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Danier enters seasonally slower Q4 with improved inventory position

Aug '10
Danier Leather Inc. announced its consolidated financial results for the fourth quarter and fiscal year ended June 26, 2010.

Fiscal 2010 Full Year Highlights

• EBITDA more than tripled to $15.2 million from $4.3 million last year
• Comparable store sales increased by 4%
• Gross profit dollars increased by 18% on a 740 basis point increase in gross margin
• Earnings per outstanding share of $1.58
• Repurchased 1,352,700 Subordinate Voting Shares or 28.9% of the prior year's outstanding Subordinate Voting Shares

Gross profit dollars increased by $1.6 million or 13% to $14.3 million compared with $12.7 million during the fourth quarter last year. Danier entered the seasonally slower fourth quarter with an improved inventory position compared with the prior year and, accordingly, management decided to reduce promotional activity and markdowns and focus on gross margin and gross profit dollar improvement.

Fourth quarter sales decreased by 1% while comparable store sales decreased by 2%. Net loss for the fourth quarter of fiscal 2010 decreased by approximately $2.1 million to $0.7 million, or $0.14 loss per outstanding share, compared with a net loss of $2.8 million, or $0.47 loss per outstanding share, during the fourth quarter last year. EBITDA loss for the fourth quarter of fiscal 2010 was $0.4 million which represents a $2.0 million decrease from last year's EBITDA loss of $2.4 million.

Selling, general and administrative expenses ("SG&A") during the fourth quarter of 2010 decreased by $1.1 million, mainly due to reduced head office and retail staff wages and administrative expenses and lower amortization.

Year-to-date sales increased 1% or $2.1 million to $164.2 million, while comparable store sales increased by 4%. Year-to-date net earnings were $7.2 million ($1.28 per diluted share) and represent a $9.5 million increase as compared with a net loss of $2.3 million (or $0.37 loss per diluted share) last year. Year-to-date earnings per share based on outstanding shares at year-end were $1.58 compared with a $0.39 loss per share last year. Year-to-date EBITDA more than tripled to $15.2 million compared with $4.3 million last year.

Year-to-date gross profit as a percentage of revenue increased by 740 basis points and was 52.8% compared with 45.4% during fiscal 2009. The year-to-date gross margin rate increase was mainly due to improved merchandise planning and purchasing, a stronger Canadian dollar and reduced markdowns as compared with last year. Year-to-date SG&A increased by 2% or $1.2 million to $75.9 million compared with $74.7 million last year.

This increase was due primarily to higher performance-based compensation for store and head office staff and increased stock-based compensation primarily resulting from an increase in the Company's share price. Excluding the increase in performance-based and stock-based compensation, SG&A decreased by $3.2 million.

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