Le Château reports third quarter results



    MONTREAL, Dec. 6 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today
reported that net earnings for the third quarter ended October 27, 2007
increased 18.5% to $9.9 million from $8.35 million for the third quarter ended
October 28, 2006. Earnings per share for the third quarter increased to $0.40
per share from $0.35 per share the previous year. Earnings before interest,
income taxes, depreciation and amortization (EBITDA) for the third quarter
increased 18.7% to $19.3 million or 23.5% of sales, compared to $16.26 million
or 20.9% of sales last year, resulting primarily from continued improvements
in gross margins.
    Sales for the third quarter increased 5.5% to $82.1 million from
$77.8 million for the same period last year. Comparable store sales increased
by 0.4% versus the same period a year ago.

    Nine-month Results
    ------------------

    Sales rose 11.9% to $236.1 million for the nine months ended October 27,
2007, compared to $210.9 million last year. Comparable store sales increased
7.1% over the same period a year ago. During the first nine months of the
year, the Company opened 16 new stores, closed one store and expanded
11 existing locations, resulting in the addition of 110,000 square feet or
12.9% to the Le Château network.
    Net earnings for the nine-month period increased 29.6% to $21.4 million
from $16.5 million the previous year. Earnings per share for the nine-month
period increased to $0.86 per share from $0.68 per share for same period last
year. Earnings before interest, income taxes, depreciation and amortization
(EBITDA) for the first nine months increased 30.7% to $46.7 million or 19.8%
of sales, compared to $35.7 million or 16.9% of sales last year.

    Fourth quarter of fiscal 2008
    -----------------------------

    For the first five weeks ended December 1, 2007, total retail sales have
increased 11.5% and comparable store sales have increased 6.2% 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 57th consecutive dividend
declared by Le Château, and is payable on February 11, 2008 to the
shareholders of record at the close of business on January 25, 2008.

    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
211 retail locations, of which 206 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)                           October 27, October 28, January 27,
    (In thousands of dollars)                   2007        2006        2007
    -------------------------------------------------------------------------
    ASSETS
    Current
    Cash and cash equivalents              $  11,144   $   7,841   $   2,743
    Short-term investments                    36,322      37,175      58,899
    Accounts receivable and prepaid
     expenses                                  6,796       4,071       4,457
    Inventories                               51,951      45,456      40,967
    -------------------------------------------------------------------------
    Total current assets                     106,213      94,543     107,066

    Fixed assets                              85,976      78,319      78,643
    -------------------------------------------------------------------------
                                           $ 192,189   $ 172,862   $ 185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current
    Accounts payable and accrued
     liabilities                           $  29,490   $  29,008   $  32,870
    Dividend payable                           3,128       1,509      20,992
    Income taxes payable                       1,747         324         833
    Derivative financial instruments             944           -           -
    Current portion of capital lease
     obligations                               1,403       2,376       2,051
    Current portion of long-term debt          7,437       4,329       4,392
    -------------------------------------------------------------------------
    Total current liabilities                 44,149      37,546      61,138

    Capital lease obligations                  1,335       2,636       2,288
    Long-term debt                            14,228       7,055       5,934
    Future income taxes                        2,573       2,313       2,891
    Deferred lease inducements                 8,870       5,188       5,284
    -------------------------------------------------------------------------
    Total liabilities                         71,155      54,738      77,535
    -------------------------------------------------------------------------

    Shareholders' Equity
    Capital stock                             31,383      27,383      30,221
    Contributed surplus                        1,451       1,184       1,139
    Retained earnings                         88,826      89,557      76,814
    Accumulated other comprehensive income      (626)          -           -
    -------------------------------------------------------------------------
    Total shareholders' equity               121,034     118,124     108,174
    -------------------------------------------------------------------------
                                           $ 192,189   $ 172,862   $ 185,709
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                For the three months     For the nine months
                                       ended                   ended
    (Unaudited)               October 27, October 28, October 27, October 28,
    (In thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------
    Balance, beginning of
     period                    $  82,057   $  82,714   $  76,814   $  77,577
    Net earnings                   9,897       8,352      21,382      16,503
    -------------------------------------------------------------------------
                                  91,954      91,066      98,196      94,080
    Dividends declared             3,128       1,509       9,370       4,523
    -------------------------------------------------------------------------
    Balance, end of period     $  88,826   $  89,557   $  88,826   $  89,557
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

    (Unaudited)                 For the three months     For the nine months
    (In thousands of                   ended                   ended
     dollars, except per      October 27, October 28, October 27, October 28,
     share data)                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales                      $  82,103   $  77,841   $ 236,097   $ 210,920
    -------------------------------------------------------------------------

