Le Château reports fall in Q2 sales
Le Château Inc. reported that sales for the second quarter ended July 30, 2011 decreased 2.0% to $84.8 million from $86.5 million for the second quarter ended July 31, 2010. Comparable store sales decreased by 5.0% versus the same period a year ago. The sales and earnings performance in the second quarter improved over the first quarter. The Company's gross margin percentage in the second quarter of 2011 decreased to 65.6% from 68.9% last year, due to increased promotional activity in a difficult retail environment.
Net earnings for the second quarter ended July 30, 2011 amounted to $3.5 million compared to $8.3 million for the second quarter ended July 31, 2010. Earnings per share (diluted) for the second quarter were $0.14 per share versus $0.34 per share the previous year. Earnings before interest, income taxes, depreciation and amortization for the second quarter amounted to $10.4 million or 12.3% of sales, compared to $16.6 million or 19.2% of sales last year.
Net earnings for the six-month period were $615,000 or $0.02 per share (diluted) compared to $12.8 million or $0.52 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the first six months amounted to $11.5 million or 7.7% of sales, compared to $27.5 million or 17.5% of sales last year.
Sales the six months ended July 30, 2011 decreased 4.9% to $149.8 million from $157.4 million last year. Comparable store sales decreased 8.1% versus the same period a year ago.
During the first six months of the year, the Company opened three stores and expanded 10 existing locations, resulting in the addition of 55,000 square feet or 4.5% to the Le Château network, bringing the total floor space at end of period to 1,277,000 square feet.
In July 2011, the Toronto Stock Exchange approved the Company's previously announced normal course issuer bid to purchase up to 1,011,443 Class A subordinate voting shares. Since July 18, 2011, no Class A subordinate voting shares have been purchased by the Company.
Effective for the first quarter ended April 30, 2011, the Company began reporting its financial results in accordance with International Financial Reporting Standards ("IFRS"). Previously reported financial results prepared in accordance with Canadian generally accepted accounting principles have been presented to conform to the new standards adopted.
The Board of Directors has declared a quarterly dividend (constituting eligible dividends for income tax purposes) of $0.08 per Class A subordinate voting share and Class B voting share. This is the 72nd consecutive dividend declared by Le Château, and is payable on November 15, 2011 to the shareholders of record at the close of business on October 28, 2011.
The Company is fully engaged in its previously announced brand repositioning. The strategies include investments in a completely upgraded merchandise collection, a multi-media advertisement campaign and a new store concept to be launched in October 2011 in Saint-Bruno, Quebec.