Customer traffic increases at Danier Leather
April 30, 2008 - Canada
Danier Leather Inc announced its unaudited interim consolidated financial results for the 13 week and 39 week periods ended March 29, 2008.
Sales for the third quarter decreased by 8% or $3.9 million to $42.4 million from $46.3 million in the third quarter last year. Comparable store sales decreased 6%. The decrease in sales was due to the timing of Boxing Week. Last year, Boxing Week sales were included in the third quarter whereas this year, Boxing Week sales were included in the second quarter.
On a comparable week basis, which excludes Boxing Week in both periods and compares the 13 week period encompassing December 30, 2007 to March 29, 2008 to the 13 week period encompassing December 31, 2006 to March 31, 2007, sales increased 17% or $6.1 million and comparable store sales increased by 20%.
Customer traffic during the comparable period increased 14%, conversion rate (percentage of customers that come into the store and make a purchase) increased 14% and the average sale decreased 10%.
Due to a difficult retail environment in the first half of the year which included customer price sensitivity, cross border shopping and warm weather early in the fall season, the Company took aggressive price reductions on merchandise featured in its third quarter promotions and also increased markdowns in order to reduce inventory and better position the Company for ordering new inventory for next fall.
Year-to-date sales increased $0.2 million to $136.1 million while comparable store sales increased 3%. Customer traffic increased 1% and conversion increased 5%, while the average sale decreased 6%.
Net earnings during the third quarter were $0.1 million or $0.02 per diluted share compared with net earnings of $0.3 million or $0.04 per diluted share in the third quarter last year. Year-to-date net earnings were $15.9 million ($2.50 per diluted share).
Excluding the reversal of the litigation provision of $18.0 million, recovery of legal and expert fees of $2.0 million and income taxes of $5.3 million, year-to-date adjusted net earnings(2) were $1.2 million ($0.19 per diluted share) compared with $4.1 million ($0.62 per diluted share) last year.
On October 12, 2007, the Supreme Court of Canada unanimously decided to uphold the unanimous Ontario Court of Appeal ruling that dismissed the class action against the Company and two of its Senior Officers.
As a result of the ruling, the litigation provision of $18 million less future income taxes of $4.6 million was reversed in the first quarter of 2008. During the second quarter of fiscal 2008, the Company received from the Plaintiffs and recorded in its financial statements $0.1 million of partial indemnity costs related to the Ontario Court of Appeal award.
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