    Cost of sales and expenses
    Cost of sales and selling,
     general and administrative   62,807      61,583     189,374     175,176
    Depreciation and
     amortization                  4,257       3,431      12,226      10,055
    Write-off of fixed assets          -         126       1,597         505
    Interest on long-term debt
     and capital lease
     obligations                     372         261       1,105         846
    Interest income                 (455)       (407)     (1,387)     (1,210)
    -------------------------------------------------------------------------
                                  66,981      64,994     202,915     185,372
    -------------------------------------------------------------------------
    Earnings before income
     taxes                        15,122      12,847      33,182      25,548
    Provision for income taxes     5,225       4,495      11,800       9,045
    -------------------------------------------------------------------------
    Net earnings               $   9,897   $   8,352   $  21,382   $  16,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings per share
      Basic                    $    0.40   $    0.35   $    0.86   $    0.68
      Diluted                       0.39        0.34        0.84        0.66

    Weighted average number of
     shares outstanding ('000)    25,025      24,143      24,959      24,120



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

                                For the three months     For the nine months
                                       ended                   ended
    (Unaudited)               October 27, October 28, October 27, October 28,
    (In thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------
    Net earnings               $   9,897   $   8,352   $  21,382   $  16,503
    -------------------------------------------------------------------------
    Other comprehensive income
    Change in fair value of
     forward exchange contracts     (839)          -        (944)          -
    Realized forward exchange
     contracts reclassified to
     net earnings                    490           -        (320)          -
    Income tax (expense)
     recovery                        117           -         426           -
    -------------------------------------------------------------------------
                                    (232)          -        (838)          -
    -------------------------------------------------------------------------
    Comprehensive income       $   9,665   $   8,352   $  20,544   $  16,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                For the three months     For the nine months
                                       ended                   ended
    (Unaudited)               October 27, October 28, October 27, October 28,
    (In thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------
    OPERATING ACTIVITIES
    Net earnings               $   9,897   $   8,352   $  21,382   $  16,503
    Adjustments to determine
     net cash from operating
     activities
      Depreciation and
       amortization                4,257       3,431      12,226      10,055
      Write-off of fixed assets        -         126       1,597         505
      Amortization of deferred
       lease inducements            (311)       (203)       (751)       (610)
      Stock-based compensation       268         230         466         726
      Future income taxes              -           -           -         (52)
    -------------------------------------------------------------------------
                                  14,111      11,936      34,920      27,127

    Net change in non-cash
     working capital
     items related to
     operations                   (3,713)       (243)    (15,789)    (12,413)
    Deferred lease inducements     2,544         614       4,337       1,598
    -------------------------------------------------------------------------
    Cash flows related to
     operating activities         12,942      12,307      23,468      16,312
    -------------------------------------------------------------------------
    FINANCING ACTIVITIES
    Repayment of capital lease
     obligations                    (418)       (664)     (1,601)     (1,961)
    Proceeds of long-term debt         -           -      16,344           -
    Repayment of long-term debt   (1,710)     (1,042)     (5,005)     (3,154)
    Issue of capital stock             -          18       1,008         173
    Dividends paid                (3,128)     (1,507)    (27,234)     (4,521)
    -------------------------------------------------------------------------

    Cash flows related to
     financing activities         (5,256)     (3,195)    (16,488)     (9,463)
    -------------------------------------------------------------------------

    INVESTING ACTIVITIES
    Decrease (increase) in
     short-term investments       (3,409)    (31,175)     22,577       5,908
    Additions to fixed assets     (4,946)     (6,703)    (21,156)    (22,895)
    -------------------------------------------------------------------------
    Cash flows related to
     investing activities         (8,355)    (37,878)      1,421     (16,987)
    -------------------------------------------------------------------------
    Increase (decrease) in cash
     and cash equivalents           (669)    (28,766)      8,401     (10,138)
    Cash and cash equivalents,
     beginning of period          11,813      36,607       2,743      17,979
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             $  11,144   $   7,841   $  11,144   $   7,841
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary information:
    Interest paid during the
     period                    $     372   $     261   $   1,105   $     846
    Income taxes paid during
     the period                    3,189       3,041      10,878      12,265
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    SEGMENTED INFORMATION
    ---------------------

                                For the three months     For the nine months
                                       ended                   ended
    (Unaudited)               October 27, October 28, October 27, October 28,
    (In thousands of dollars)       2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales by country
    Canada                     $  80,575   $  75,729   $ 230,590   $ 205,034
    United States                  1,528       2,112       5,507       5,886
    -------------------------------------------------------------------------
                               $  82,103   $  77,841   $ 236,097   $ 210,920
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Sales by division
    Ladies' Clothing           $  48,390   $  44,322   $ 136,618   $ 120,530
    Men's Clothing                12,043      11,376      34,300      30,509
    Footwear                       9,613       9,824      29,513      26,902
    Accessories                   12,057      12,319      35,666      32,979
    -------------------------------------------------------------------------
                               $  82,103   $  77,841   $ 236,097   $ 210,920
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net earnings (loss)
    Canada                     $  10,342   $   8,593   $  23,468   $  17,358
    United States                   (445)       (241)     (2,086)       (855)
    -------------------------------------------------------------------------
                               $   9,897   $   8,352   $  21,382   $  16,503
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Identifiable assets
    Canada                     $ 189,387   $ 167,448   $ 189,387   $ 167,448
    United States                  2,802       5,414       2,802       5,414
    -------------------------------------------------------------------------
                               $ 192,189   $ 172,862   $ 192,189   $ 172,862
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




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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