Le Chateau Reports Third Quarter Results
Q3 Comparable Stores Sales Increased 2.5%
(firmenpresse) - MONTREAL, QUEBEC -- (Marketwired) -- 12/11/15 -- Le Chateau Inc. (TSX: CTU.A), a leading Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories and footwear for style-conscious women and men, today reported its results for the third quarter ended October 31, 2015. The 2015 year refers to the 39-week period ended October 31, 2015 while the 2014 year refers to the 39-week period ended October 25, 2014.
Sales for the third quarter ended October 31, 2015 were $57.6 million as compared with $58.1 million for the third quarter ended October 25, 2014, a decrease of 0.8%, with 7 fewer stores in operation. Comparable store sales increased 2.5% for the third quarter as compared to last year (see non-GAAP measures below). As expected, the benefits of the Canada-wide media campaign starting in August were well reflected in regular stores, online sales and also in the Ladies and Footwear divisions. Comparable store sales for the Company''s 150 regular stores (excluding fashion outlets) increased 5.6% for the third quarter as compared to last year. Included in comparable store sales are online sales which increased 34.8% for the third quarter.
Earnings (loss) before interest, income taxes, depreciation, amortization, write-off and/or impairment of property and equipment ("Adjusted EBITDA") (see non-GAAP measures below) for the third quarter amounted to $(7.2) million, compared to $(4.9) million for the same period last year. The decrease of $2.3 million in adjusted EBITDA for the third quarter was primarily attributable to the increase of $3.4 million in selling, general and administrative ("SG&A") expenses, offset by an increase in gross margin dollars of $1.1 million. SG&A expenses increased primarily due to the cost of the Canada-wide media campaign that started in August. The increase of $1.1 million in gross margin dollars was the result of the increase in gross margin percentage to 63.9% from 61.6% in 2014. The gross margin improvement in the third quarter of 2015 resulted from reduced promotional activity.
Net loss for the third quarter ended October 31, 2015 amounted to $12.5 million or $(0.42) per share compared to a net loss of $11.1 million or $(0.37) per share for the same period last year.
Nine-month Results
Sales for the nine months ended October 31, 2015 were $171.7 million as compared with $179.7 million last year, a decrease of 4.5%, with 7 fewer stores in operation. Comparable store sales decreased 2.6% versus the same period a year ago. Included in comparable store sales are online sales which increased 31.1% for the nine months ended October 31, 2015.
Adjusted EBITDA for the nine months ended October 31, 2015 amounted to $(12.1) million, compared to $(11.3) million last year. The decrease of $851,000 in adjusted EBITDA for the first nine months was primarily attributable to an increase of $458,000 in SGA expenses, as well as a decrease of $393,000 in gross margin dollars. SG&A expenses increased due to the launch of our media campaign, as indicated above, partially offset by reductions in store operating costs and head office expenses. The decrease of $393,000 million in gross margin dollars was the result of the 4.5% decline in sales for the first nine months of 2015, offset by the increase in gross margin percentage to 65.0% from 62.3% in 2014. The gross margin improvement for the nine months ended October 31, 2015 resulted from reduced promotional activity.
Net loss for the nine-month period ended October 31, 2015 amounted to $28.9 million or $(0.96) per share compared to a net loss of $27.1 million or $(0.95) per share the previous year.
During the first nine months of 2015, the Company closed four stores and, as planned, expects to close another 8 stores before the year ending January 30, 2016. As at October 31, 2015, the Company operated 218 stores (including 68 fashion outlet stores) compared to 225 stores (including 42 fashion outlet stores) as at October 25, 2014. Total square footage for the Le Chateau network as at October 31, 2015 amounted to 1,192,000 square feet (including 475,000 square feet for fashion outlet stores), compared to 1,230,000 square feet (including 391,000 square feet for fashion outlet stores) as at October 25, 2014. During the next three years, the Company plans on reducing its retail floor space by 250,000 square feet, predominantly coming from the fashion outlet stores.
During the nine months ended October 31, 2015, the Company renovated five stores: Scarborough Town Centre in Ontario on April 1, 2015, Fairview Pointe Claire in Quebec on May 21, 2015, Mayfair Shopping Centre in British Columbia on September 3, 2015, Yorkdale Shopping Centre in Ontario on September 10, 2015 and St. Laurent Shopping Centre in Ottawa, Ontario on September 18, 2015.
Strategy
During the preceding three years, in response to significant new competition entering the Company''s markets, the Company embarked on a major product repositioning and rebranding project. In conjunction with the project, the Company initiated a store renovation program and in mid-August, launched a marketing campaign across Canada in collaboration with Sid Lee, a world renowned agency that offers marketing communication strategies. The campaign combines TV, billboards and social media, and aims to raise brand awareness. Consumers are rediscovering our brand and products, and we believe this will have a sustainable impact. Direct benefits of the media campaign were reflected in the sale of the Ladies and Footwear divisions with year-over-year increases of 5.6% and 10.5% in comparable store sales for the third quarter, respectively. We also observed some important provincial disparities with solid sales increases in Ontario and Quebec partially offset by weakness in Alberta as a result of economic conditions. Overall, we remain optimistic about the opportunity to grow our business and improve our margins.
Fourth Quarter of 2015
For the first five weeks ended December 5, 2015, total retail sales increased 8.0% compared to the five week period ended November 29, 2014. On a comparable week basis (for the five week period ended December 5, 2015 versus the five week period ended December 6, 2014, total retail sales decreased 3.4%, with 8 fewer stores in operation, and comparable store sales decreased 1.7%. Included in comparable store sales are online sales which increased 26.8%.
Profile
Le Chateau 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 Chateau brand is sold exclusively through the Company''s 217 retail locations, of which 216 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 4 stores under license in the Middle East. Le Chateau''s web-based marketing is further broadening the Company''s customer base among internet shoppers in both Canada and the United States. With its 57-year tradition of vertical integration, emphasizing a design and manufacturing approach to retailing, Le Chateau is unique among Canadian fashion merchants.
Non-GAAP Measures
In addition to discussing earnings measures in accordance with IFRS, this press release provides adjusted EBITDA as a supplementary earnings measure, which is defined as earnings (loss) before interest, income taxes, depreciation, amortization, write-off and/or impairment of property and equipment. Adjusted 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 following table reconciles adjusted EBITDA to loss before income tax recovery for the three and nine-month periods ended October 31, 2015 and October 25, 2014:
The Company also discloses comparable store sales which are defined as sales generated by stores that have been open for at least one year on a comparable week basis. Comparable store sales exclude sales from stores converted to outlet or clearance stores during the year of conversion.
The following table reconciles comparable store sales to total sales disclosed in the unaudited interim condensed consolidated statements of loss for the three and nine-month periods ended October 31, 2015 and October 25, 2014:
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 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 also 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; seasonality and weather patterns; changes in the Company''s relationship with its suppliers; lease renewals; information technology security and loss of customer data; fluctuations in foreign currency exchange rates; interest rate fluctuations; liquidity risk and changes in laws, rules and regulations applicable to the Company. The foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results.
The Company''s unaudited interim condensed consolidated financial statements and Management''s Discussion and Analysis for the third quarter ended October 31, 2015 are available online at .
Contacts:
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 Chateau Inc.
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Datum: 11.12.2015 - 16:42 Uhr
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