Le Château reports first quarter results



    MONTREAL, June 11 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today
reported that sales for the first quarter ended May 2, 2009 increased 1.7% to
$71.8 million from $70.6 million for the first quarter ended April 26, 2008.
Comparable store sales decreased by 5.9% versus the same period a year ago.
    Net earnings for the first quarter ended May 2, 2009 were $5.1 million
compared to $5.6 million for the first quarter ended April 26, 2008. Earnings
per share (diluted) for the first quarter were $0.21 per share versus $0.22
per share the previous year. Earnings before interest, income taxes,
depreciation and amortization (EBITDA) for the first quarter amounted to $12.0
million or 16.7% of sales, compared to $12.4 million or 17.5% of sales last
year.
    During the first quarter, the Company opened 2 stores, closed 1 and
expanded 1 existing location, resulting in the addition of 8,000 square feet
to the Le Château network, bringing the total floor space at end of period to
1,056,000 square feet.

    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 63rd consecutive dividend
declared by Le Château, and is payable on August 18, 2009 to the shareholders
of record at the close of business on July 30, 2009.

    Normal course issuer bid
    ------------------------

    The Company announced today that it intends, subject to the approval of
the Toronto Stock Exchange, to proceed with a normal course issuer bid. Under
the bid, the Company may purchase up to 987,173 Class A subordinate voting
shares of the Company, representing 5% of the issued shares of such class as
at June 11, 2009. The bid will commence on June 19, 2009 and may continue to
June 18, 2010. The average daily trading volume for the 6-month period
preceding June 1, 2009 is 26,815 shares. In accordance with TSX requirements,
a maximum daily repurchase of 25% of this average may be made, representing
6,703 shares. The shares will be purchased on behalf of the Company by a
registered broker through the facilities of the Toronto Stock Exchange. The
price paid for the shares will be the market price at the time of acquisition,
and the number of shares purchased and the timing of any such purchases will
be determined by the Company. All shares purchased by the Company will be
cancelled. The Company currently has 19,743,464 Class A subordinate voting
shares outstanding. During the past 12 months, the Company purchased 920,700
Class A subordinate voting shares at a weighted average price of $11.41 per
share for a total of $10.5 million.
    The directors of the Company have concluded that purchases of up to
987,173 of the issued and outstanding Class A subordinate voting shares are an
appropriate and desirable use of the Company's available funds and, therefore,
would be in the best interests of the Company. As a result of such purchases,
the number of issued shares will be decreased and, consequently, the
proportionate share interest of all remaining shareholders will be increased
on a pro rata basis.

    Annual General Meeting
    ----------------------

    The Company's annual general meeting is scheduled for June 17, 2009 at
its head office located at 8300 Decarie Boulevard. The record date for this
meeting was May 15, 2009.

    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 223
retail locations, of which 219 are located in Canada and 4 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 49-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
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
    --------------------------

    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)                            May 2,     April 26,   January 31,
    (In thousands of dollars)               2009          2008          2009
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents          $  20,158     $  16,929     $  10,034
    Short-term investments                20,000        53,080        56,643
    Accounts receivable and other
     assets                                3,616         4,808         4,791
    Income taxes refundable                1,371             -             -
    Derivative financial instruments           -             -         1,530
    Inventories                           57,590        49,868        54,012
    Future income taxes                      149             -             -
    Prepaid expenses                       6,950         1,992           778
    -------------------------------------------------------------------------
    Total current assets                 109,834       126,677       127,788
    Long-term investments                 10,000             -             -
    Fixed assets                          89,914        92,214        88,643
    -------------------------------------------------------------------------
                                       $ 209,748     $ 218,891     $ 216,431
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS'
     EQUITY
    Current
    Accounts payable and accrued
     liabilities                       $  24,457     $  29,815     $  25,403
    Dividend payable                       4,239         3,133         4,239
    Income taxes payable                       -           456         2,285
    Derivative financial instruments         470             -             -
    Current portion of capital lease
     obligations                             677         1,403         1,008
    Current portion of long-term debt      7,885        10,049         8,746
    Future income taxes                        -             -           487
    -------------------------------------------------------------------------
    Total current liabilities             37,728        44,856        42,168
    Capital lease obligations                  -           677             -
    Long-term debt                        17,267        25,335        18,982
    Future income taxes                    3,176         2,956         3,176
    Deferred lease inducements             9,513         8,704         9,691
    -------------------------------------------------------------------------
    Total liabilities                     67,684        82,528        74,017
    -------------------------------------------------------------------------

