Le Château reports second quarter results



    MONTREAL, Sept. 10 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today
reported that sales increased 16.3% to $83.6 million for the second quarter
ended July 28, 2007 as compared with $71.9 million for the second quarter
ended July 29, 2006. Comparable store sales increased by 11.7% versus the same
period a year ago.
    Net earnings for the second quarter increased 27.1% to $6.9 million or
$0.28 per share from $5.4 million or $0.23 per share for the same period last
year. Earnings before interest, income taxes, depreciation and amortization
(EBITDA) for the second quarter increased 37.2% to $16.6 million or 19.9% of
sales, compared to $12.1 million or 16.9% of sales last year.

    Six-month Results
    -----------------

    Sales rose 15.7% to $154.0 million for the six months ended July 28,
2007, compared to $133.0 million last year. Comparable store sales increased
11.1% over the same period a year ago. During the first six months of the
year, the Company opened 11 new stores, closed one store and expanded
10 existing locations, resulting in the addition of 57,000 square feet or 6.7%
to the Le Château network.
    Net earnings for the six-month period were $11.5 million or $0.46 per
share, compared to $8.2 million or $0.34 per share the previous year. Earnings
before interest, income taxes, depreciation and amortization (EBITDA) for the
first six months increased 40.8% to $27.4 million or 17.8% of sales, compared
to $19.5 million or 14.6% of sales last year.

    Third quarter of fiscal 2008
    ----------------------------

    For the first six weeks ended September 8, 2007, total retail sales have
increased 4.0% and comparable store sales have decreased 1.0% 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 $0.125 per Class A subordinate
voting share and Class B voting share. This is the 56th consecutive dividend
declared by Le Château, and is payable on November 12, 2007 to the
shareholders of record at the close of business on October 26, 2007.

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

    At the annual meeting of shareholders held on June 27, 2007, the
shareholders approved the split of the Class A subordinate voting shares and
Class B voting shares on a four-for-one basis. The record date for the split
was July 18, 2007 and shares began trading on an "as split" basis at the
opening of business on July 16, 2007. All share and per share information
presented 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
208 retail locations, of which 203 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. In
addition, the Company has 8 stores under license in the Middle East.
    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)                            July 28,     July 29,  January 27,
    (In thousands of dollars)                 2006         2007         2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents            $  11,813    $  36,607    $   2,743
    Short-term investments                  32,913        6,000       58,899
    Accounts receivable and prepaid
     expenses                                5,063        3,312        4,457
    Income taxes refundable                    303        1,131            -
    Inventories                             46,484       40,895       40,967
    -------------------------------------------------------------------------
    Total current assets                    96,576       87,945      107,066
    Fixed assets                            85,287       75,173       78,643
    -------------------------------------------------------------------------
                                         $ 181,863    $ 163,118    $ 185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current
    Accounts payable and accrued
     liabilities                         $  28,053    $  25,386    $  32,870
    Dividend payable                         3,128        1,507       20,992
    Income taxes payable                         -            -          833
    Derivative financial instruments           595            -            -
    Current portion of capital lease
     obligations                             1,499        2,620        2,051
    Current portion of long-term debt        7,592        4,266        4,392
    -------------------------------------------------------------------------
    Total current liabilities               40,867       33,779       61,138
    Capital lease obligations                1,657        3,056        2,288
    Long-term debt                          15,783        8,160        5,934
    Future income taxes                      2,690        2,313        2,891
    Deferred lease inducements               6,637        4,777        5,284
    -------------------------------------------------------------------------
    Total liabilities                       67,634       52,085       77,535
    -------------------------------------------------------------------------

    Shareholders' Equity
    Capital stock                           31,383       27,365       30,221
    Contributed surplus                      1,183          954        1,139
    Retained earnings                       82,057       82,714       76,814
    Accumulated other comprehensive
     income                                   (394)           -            -
    -------------------------------------------------------------------------
    Total shareholders' equity             114,229      111,033      108,174
    -------------------------------------------------------------------------
                                         $ 181,863    $ 163,118      185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                     For the three               For the six
                                      months ended              months ended
    (Unaudited)                  July 28,  July 29,     July 28,     July 29,
    (In thousands of dollars)       2007      2006         2007         2006
    -------------------------------------------------------------------------
    Balance, beginning
     of period                 $  78,283 $  78,789    $  76,814    $  77,577
    Net earnings                   6,902     5,432       11,485        8,151
    -------------------------------------------------------------------------
                                  85,185    84,221       88,299       85,728
    Dividends declared             3,128     1,507        6,242        3,014
    -------------------------------------------------------------------------
    Balance, end of period     $  82,057 $  82,714    $  82,057    $  82,714
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                     For the three               For the six
    (Unaudited)                       months ended              months ended
    (In thousands of dollars,    July 28,  July 29,     July 28,     July 29,
     except per share data)         2007      2006         2007         2006
    -------------------------------------------------------------------------
    Sales                      $  83,609 $  71,892    $ 153,994    $ 133,079
    -------------------------------------------------------------------------
    Cost of sales and expenses
    Cost of sales and selling,
     general and administrative   66,970    59,767      126,567      113,593
    Depreciation and amortization  4,123     3,426        7,969        6,624
    Write-off of fixed assets      1,597       328        1,597          379
    Interest on long-term debt
     and capital lease
     obligations                     386       281          733          585
    Interest income                 (444)     (392)        (932)        (803)
    -------------------------------------------------------------------------
                                  72,632    63,410      135,934      120,378
    -------------------------------------------------------------------------
    Earnings before income taxes  10,977     8,482       18,060       12,701
    Provision for income taxes     4,075     3,050        6,575        4,550
    -------------------------------------------------------------------------
    Net earnings               $   6,902 $   5,432    $  11,485    $   8,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share
      Basic                    $    0.28 $    0.23    $    0.46    $    0.34
      Diluted                       0.27      0.22         0.45         0.33

