,703   $ 31,395
United States     (267)     (422)     (1,594)     (1,558)
    $ 3,782   $ 11,388   $ 19,109   $ 29,837
                         
Fixed assets and intangible assets                        
Canada   $ 98,841   $ 90,296   $ 98,841   $ 90,296
United States     532     668     532     668
    $ 99,373   $ 90,964   $ 99,373   $ 90,964

 

SOURCE LE CHATEAU INC.

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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LE CHATEAU INC.

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