Home / Knowledge / News / Apparel/Garments / Le Château FY '12 Q3 sales dip 5.4%
Le Château FY '12 Q3 sales dip 5.4%
03
Jan '12
Le Château Inc. reported that sales for the third quarter ended October 29, 2011 decreased 5.4% to $70.4 million from $74.5 million for the third quarter ended October 30, 2010. Comparable store sales decreased by 8.4% versus the same period a year ago.

Sales were negatively impacted by reduced traffic as consumers continued to remain cautious on discretionary spending in the context of global economic uncertainty. Unusually mild weather in most Canadian regions also affected demand for winter related categories, necessitating increased promotional activity. As a result, the Company's gross margin percentage in the third quarter of 2011 decreased to 68.8% from 71.6% last year.

In addition to external factors impacting sales and gross margin, the Company incurred some non-recurring expenses related to the temporary ramp-up in marketing expenses to accelerate brand repositioning efforts and start-up costs related to the e-commerce initiative which totaled $2.4 million for the third quarter.

Net loss for the third quarter ended October 29, 2011 amounted to $4.1 million compared to net earnings of $2.5 million for the third quarter ended October 30, 2010. Earnings (loss) per share (diluted) for the third quarter amounted to $(0.16) per share versus $0.10 per share the previous year.

Loss before interest, income taxes, depreciation and amortization for the third quarter amounted to $104,000, compared to earnings before interest, income taxes, depreciation and amortization (“EBITDA”) of $8.4 million or 11.3% of sales last year.

Nine-month Results
Sales during the nine months ended October 29, 2011 decreased 5.0% to $220.2 million from $231.9 million last year. Comparable store sales decreased 8.2% versus the same period a year ago.

Net loss for the nine-month period amounted to $3.5 million or $(0.14) per share (diluted) compared to net earnings of $15.3 million or $0.62 per share the previous year. EBITDA for the first nine months amounted to $11.4 million or 5.2% of sales, compared to $35.9 million or 15.5% of sales last year.

Year-to-date results were impacted by lower sales combined with some pressure on gross margins reflecting increased promotional activity and higher selling expenses. The latter includes some non-recurring expenses such as the above-mentioned temporary ramp-up in marketing expenses and the e-commerce initiative which totaled over $5.0 million for the period.

During the first nine months of the year, the Company opened five stores and expanded twelve existing locations, resulting in the addition of 39,000 square feet or 3.2% to the Le Château network, bringing the total floor space at end of period to 1,260,000 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 votingshares have been purchased by the Company.

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