    Shareholders' equity
    Capital stock                         30,997        31,794        30,997
    Contributed surplus                    2,643         2,034         2,460
    Retained earnings                    108,745       102,396       107,914
    Accumulated other comprehensive
     income (loss)                          (321)          139         1,043
    -------------------------------------------------------------------------
    Total shareholders' equity           142,064       136,363       142,414
    -------------------------------------------------------------------------
                                       $ 209,748     $ 218,891     $ 216,431
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    --------------------------------------------
                                                  For the three months ended
    (Unaudited)                                          May 2,     April 26,
    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    Balance, beginning of period                     $ 107,914     $  99,884
    Net earnings                                         5,070         5,645
    -------------------------------------------------------------------------
                                                       112,984       105,529
    Dividends declared                                   4,239         3,133
    -------------------------------------------------------------------------
    Balance, end of period                           $ 108,745     $ 102,396
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF EARNINGS
    -----------------------------------

    (Unaudited)                                   For the three months ended
    (In thousands of dollars, except per share           May 2,     April 26,
     data)                                                2009          2008
    -------------------------------------------------------------------------
    Sales                                            $  71,775     $  70,616
    -------------------------------------------------------------------------

    Cost of sales and expenses
    Cost of sales and selling, general and
     administrative                                     59,798        58,262
    Depreciation and amortization                        4,303         4,039
    Write-off of fixed assets                                -           100
    Interest on long-term debt and capital lease
     obligations                                           377           434
    Interest income                                       (273)         (699)
    -------------------------------------------------------------------------
                                                        64,205        62,136
    -------------------------------------------------------------------------
    Earnings before income taxes                         7,570         8,480
    Provision for income taxes                           2,500         2,835
    -------------------------------------------------------------------------
    Net earnings                                     $   5,070     $   5,645
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share
      Basic                                          $    0.21     $    0.23
      Diluted                                             0.21          0.22

    Weighted average number of shares
     outstanding ('000)                                 24,223        25,063


    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    -----------------------------------------------

                                                  For the three months ended
    (Unaudited)                                          May 2,     April 26,
    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    Net earnings                                     $   5,070     $   5,645
    -------------------------------------------------------------------------
    Other comprehensive income
    Change in fair value of forward exchange
     contracts                                            (551)          209
    Realized forward exchange contracts
     reclassified to net earnings                       (1,449)         (255)
    Income tax recovery                                    636            19
    -------------------------------------------------------------------------
                                                        (1,364)          (27)
    -------------------------------------------------------------------------
    Comprehensive income                             $   3,706     $   5,618
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------
                                                  For the three months ended
    (Unaudited)                                          May 2,     April 26,
    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings                                     $   5,070     $   5,645
    Adjustments to determine net cash from
     operating activities
      Depreciation and amortization                      4,303         4,039
      Write-off of fixed assets                              -           100
      Amortization of deferred lease inducements          (356)         (338)
      Stock-based compensation                             183           273
      Future income taxes                                    -          (927)
    -------------------------------------------------------------------------
                                                         9,200         8,792
    Net change in non-cash working capital items
     related to operations                             (13,177)       (9,702)
    Deferred lease inducements                             178           469
    -------------------------------------------------------------------------
    Cash flows related to operating activities          (3,799)         (441)
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of capital lease obligations                (331)         (312)
    Proceeds of long-term debt                               -        18,000
    Repayment of long-term debt                         (2,576)       (2,418)
    Dividends paid                                      (4,239)       (3,133)
    -------------------------------------------------------------------------
    Cash flows related to financing activities          (7,146)       12,137
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease in short-term investments                  36,643        13,274
    Increase in long-term investments                  (10,000)            -
    Additions to fixed assets                           (5,574)      (11,887)
    -------------------------------------------------------------------------
    Cash flows related to investing activities          21,069         1,387
    -------------------------------------------------------------------------

    Increase in cash and cash equivalents               10,124        13,083
    Cash and cash equivalents, beginning of period      10,034         3,846
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period         $  20,158     $  16,929
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Interest paid during the period                  $     377     $     434
    Income taxes paid during the period                  6,096         8,398
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    SEGMENTED INFORMATION
    ---------------------
                                                  For the three months ended
    (Unaudited)                                          May 2,     April 26,
    (In thousands of dollars)                             2009          2008
    -------------------------------------------------------------------------
    Sales by country
    Canada                                           $  70,338     $  69,206
    United States                                        1,437         1,410
    -------------------------------------------------------------------------
                                                     $  71,775     $  70,616
    -------------------------------------------------------------------------

    Sales by division
    Ladies' Clothing                                 $  41,703     $  41,660
    Men's Clothing                                      11,144        10,865
    Footwear                                             7,661         7,471
    Accessories                                         11,267        10,620
    -------------------------------------------------------------------------
                                                     $  71,775     $  70,616
    -------------------------------------------------------------------------

    Net earnings (loss)
    Canada                                           $   5,308     $   5,730
    United States                                         (238)          (85)
    -------------------------------------------------------------------------
                                                     $   5,070     $   5,645
    -------------------------------------------------------------------------

    Fixed assets
    Canada                                           $  89,000     $  91,054
    United States                                          914         1,160
    -------------------------------------------------------------------------
                                                     $  89,914     $  92,214
    -------------------------------------------------------------------------
    




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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