Le Château reports record year-end earnings



    MONTREAL, April 8 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today
reported that net earnings for the 53-week period ended January 31, 2009
increased 18.4% to $38.6 million from $32.6 million for the 52-week period
ended January 26, 2008. Earnings per share (basic) for the year increased
20.0% to $1.56 per share from $1.30 per share the previous year. Earnings
before interest, income taxes, depreciation and amortization (EBITDA) for the
year increased 9.2% to $74.5 million or 21.6% of sales, compared to $68.2
million or 20.3% of sales last year, resulting primarily from continued
improvements in gross margins.
    Sales for the 53-week period ended January 31, 2009 increased 2.8% to
$345.6 million compared to $336.1 million for the 52-week period ended January
26, 2008. Comparable store sales decreased by 2.7% over the same period a year
ago. During the year, the Company opened twelve new stores and expanded nine
existing locations, resulting in the addition of 83,000 square feet or 8.6% to
the Le Château network, bringing the total floor space at end of year to
1,048,000 square feet.
    In June 2008, the Toronto Stock Exchange approved the Company's
previously announced normal course issuer bid to purchase up to 925,148 Class
A subordinate voting shares. Since June 19, 2008, the Company purchased
920,700 Class A subordinate voting shares at an average price of $11.44 per
share for a total of $10.5 million.

    Fourth quarter results
    ----------------------

    Net earnings for the 14-week period ended January 31, 2009 increased 6.5%
to $13.2 million from $12.4 million the 13-week period ended January 26, 2008.
Earnings per share (basic) for the period increased 10.2% to $0.54 per share
from $0.49 per share last year. Earnings before interest, income taxes,
depreciation and amortization (EBITDA) for the fourth quarter increased 3.0%
to $23.9 million or 23.3% of sales, compared to $23.2 million or 23.2% of
sales last year.
    Sales rose 2.6% to $102.6 million for the 14-week period ended January
31, 2009, compared to $100.0 million for the 13-week period ended January 26,
2008. Comparable store sales decreased 5.4% versus 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 $0.175 per Class A subordinate
voting share and Class B voting share. This is the 62nd consecutive dividend
declared by Le Château, and is payable on May 19, 2009 to the shareholders of
record at the close of business on May 5, 2009.

    New Accounting Standard Implemented in 2008:
    --------------------------------------------

    On January 27, 2008, the Company adopted the recommendations of the
following Section of the Canadian Institute of Chartered Accountants ("CICA")
Handbook:
    Section 3031, Inventory, was developed based on International Financial
Reporting Standards ("IFRS"). The standard was revised to provide more
extensive guidance than Section 3030, to facilitate the CICA's move towards
IFRS, and to reduce the number of alternatives for the measurement of
inventories. Section 3031 requires inventories to be measured at the lower of
cost and net realizable value. The Company previously valued its inventory at
the lower of average cost and net realizable value less a normal profit
margin, using the retail inventory method.
    The Company has adopted this new standard retrospectively, with
restatement of prior period amounts. The initial impact of measuring the
inventories under the new standard was an increase to the carrying amount of
opening inventories as at January 27, 2008 of $2.9 million ($4.4 million as at
January 28, 2007). Opening retained earnings as at January 27, 2008 have been
increased by $2.0 million, equal to the change in opening inventories net of
tax of $927,000. For the previous year, opening retained earnings as at
January 28, 2007 have been increased by $3.0 million, equal to the change in
opening inventories net of tax of $1.4 million.
    The adoption of the new standard resulted in an increase in net earnings
for the fourth quarter ended January 31, 2009 of $26,000 or NIL per share. The
carrying amount of inventories as at January 31, 2009 increased by $1.8
million to $54.0 million. As a result of the restatement, net earnings for the
fourth quarter ended January 26, 2008 increased by $139,000 or NIL per share.
The carrying amount of inventories as at January 26, 2008 increased by $2.9
million to $45.9 million. On a year-to-date basis, the adoption of the new
standard resulted in a reduction of net earnings for the year ended January
31, 2009 of $736,000 or $0.03 per share (2008 - $1.0 million or $0.05 per
share).
    Total inventories as at January 31, 2009 increased 17.6% to $54.0 million
from $45.9 million a year earlier. Approximately half of this increase is
related to the following two factors. Firstly, an earlier Chinese New Year
resulted in the acceleration of import spring receipts and secondly, there was
an additional week of spring deliveries due to a 53-week period which ended
one week later on January 31, 2009 as compared to a 52-week period the
previous year which ended January 26, 2008. The balance of the increase was
due to the additional square footage year over year of 8.6% or 83,000 square
feet.

