Le Château reports first quarter results



    MONTREAL, June 7 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today
reported that sales increased 15.0% to $70.4 million for the first quarter
ended April 28, 2007 as compared with $61.2 million for the first quarter
ended April 29, 2006. Comparable store sales increased by 10.0% versus the
same period a year ago.
    Net earnings for the first quarter increased 68.6% to $4.6 million or
$0.74 per share from $2.7 million or $0.45 per share for the same period last
year. Earnings before interest, income taxes, depreciation and amortization
(EBITDA) for the first quarter increased 46.6% to $10.8 million or 15.3% of
sales, compared to $7.4 million or 12.0% of sales last year.
    Le Château's CEO Jane Silverstone Segal said, "The sales growth achieved
during the first quarter resulted from a combination of the strong appeal of
the Company's product offerings, as well as increased footage arising from new
store openings and the expansion of certain stores."
    During the first quarter, the Company opened four new stores, closed one
store and expanded nine existing locations, resulting in the addition of
27,000 square feet or 3% to the Le Château network.

    Second quarter of fiscal 2008
    -----------------------------

    For the first five weeks ended June 2, 2007, total retail sales have
increased 17.8% and comparable store sales have increased 12.5% over the same
period a year ago.

    Dividend declaration
    --------------------

    The Board of Directors has declared a quarterly dividend (constituting
eligible dividends for income tax purposes) of $0.50 per Class A subordinate
voting share and Class B voting share (on a pre-split basis). This is the
55th consecutive dividend declared by Le Château, and is payable on August 17,
2007 to the shareholders of record at the close of business on July 20, 2007.

    Stock split
    -----------

    As disclosed on April 12, 2007, the Company intends to propose a
four-for-one stock split of its Class A subordinate voting shares and Class B
voting shares. The stock split will be subject to approval by the Company's
shareholders at the forthcoming meeting of shareholders to be held on June 27,
2007. Further information relating to the stock split is provided in the
Company's information circular dated May 22, 2007. All share and per share
information presented do not reflect the effects of the stock split.

    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
203 retail locations, of which 198 are located in Canada and 5 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.
    The Company's 48-year tradition of vertical integration, a design and
manufacturing approach to retailing, makes it unique among Canadian fashion
merchants.

    Supplementary Earnings Measure
    ------------------------------

    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 above measure does 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.
    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.

    
    CONSOLIDATED BALANCE SHEETS
    ---------------------------
                                               As at       As at       As at
    (Unaudited)                             April 28,   April 29, January 27,
    (In thousands of dollars)                   2007        2006        2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents              $  11,720   $   5,808   $   2,743
    Short-term investments                    32,516      37,276      58,899
    Accounts receivable and prepaid
     expenses                                  4,410       4,512       4,457
    Income taxes refundable                      852         796           -
    Inventories                               46,349      37,249      40,967
    -------------------------------------------------------------------------
    Total current assets                      95,847      85,641     107,066
    Fixed assets                              86,394      73,972      78,643
    -------------------------------------------------------------------------
                                           $ 182,241   $ 159,613   $ 185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued
     liabilities                           $  31,948   $  24,563   $  32,870
    Dividend payable                           3,114       1,507      20,992
    Income taxes payable                           -           -         833
    Derivative financial instruments             829           -           -
    Current portion of capital lease
     obligations                               1,680       2,674       2,051
    Current portion of long-term debt          7,414       4,204       4,392
    -------------------------------------------------------------------------
    Total current liabilities                 44,985      32,948      61,138
    Capital lease obligations                  1,975       3,655       2,288
    Long-term debt                            17,703       9,251       5,934
    Future income taxes                        2,612       2,365       2,891
    Deferred lease inducements                 5,508       4,671       5,284
    -------------------------------------------------------------------------
    Total liabilities                         72,783      52,890      77,535
    -------------------------------------------------------------------------

    Shareholders' Equity
    Capital stock                             30,367      27,212      30,221
    Contributed surplus                        1,358         722       1,139
    Retained earnings                         78,283      78,789      76,814
    Accumulated other comprehensive income      (550)          -           -
    -------------------------------------------------------------------------
    Total shareholders' equity               109,458     106,723     108,174
    -------------------------------------------------------------------------
                                           $ 182,241   $ 159,613   $ 185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    --------------------------------------------
                                                  For the three months ended
    (Unaudited)                                         April 28,   April 29,
    (In thousands of dollars)                               2007        2006
    -------------------------------------------------------------------------
    Balance, beginning of period                       $  76,814   $  77,577
    Net earnings                                           4,583       2,719
    -------------------------------------------------------------------------
                                                          81,397      80,296
    Dividends                                              3,114       1,507
    -------------------------------------------------------------------------
    Balance, end of period                             $  78,283   $  78,789
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS
    -----------------------------------
                                                  For the three months ended
    (Unaudited)                                         April 28,   April 29,
    (In thousands of dollars, except per share data)        2007        2006
    -------------------------------------------------------------------------
    Sales                                              $  70,385   $  61,187
    -------------------------------------------------------------------------

