Brand repositioning strategy will work - Le Château
Le Château Inc reported that sales for the year ended January 29, 2011 decreased 0.8% to $319.0 million from $321.7 million for the year ended January 30, 2010. Comparable store sales decreased by 4.2% versus the same period a year ago.
Net earnings for the year ended January 29, 2011 were $19.1 million compared to $29.8 million for the year ended January 30, 2010. Earnings per share (diluted) for the year were $0.77 per share versus $1.22 per share the previous year. Earnings before interest, income taxes, depreciation and amortization (EBITDA) for the year amounted to $46.9 million or 14.7% of sales, compared to $61.7 million or 19.2% of sales last year.
During the year, the Company opened 13 stores, closed 5 and expanded 17 existing locations, resulting in the addition of 76,000 square feet or 6.6% to the Le Château network, bringing the total floor space at end of period to 1,222,000 square feet.
Brand Repositioning Accelerated
Le Château's financial performance in the second half of 2010 was disappointing, particularly after an encouraging second quarter. A soft second half necessitated heavy discounting in the fourth quarter which negatively impacted gross margins and net earnings.
Building on the preliminary success of our brand repositioning, we will continue to move the strategy forward into a higher quality, European-inspired style brand with broader lifestyle appeal to a larger demographic. This repositioning in the ladies' segment, although not fully completed, did translate into positive growth of 0.3% in comparable store sales in 2010. We are therefore accelerating this brand repositioning to all divisions: menswear, footwear, and accessories. The Company believes that this strategy will restore positive overall growth.
Le Château is renowned as an exciting place to shop and the Company's core strengths, including a solid management and design team, a wide network of retail stores, powerful name recognition, vertical integration and a strong financial position, are all firmly in place.
Fourth Quarter Results
Sales decreased 6.5% to $87.1 million for the fourth quarter ended January 29, 2011, compared to $93.2 million for the fourth quarter ended January 30, 2010. Comparable store sales decreased 8.8% versus the same period a year ago.
Net earnings for the fourth quarter ended January 29, 2011 were $3.8 million or $0.15 per share (diluted) compared to $11.4 million or $0.46 per share for the fourth quarter ended January 30, 2010. EBITDA for the fourth quarter amounted to $10.6 million or 12.1% of sales, compared to $20.7 million or 22.2% of sales last year.
The Board of Directors has declared a quarterly dividend (constituting eligible dividends for income tax purposes) of $0.175 per Class A subordinate voting share and Class B voting share. This is the 70th consecutive dividend declared by Le Château, and is payable on May 17, 2011 to the shareholders of record at the close of business on May 3, 2011.
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 240 retail locations, of which 238 are located in Canada and 2 in the New York City area.
Le Château Inc