    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 222
retail locations, of which 218 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
                                                      January 31, January 26,
    (Unaudited)                                             2009        2008
    (In thousands of dollars)                                      (restated)
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents                         $   10,034  $    3,846
    Short-term investments                                56,643      66,354
    Accounts receivable and other assets                   4,791       4,350
    Derivative financial instruments                       1,530         250
    Inventories                                           54,012      45,903
    Prepaid expenses                                         778       1,707
    -------------------------------------------------------------------------
    Total current assets                                 127,788     122,410
    Fixed assets                                          88,643      84,466
    -------------------------------------------------------------------------
                                                      $  216,431  $  206,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued liabilities          $   25,403  $   30,377
    Dividend payable                                       4,239       3,133
    Income taxes payable                                   2,285       5,092
    Current portion of capital lease obligations           1,008       1,384
    Current portion of long-term debt                      8,746       7,113
    Future income taxes                                      487         927
    -------------------------------------------------------------------------
    Total current liabilities                             42,168      48,026
    Capital lease obligations                                  -       1,008
    Long-term debt                                        18,982      12,689
    Future income taxes                                    3,176       2,975
    Deferred lease inducements                             9,691       8,573
    -------------------------------------------------------------------------
    Total liabilities                                     74,017      73,271
    -------------------------------------------------------------------------

    Shareholders' Equity
    Capital stock                                         30,997      31,794
    Contributed surplus                                    2,460       1,761
    Retained earnings                                    107,914      99,884
    Accumulated other comprehensive income                 1,043         166
    -------------------------------------------------------------------------
    Total shareholders' equity                           142,414     133,605
    -------------------------------------------------------------------------
                                                      $  216,431  $  206,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                               For the three months        For the year
                                       ended                   ended
                              January 31, January 26, January 31, January 26,
    (Unaudited)                     2009        2008        2009        2008
    (In thousands of dollars)              (restated)              (restated)
    -------------------------------------------------------------------------
    Balance, beginning of
     period - as previously
     reported                 $  100,020  $   88,826  $   97,914  $   76,814
    Adjustment to opening
     retained earnings
     resulting from adoption
     of new accounting
     standard for inventories,
     net of income taxes of
     $927 (2008 - 3 month
     period $860; 2008 - 12
     month period $1,400)              -       1,833       1,970       2,978
    Excess of cost over
     stated value of Class A
     subordinate voting
     shares purchased and
     cancelled                    (1,034)          -      (8,989)          -
    Net earnings                  13,167      12,359      38,621      32,596
    -------------------------------------------------------------------------
                                 112,153     103,018     129,516     112,388
    Dividends declared             4,239       3,134      21,602      12,504
    -------------------------------------------------------------------------
    Balance, end of period    $  107,914  $   99,884  $  107,914  $   99,884
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                               For the three months        For the year
                                       ended                   ended
    (Unaudited)               January 31, January 26, January 31, January 26,
    (In thousands of dollars,       2009        2008        2009        2008
     except per share data)                (restated)              (restated)
    -------------------------------------------------------------------------
    Sales                     $  102,555  $   99,973  $  345,614  $  336,070
    -------------------------------------------------------------------------
    Cost of sales and expenses
    Cost of sales and
     selling, general and
     administrative               78,648      76,819     271,119     267,878
    Depreciation and
     amortization                  4,233       3,822      16,705      16,048
    Write-off of fixed
     assets                          401         623         585       2,220
    Interest on long-term
     debt and capital lease
     obligations                     426         324       1,798       1,429
    Interest income                 (505)       (641)     (2,299)     (2,028)
    -------------------------------------------------------------------------
                                  83,203      80,947     287,908     285,547
    -------------------------------------------------------------------------
    Earnings before income
     taxes                        19,352      19,026      57,706      50,523
    Provision for income
     taxes                         6,185       6,667      19,085      17,927
    -------------------------------------------------------------------------
    Net earnings              $   13,167  $   12,359  $   38,621  $   32,596
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings per share
      Basic                   $     0.54  $     0.49  $     1.56  $     1.30
      Diluted                       0.54        0.49        1.55        1.29
    Weighted average number
     of shares outstanding
     ('000)                       24,355      25,036      24,796      24,978