    Cost of sales and expenses
    Cost of sales and selling, general and
     administrative                                       59,597      53,826
    Depreciation and amortization                          3,846       3,198
    Write-off of fixed assets                                  -          51
    Interest on long-term debt and capital lease
     obligations                                             347         304
    Interest income                                         (488)       (411)
    -------------------------------------------------------------------------
                                                          63,302      56,968
    -------------------------------------------------------------------------
    Earnings before income taxes                           7,083       4,219
    Provision for income taxes                             2,500       1,500
    -------------------------------------------------------------------------
    Net earnings                                       $   4,583   $   2,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share
      Basic                                            $    0.74   $    0.45
      Diluted                                               0.72        0.43

    Weighted average number of shares
     outstanding ('000)                                    6,221       6,026


    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    -----------------------------------------------
                                                  For the three months ended
    (Unaudited)                                         April 28,   April 29,
    (In thousands of dollars)                               2007        2006
    -------------------------------------------------------------------------
    Net earnings                                       $   4,583   $   2,719
    -------------------------------------------------------------------------
    Other comprehensive income
    Losses on forward exchange contracts designated
     as cash flow hedges (net of income taxes of $279)      (550)          -
    Gains on forward exchange contracts designated
     as cash flow hedges prior to January 28, 2007,
     transferred to net earnings in the current period
     (net of income taxes of $108)                          (212)          -
    -------------------------------------------------------------------------
                                                            (762)          -
    -------------------------------------------------------------------------
    Comprehensive income                               $   3,821   $   2,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------
                                                  For the three months ended
    (Unaudited)                                         April 28,   April 29,
    (In thousands of dollars)                               2007        2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings                                       $   4,583   $   2,719
    Adjustments to determine net cash from operating
     activities
      Depreciation and amortization                        3,846       3,198
      Write-off of fixed assets                                -          51
      Amortization of deferred lease inducements            (205)       (179)
      Stock-based compensation                               219         264
    -------------------------------------------------------------------------
                                                           8,443       6,053
    Net change in non-cash working capital
     items related to operations                          (7,942)    (10,212)
    Deferred lease inducements                               429         650
    -------------------------------------------------------------------------
    Cash flows related to operating activities               930      (3,509)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of capital lease obligations                  (684)       (644)
    Proceeds of long-term debt                            16,344           -
    Repayment of long-term debt                           (1,553)     (1,083)
    Issue of capital stock                                   146           2
    Dividends paid                                       (20,992)     (1,507)
    -------------------------------------------------------------------------
    Cash flows related to financing activities            (6,739)     (3,232)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease in short-term investments                    26,383       5,807
    Additions to fixed assets                            (11,597)    (11,237)
    -------------------------------------------------------------------------
    Cash flows related to investing activities            14,786      (5,430)
    -------------------------------------------------------------------------

    Increase (decrease) in cash and cash equivalents       8,977     (12,171)
    Cash and cash equivalents, beginning of period         2,743      17,979
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period           $  11,720   $   5,808
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Interest paid during the period                    $     347   $     304
    Income taxes paid during the period                    4,113       6,038
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    SEGMENTED INFORMATION
    ---------------------
                                                  For the three months ended
    (Unaudited)                                         April 28,   April 29,
    (In thousands of dollars)                               2007        2006
    -------------------------------------------------------------------------
    Sales by country
    Canada                                             $  68,304   $  59,392
    United States                                          2,081       1,795
    -------------------------------------------------------------------------
                                                       $  70,385   $  61,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Sales by division
    Ladies' Clothing                                   $  41,420   $  36,128
    Men's Clothing                                         9,754       8,312
    Footwear                                               8,335       7,204
    Accessories                                           10,876       9,543
    -------------------------------------------------------------------------
                                                       $  70,385   $  61,187
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)
    Canada                                             $   4,792   $   3,109
    United States                                           (209)       (390)
    -------------------------------------------------------------------------
                                                       $   4,583   $   2,719
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Identifiable assets
    Canada                                             $ 177,595   $ 154,668
    United States                                          4,646       4,945
    -------------------------------------------------------------------------
                                                       $ 182,241   $ 159,613
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Emilia Di Raddo, CA, President (514) 738-7000;
Johnny Del Ciancio, CA, Vice-President, Finance, (514) 738-7000; Maison
Brison: Rick Leckner, (514) 731-0000; Source: Le Château Inc.

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