LE CHÂTEAU REPORTS SECOND QUARTER RESULTS
MONTREAL, Sept. 8 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the second quarter ended July 31, 2010 increased 6.3% to $86.5 million from $81.4 million for the second quarter ended August 1, 2009. Comparable store sales increased by 1.2% versus the same period a year ago.
Net earnings for the second quarter ended July 31, 2010 increased to $8.2 million from $7.8 million for the second quarter ended August 1, 2009. Earnings per share (diluted) for the second quarter were $0.33 per share versus $0.32 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the second quarter amounted to $16.6 million or 19.2% of sales, compared to $16.3 million or 20.0% of sales last year.
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.
Six-month Results
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Net earnings for the six-month period were $12.6 million or $0.51 per share (diluted) compared to $12.9 million or $0.53 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first six months amounted to $27.6 million or 17.5% of sales, compared to $28.3 million or 18.5% of sales last year.
Sales increased 2.7% to $157.4 million for the six months ended July 31, 2010, compared to $153.2 million last year. Comparable store sales decreased 1.6% versus the same period a year ago.
During the first six months of the year, the Company opened 4 stores, closed 2 and expanded 13 existing locations, resulting in the addition of 53,000 square feet or 4.6% to the Le Château network, bringing the total floor space at end of period to 1,199,000 square feet.
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 68th consecutive dividend declared by Le Château, and is payable on November 16, 2010 to the shareholders of record at the close of business on October 29, 2010.
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 234 retail locations, of which 231 are located in Canada and 3 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 50-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 earnings before interest, income taxes, depreciation and amortization ("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 second quarter ended July 31, 2010 are available online at www.sedar.com
CONSOLIDATED BALANCE SHEETS
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As at As at As at
(Unaudited) July 31, August 1, January 30,
(In thousands of dollars) 2010 2009 2010
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ASSETS
Current
Cash and cash equivalents $ 15,967 $ 19,626 $ 23,411
Short-term investments 38,620 20,000 45,000
Accounts receivable 3,363 2,502 2,454
Income taxes refundable 1,863 3,139 1,602
Derivative financial instruments 258 - 59
Inventories 77,775 58,899 61,234
Future income taxes - 406 -
Prepaid expenses 1,934 7,250 1,308
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Total current assets 139,780 111,822 135,068
Long-term investments - 10,000 10,000
Fixed assets 92,677 89,673 88,437
Intangible assets 3,615 2,013 2,527
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$ 236,072 $ 213,508 $ 236,032
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued
liabilities $ 28,048 $ 25,197 $ 27,151
Dividend payable 4,313 4,262 4,293
Derivative financial instruments - 1,277 -
Current portion of capital lease
obligations - 341 -
Current portion of long-term debt 12,103 7,565 11,752
Future income taxes 77 - 19
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Total current liabilities 44,541 38,642 43,215
Long-term debt 14,920 15,529 21,464
Future income taxes 3,910 3,176 3,910
Deferred lease inducements 10,028 10,139 10,222
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Total liabilities 73,399 67,486 78,811
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Shareholders' equity
Capital stock 35,666 32,241 34,335
Contributed surplus 2,121 2,389 2,159
Retained earnings 124,705 112,263 120,687
Accumulated other comprehensive
income (loss) 181 (871) 40
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Total shareholders' equity 162,673 146,022 157,221
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$ 236,072 $ 213,508 $ 236,032
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
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For the For the
three months ended six months ended
(Unaudited) July 31, August 1, July 31, August 1,
(In thousands of dollars) 2010 2009 2010 2009
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Balance, beginning of
period $ 120,861 $ 108,745 $ 120,687 $ 107,914
Net earnings 8,157 7,780 12,641 12,850
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129,018 116,525 133,328 120,764
Dividends declared 4,313 4,262 8,623 8,501
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Balance, end of period $ 124,705 $ 112,263 $ 124,705 $ 112,263
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CONSOLIDATED STATEMENTS OF EARNINGS
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For the For the
(Unaudited) three months ended six months ended
(In thousands of dollars, July 31, August 1, July 31, August 1,
except per share data) 2010 2009 2010 2009
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Sales $ 86,536 $ 81,437 $ 157,432 $ 153,212
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Cost of sales and expenses
Cost of sales and selling,
general and administrative 69,946 65,150 129,866 124,948
Depreciation and