    Weighted average number
     of shares outstanding
     ('000)                       24,967    24,111       24,925       24,108


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

                                     For the three               For the six
                                      months ended              months ended
    (Unaudited)                  July 28,  July 29,     July 28,     July 29,
    (In thousands of dollars)       2007      2006         2007         2006
    -------------------------------------------------------------------------
    Net earnings               $   6,902 $   5,432    $  11,485    $   8,151
    -------------------------------------------------------------------------
    Other comprehensive income
    Change in fair value of
    forward exchange contracts      (306)        -         (595)           -
    Realized forward exchange
     contracts reclassified to
     net earnings                    540         -         (320)           -
    Income tax expense (recovery)    (78)        -          309            -
    -------------------------------------------------------------------------
                                     156         -         (606)           -
    -------------------------------------------------------------------------
    Comprehensive income       $   7,058 $   5,432    $  10,879    $   8,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                     For the three               For the six
                                      months ended              months ended
    (Unaudited)                  July 28,  July 29,     July 28,     July 29,
    (In thousands of dollars)       2007      2006         2007         2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings               $   6,902 $   5,432    $  11,485    $   8,151
    Adjustments to determine
     net cash from operating
     activities
      Depreciation and
       amortization                4,123     3,426        7,969        6,624
      Write-off of fixed assets    1,597       328        1,597          379
      Amortization of deferred
       lease inducements            (235)     (228)        (440)        (407)
      Stock-based compensation       (21)      232          198          496
      Future income taxes              -       (52)           -          (52)
    -------------------------------------------------------------------------
                                  12,366     9,138       20,809       15,191

    Net change in non-cash working
     capital items related to
     operations                   (4,134)   (1,958)     (12,076)     (12,170)
    Deferred lease inducements     1,364       334        1,793          984
    -------------------------------------------------------------------------
    Cash flows related to
     operating activities          9,596     7,514       10,526        4,005
    -------------------------------------------------------------------------

    FINANCING ACTIVITIES
    Repayment of capital lease
     obligations                    (499)     (653)      (1,183)      (1,297)
    Proceeds of long-term debt         -         -       16,344            -
    Repayment of long-term debt   (1,742)   (1,029)      (3,295)      (2,112)
    Issue of capital stock           862       153        1,008          155
    Dividends paid                (3,114)   (1,507)     (24,106)      (3,014)
    -------------------------------------------------------------------------
    Cash flows related to
     financing activities         (4,493)   (3,036)     (11,232)      (6,268)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease (increase) in
     short-term investments         (397)   31,276       25,986       37,083
    Additions to fixed assets     (4,613)   (4,955)     (16,210)     (16,192)
    -------------------------------------------------------------------------
    Cash flows related to
     investing activities         (5,010)   26,321        9,776       20,891
    -------------------------------------------------------------------------
    Increase in cash and cash
     equivalents                      93    30,799        9,070       18,628
    Cash and cash equivalents,
     beginning of period          11,720     5,808        2,743       17,979
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             $  11,813 $  36,607    $  11,813    $  36,607
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Interest paid during the
     period                    $     386 $     281    $     733    $     585
    Income taxes paid during
     the period                    3,576     3,186        7,689        9,924
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    SEGMENTED INFORMATION
    ---------------------
                                     For the three               For the six
                                      months ended              months ended
    (Unaudited)                  July 28,  July 29,     July 28,     July 29,
    (In thousands of dollars)       2007      2006         2007         2006
    -------------------------------------------------------------------------
    Sales by country
    Canada                     $  81,711 $  69,913    $ 150,015    $ 129,305
    United States                  1,898     1,979        3,979        3,774
    -------------------------------------------------------------------------
                               $  83,609 $  71,892    $ 153,994    $ 133,079
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Sales by division
    Ladies' Clothing           $  46,808 $  40,080    $  88,228    $  74,619
    Men's Clothing                12,503    10,821       22,257       20,722
    Footwear                      11,565     9,874       19,900       17,078
    Accessories                   12,733    11,117       23,609       20,660
    -------------------------------------------------------------------------
                               $  83,609 $  71,892    $ 153,994    $ 133,079
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)
    Canada                     $   8,334 $   5,656    $  13,126    $   8,765
    United States                 (1,432)     (224)      (1,641)        (614)
    -------------------------------------------------------------------------
                               $   6,902 $   5,432    $  11,485    $   8,151
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Identifiable assets
    Canada                     $ 178,899 $ 158,098    $ 178,899    $ 158,098
    United States                  2,964     5,020        2,964        5,020
    -------------------------------------------------------------------------
                               $ 181,863 $ 163,118    $ 181,863    $ 163,118
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

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

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