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Press release from CNW Group

Le Château reports second quarter results

Friday, September 07, 2012

Le Château reports second quarter results16:30 EDT Friday, September 07, 2012MONTREAL, Sept. 7, 2012 /CNW Telbec/ - Le Château Inc. (TSX: CTU.A) today reported that sales for the second quarter ended July 28, 2012 amounted to $72.5 million, a decrease of 14.5% from $84.8 million for the second quarter ended July 30, 2011. Comparable store sales decreased 14.4% for the second quarter versus the same period a year ago.Net earnings for the second quarter amounted to $1.3 million or $0.05 per share (diluted) compared to net earnings of $3.5 million or $0.14 per share the previous year. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") for the second quarter amounted to $8.5 million or 11.7% of sales, compared to $10.4 million or 12.3% of sales last year.Six-month ResultsNet loss for the six-month period ended July 28, 2012 amounted to $5.3 million or $(0.21) per share (diluted) compared to net earnings of $615,000 or $0.02 per share the previous year. EBITDA for the first six months amounted to $5.3 million or 4.1% of sales, compared to $11.5 million or 7.7% of sales last year.Sales for the six months ended July 28, 2012 decreased 13.0% to $130.3 million from $149.8 million last year. Comparable store sales decreased 13.8% versus the same period a year ago.During the first six months of the year, the Company opened one new store and closed eight stores. Total square footage for the Le Château network at the end of the second quarter ended July 28, 2012 amounted to 1,275,000 square feet.ProfileLe 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 sold exclusively through the Company's 236 retail locations, of which 235 are located in Canada. The Company's retail locations are primarily found in major urban shopping malls, as well as street-front locations with high pedestrian traffic. In addition, the Company has 10 stores under license in the Middle East. Le Château's web-based marketing is further broadening the Company's customer base among Internet shoppers in both Canada and the United States. With its 52-year tradition of vertical integration, emphasizing a design and manufacturing approach to retailing, Le Château is unique among Canadian fashion merchants. Non-GAAP MeasuresIn addition to discussing earnings measures in accordance with IFRS, this press release provides EBITDA as a supplementary earnings measure. Depreciation and amortization includes the write-off and impairment of property and equipment. 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 open for at least one year.The above measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.Forward-Looking StatementsThis 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 except to the extent required under applicable securities law.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.The Company's unaudited interim condensed financial statements and Management's Discussion and Analysis for the second quarter ended July 28, 2012 are available online at www.sedar.comCONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands of Canadian dollars) As atJuly 28, 2012  As atJuly 30, 2011  As atJanuary 28, 2012ASSETS        Current assets        Cash and cash equivalents$3,569 $7,305 $7,193Short-term investments -  18,580  -Accounts receivable 1,665  3,299  2,358Income taxes refundable 3,114  4,878  2,137Derivative financial instruments 69  -  129Inventories 127,651  103,194  119,325Prepaid expenses 2,101  2,104  1,564Total current assets 138,169  139,360  132,706Property and equipment 91,888  96,436  95,744Intangible assets 5,418  5,629  5,344Deferred income taxes -  169  -  $235,475 $241,594 $233,794         LIABILITIES AND SHAREHOLDERS' EQUITY        Current liabilities        Bank indebtedness$18,808 $- $-Trade and other payables 19,367  28,563  21,820Dividend payable -  4,338  -Deferred revenue 3,186  3,453  3,918Current portion of provisions 160  842  300Derivative financial instruments -  579  -Current portion of long-term debt  13,450  17,129  16,323Total current liabilities 54,971  54,904  42,361Long-term debt 23,353  20,452  29,145Provisions 271  75  120Deferred income taxes 2,936  2,883  2,954Deferred lease credits 16,033  15,805  16,109Total liabilities 97,564  94,119  90,689         Shareholders' equity        Share capital 37,729  37,729  37,729Contributed surplus 2,426  2,216  2,328Retained earnings 97,706  107,940  102,956Accumulated other comprehensive income (loss) 50  (410)  92Total shareholders' equity 137,911  147,475  143,105 $235,475 $241,594 $233,794CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)   (Unaudited)   For the three months ended For the six months ended(In thousands of Canadian dollars, except per share information)  July 28, 2012  July 30, 2011  July 28, 2012  July 30, 2011Sales $72,514 $84,810 $130,291 $149,769Cost of sales and expenses            Cost of sales  22,503  29,203  40,521  48,515Selling  38,381  40,819  76,864  