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

                               For the three months        For the year
                                       ended                   ended
                              January 31, January 26, January 31, January 26,
    (Unaudited)                     2009        2008        2009        2008
    (In thousands of dollars)              (restated)              (restated)
    -------------------------------------------------------------------------
    Net earnings              $   13,167  $   12,359  $   38,621  $   32,596
    -------------------------------------------------------------------------
    Other comprehensive income
    Change in fair value
     of forward exchange
     contracts                      (194)       (881)      5,260      (1,825)
    Realized forward
     exchange contracts
     reclassified to net
     earnings                     (3,336)      2,075      (3,980)      1,755
    Income tax (expense)
     recovery                      1,122        (402)       (403)         24
    -------------------------------------------------------------------------
                                  (2,408)        792         877         (46)
    -------------------------------------------------------------------------
    Comprehensive income      $   10,759  $   13,151  $   39,498  $   32,550
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------

                               For the three months        For the year
                                       ended                   ended
    (Unaudited)               January 31, January 26, January 31, January 26,
                                    2009        2008        2009        2008
    (In thousands of dollars)              (restated)              (restated)
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings              $   13,167  $   12,359  $   38,621  $   32,596
    Adjustments to
     determine net cash
     from operating
     activities
      Depreciation and
       amortization                4,233       3,822      16,705      16,048
      Write-off of fixed
       assets                        401         623         585       2,220
      Amortization of
       deferred lease
       inducements                  (358)       (344)     (1,414)     (1,095)
      Stock-based
       compensation                  190         363         836         829
      Future income taxes            285          67        (642)       (473)
    -------------------------------------------------------------------------
                                  17,918      16,890      54,691      50,125

    Net change in non-cash
     working capital items
     related to operations          (963)     13,712     (15,402)       (392)
    Deferred lease
     inducements                     733          47       2,532       4,384
    -------------------------------------------------------------------------
    Cash flows related to
     operating activities         17,688      30,649      41,821      54,117
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of capital
     lease obligations              (435)       (346)     (1,384)     (1,947)
    Proceeds of long-term
     debt                              -           -      18,000      16,344
    Repayment of long-
     term debt                    (2,432)     (1,863)    (10,074)     (6,868)
    Issue of capital stock
     upon exercise of
     options                           -         358         614       1,366
    Purchase of Class A
     subordinate voting
     shares for cancellation      (1,303)          -     (10,537)          -
    Dividends paid                (4,278)     (3,129)    (20,496)    (30,363)
    -------------------------------------------------------------------------
    Cash flows related to
     financing activities         (8,448)     (4,980)    (23,877)    (21,468)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease (increase) in
     short-term investments            -     (30,032)      9,711      (7,455)
    Additions to fixed assets     (1,611)     (2,935)    (21,467)    (24,091)
    -------------------------------------------------------------------------
    Cash flows related to
     investing activities         (1,611)    (32,967)    (11,756)    (31,546)
    -------------------------------------------------------------------------

    Increase (decrease) in
     cash and cash equivalents     7,629      (7,298)      6,188       1,103
    Cash and cash equivalents,
     beginning of period           2,405      11,144       3,846       2,743
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period            $   10,034  $    3,846  $   10,034  $    3,846
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Interest paid during
     the period               $      426  $      324  $    1,798  $    1,429
    Income taxes paid during
     the period                    4,206       3,325      22,009      14,203
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    SEGMENTED INFORMATION
    ---------------------
                               For the three months        For the year
                                       ended                   ended
                              January 31, January 26, January 31, January 26,
    (Unaudited)                     2009        2008        2009        2008
    (In thousands of dollars)              (restated)              (restated)
    -------------------------------------------------------------------------
    Sales by country
    Canada                    $  100,982  $   98,098  $  339,660  $  328,688
    United States                  1,573       1,875       5,954       7,382
    -------------------------------------------------------------------------
                              $  102,555  $   99,973  $  345,614  $  336,070
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Sales by division
    Ladies' Clothing          $   53,549  $   55,120  $  190,676  $  191,738
    Men's Clothing                18,462      17,753      57,847      52,053
    Footwear                      10,719      10,066      38,562      39,579
    Accessories                   19,825      17,034      58,529      52,700
    -------------------------------------------------------------------------
                              $  102,555  $   99,973  $  345,614  $  336,070
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)
    Canada                    $   13,523  $   12,383  $   39,259  $   34,706
    United States                   (356)        (24)       (638)     (2,110)
    -------------------------------------------------------------------------
                              $   13,167  $   12,359  $   38,621  $   32,596
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Identifiable assets
    Canada                    $  214,165  $  204,337  $  214,165  $  204,337
    United States                  2,266       2,539       2,266       2,539
    -------------------------------------------------------------------------
                              $  216,431  $  206,876  $  216,431  $  206,876
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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

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