amortization 4,345 4,484 8,559 8,787
Write-off of fixed assets 215 89 215 89
Interest on long-term
debt and capital lease
obligations 400 326 846 703
Interest income (147) (162) (310) (435)
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74,759 69,887 139,176 134,092
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Earnings before income
taxes 11,777 11,550 18,256 19,120
Provision for income
taxes 3,620 3,770 5,615 6,270
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Net earnings $ 8,157 $ 7,780 $ 12,641 $ 12,850
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Net earnings per share
Basic $ 0.33 $ 0.32 $ 0.51 $ 0.53
Diluted 0.33 0.32 0.51 0.53
Weighted average number
of shares outstanding
('000) 24,632 24,312 24,592 24,268
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
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For the For the
three months ended six months ended
(Unaudited) July 31, August 1, July 31, August 1,
(In thousands of dollars) 2010 2009 2010 2009
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Net earnings $ 8,157 $ 7,780 $ 12,641 $ 12,850
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Other comprehensive income
Change in fair value of
forward exchange contracts 137 (1,152) 295 (1,703)
Realized forward exchange
contracts reclassified
to net earnings (37) 345 (96) (1,104)
Income tax recovery
(expense) (30) 257 (58) 893
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70 (550) 141 (1,914)
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Comprehensive income $ 8,227 $ 7,230 $ 12,782 $ 10,936
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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For the For the
three months ended six months ended
(Unaudited) July 31, August 1, July 31, August 1,
(In thousands of dollars) 2010 2009 2010 2009
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OPERATING ACTIVITIES
Net earnings $ 8,157 $ 7,780 $ 12,641 $ 12,850
Adjustments to determine
net cash from operating
activities
Depreciation and
amortization 4,345 4,484 8,559 8,787
Write-off of fixed assets 215 89 215 89
Amortization of deferred
lease inducements (467) (373) (869) (729)
Stock-based compensation 91 (20) 223 163
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12,341 11,960 20,769 21,160
Net change in non-cash
working capital items
related to operations 146 (1,523) (17,440) (14,700)
Deferred lease inducements 439 998 675 1,176
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Cash flows related to
operating activities 12,926 11,435 4,004 7,636
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FINANCING ACTIVITIES
Repayment of capital lease
obligations - (336) - (667)
Repayment of long-term
debt (2,924) (2,058) (6,193) (4,634)
Issue of capital stock
upon exercise of options 280 1,010 1,070 1,010
Dividends paid (4,310) (4,239) (8,603) (8,478)
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Cash flows related to
financing activities (6,954) (5,623) (13,726) (12,769)
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INVESTING ACTIVITIES
Decrease in short-term
investments 7,380 - 6,380 36,643
Decrease (increase) in
long-term investments - - 10,000 (10,000)
Additions to fixed assets
and intangible assets (5,548) (6,344) (14,102) (11,918)
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Cash flows related to
investing activities 1,832 (6,344) 2,278 14,725
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Increase (decrease) in
cash and cash equivalents 7,804 (532) (7,444) 9,592
Cash and cash equivalents,
beginning of period 8,163 20,158 23,411 10,034
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Cash and cash equivalents,
end of period $ 15,967 $ 19,626 $ 15,967 $ 19,626
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Supplementary information:
Interest paid during the
period $ 400 $ 326 $ 846 $ 703
Income taxes paid during
the period 2,863 5,275 5,593 11,344
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SEGMENTED INFORMATION
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For the For the
three months ended six months ended
(Unaudited) July 31, August 1, July 31, August 1,
(In thousands of dollars) 2010 2009 2010 2009
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Sales by country
Canada $ 85,681 $ 80,180 $ 155,635 $ 150,518
United States 855 1,257 1,797 2,694
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$ 86,536 $ 81,437 $ 157,432 $ 153,212
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Sales by division
Ladies' Clothing $ 49,721 $ 44,869 $ 93,056 $ 86,572
Men's Clothing 14,890 14,275 25,197 25,419
Footwear 8,888 9,051 16,198 16,712
Accessories 13,037 13,242 22,981 24,509
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$ 86,536 $ 81,437 $ 157,432 $ 153,212
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Net earnings (loss)
Canada $ 8,530 $ 8,119 $ 13,439 $ 13,427
United States (373) (339) (798) (577)
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$ 8,157 $ 7,780 $ 12,641 $ 12,850
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Fixed assets and
intangible assets
Canada $ 95,691 $ 90,831 $ 95,691 $ 90,831
United States 601 855 601 855
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$ 96,292 $ 91,686 $ 96,292 $ 91,686
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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; Maison Brison: Pierre Boucher, (514) 731-0000; Source: Le Château Inc.