80,309General and administrative  8,716  9,473  18,376  19,276   69,600  79,495  135,761  148,100             Results from operating activities  2,914  5,315  (5,470)  1,669Finance costs  879  502  1,568  987Finance income  (7)  (91)  (8)  (183)Earnings (loss) before income taxes  2,042  4,904  (7,030)  865Income tax expense (recovery)  760  1,420  (1,780)  250Net earnings (loss) $1,282 $3,484 $(5,250) $615             Net earnings (loss) per share             Basic $0.05 $0.14 $(0.21) $0.02Diluted  0.05  0.14  (0.21)  0.02             Weighted average number of shares outstanding ('000)  24,789  24,789  24,789   24,789                          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)   (Unaudited)  For the three months ended For the six months ended(In thousands of Canadian dollars)  July 28, 2012  July 30, 2011  July 28, 2012  July 30, 2011Net earnings (loss) $1,282 $3,484 $(5,250) $615Other comprehensive income (loss)            Change in fair value of forward exchange contracts  295  29  (98)  (1,459)Income tax (expense) recovery  (82)  (8)  28  423   213  21  (70)  (1,036)Realized forward exchange contracts reclassified to net earnings (loss)  167  867  38  998Income tax expense  (47)  (251)  (10)  (289)   120  616  28  709Total other comprehensive income (loss)  333  637  (42)  (327)Comprehensive income (loss) $1,615 $4,121 $(5,292) $288  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)  For the three months ended For the six months ended(In thousands of Canadian dollars)  July 28, 2012  July 30, 2011  July 28, 2012  July 30, 2011             SHARE CAPITAL $37,729 $37,729 $37,729 $37,729             CONTRIBUTED SURPLUS            Balance, beginning of period $2,374 $2,129 $2,328 $2,006Stock-based compensation expense  52  87  98  210Balance, end of period $2,426 $2,216 $2,426 $2,216             RETAINED EARNINGS            Balance, beginning of period $96,424 $108,794 $102,956 $116,001Net earnings (loss)  1,282  3,484  (5,250)  615Dividends declared  -  (4,338)  -  (8,676)Balance, end of period $97,706 $107,940 $97,706 $107,940             ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)            Balance, beginning of period $(283) $(1,047) $92 $(83)Other comprehensive income (loss) for the period  333  637  (42)  (327)Balance, end of period $50 $(410) $50 $(410)             Total shareholders' equity $137,911 $147,475 $137,911 $147,475  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)  For the three months ended For the six months ended(In thousands of Canadian dollars)  July 28, 2012  July 30, 2011  July 28, 2012  July 30, 2011OPERATING ACTIVITIES            Net earnings (loss) $1,282 $3,484 $(5,250) $615Adjustments to determine net cash from operating activities             Depreciation and amortization  4,969  4,867  9,919  9,571 Write-off and impairment of property and equipment  607  255  836  255 Amortization of deferred lease credits  (310)  (239)  (576)  (479) Deferred lease credits  481  240  500  348 Stock-based compensation  52  87  98  210 Provisions  214  (251)  11  (557) Finance costs  879  502  1,568  987 Finance income  (7)  (91)  (8)  (183) Interest paid  (744)  (508)  (1,433)  (999) Interest received  5  31  12  379 Income tax expense (recovery)  760  1,420  (1,780)  250   8,188  9,797  3,897  10,397Net change in non-cash working capital items related to operations  (1,236)  (1,172)  (11,684)  (10,538)   6,952  8,625  (7,787)  (141)Income taxes refunded (paid)  489  (1,423)  993  (1,499)Cash flows related to operating activities  7,441  7,202  (6,794)  (1,640)             FINANCING ACTIVITIES            Proceeds of long-term debt  -  -  -  10,024Repayment of long-term debt  (4,205)  (4,530)  (8,665)  (8,623)Dividends paid  -  (4,338)  -  (8,676)Cash flows related to financing activities  (4,205)  (8,868)  (8,665)  (7,275)             INVESTING ACTIVITIES            Decrease in short-term investments  -  -  -  11,720Additions to property and equipment and intangible assets  (3,594)  (6,335)  (6,973)  (13,161)Cash flows related to investing activities  (3,594)  (6,335)  (6,973)  (1,441)             Decrease in cash and cash equivalents, net of bank indebtedness  (358)  (8,001)  (22,432)  (10,356)Cash and cash equivalents, net of bank indebtedness, beginning of period  (14,881)  15,306  7,193  17,661Cash and cash equivalents, net of bank indebtedness, end of period $(15,239) $7,305 $(15,239) $7,305  TOTAL SALES BY DIVISION  (Unaudited)  For the three months ended For the six months ended(In thousands of Canadian dollars)  July 28, 2012  July 30, 2011  July 28, 2012  July 30, 2011             Ladies' Clothing $40,915  $48,562 $75,317  $87,881Men's Clothing  13,925   15,166  23,417   25,340Footwear  7,453   8,751  13,815   15,426Accessories  10,221  12,331  17,742   21,122  $72,514  $84,810 $130,291  $149,769 SOURCE: LE CHATEAU INC.For further information: Emilia Di Raddo, CPA, CA, President (514) 738-7000 Johnny Del Ciancio, CPA, CA, Vice-President, Finance, (514) 738-7000 MaisonBrison:  Pierre Boucher, (514) 731-0000 Source:  Le Château Inc.