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Danier Leather gross profit margin up by 1.9%

14
Aug '09
Danier Leather Inc. announced its consolidated financial results for the fourth quarter and fiscal year ended June 27, 2009.

Fourth quarter comparable store sales increased 2% and comparable store gross profit increased 4%. With five fewer stores in operation, sales for the fourth quarter of 2009 decreased 2% or $0.5 million to $27.0 million from $27.5 million in the fourth quarter of 2008.

Net loss for the fourth quarter of 2009 decreased by approximately $0.25 million to $2.8 million, or $0.45 loss per share, compared with a net loss of $3.0 million, or $0.48 loss per share, during the fourth quarter last year. EBITDA loss for the fourth quarter of 2009 was $2.4 million compared with an EBITDA loss of $2.5 million during the fourth quarter last year.

Gross profit dollars during the fourth quarter of 2009 increased by $0.3 million. For the last half of the fiscal year gross profit dollars increased by $1.5 million or 5%. The increase was mainly due to less clearance activity resulting from management's decision to reduce inventory purchases during the last half of the fiscal year. Selling, general and administrative expenses during the fourth quarter of 2009 decreased by $0.1 million.

Year-to-date sales decreased 1% or $1.4 million to $162.1 million while comparable store sales decreased 1%. Year-to-date net loss was $2.3 million, or $0.37 per diluted share, compared with net earnings of $12.9 million or $2.03 per diluted share last year. Year-to-date adjusted net loss of $1.0 million ($0.15 loss per diluted share) was $0.8 million lower than the adjusted net loss of $1.8 million ($0.29 loss per diluted share) last year. Adjusted net loss excludes restructuring costs, goodwill impairment charge and recovery of litigation provision and related expenses. Year-to-date EBITDA was $4.3 million compared with $3.8 million last year.

Year-to-date gross profit as a percentage of revenue was 45.4% compared with 46.6% during 2008. The year-to-date gross margin rate decline was mainly due to a decline in the Canadian dollar relative to the U.S. dollar during the first half of the year, which resulted in higher merchandise costs to the Company. Year-to-date SG&A decreased by 5% or $3.9 million to $74.7 million or 46.1% of sales compared with $78.6 million or 48.0% of sales last year.

Danier repurchased 267,160 subordinate voting shares under its normal course issuer bid during the fourth quarter of 2009 and repurchased a total of 367,160 subordinate voting shares during the fiscal year.

Danier maintained a strong financial position at year-end with approximately $24.6 million in cash, a $6.4 million reduction in inventory compared with the prior year, no long-term debt and working capital of approximately $37.1 million. Book value per outstanding share at the end of the fourth quarter of fiscal 2009 was $9.59.

Danier Leather Inc


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