Le Château Reports First Quarter Results

MONTREAL, June 26, 2018 (GLOBE NEWSWIRE) -- Le Château Inc. (TSX VENTURE:CTU), today reported that sales for the first quarter ended April 28, 2018 amounted to $41.1 million as compared with $44.4 million for the first quarter ended April 29, 2017, a decrease of 7.4%, with 29 fewer stores in operation. Comparable store sales decreased 0.3% for the first quarter as compared to last year, with comparable regular store sales decreasing 0.7% and comparable outlet store sales increasing 1.9% (see non-GAAP measures below). Included in comparable store sales are online sales which increased 32.7% for the first quarter.

Adjusted EBITDA (see non-GAAP measures below) for the first quarter of 2018 amounted to $(6.2) million, compared to $(8.3) million for the same period last year. The improvement of $2.1 million in adjusted EBITDA for the first quarter was primarily attributable to the reduction of $3.4 million in selling, general and administrative (“SG&A”) expenses, partially offset by the decrease of $1.3 million in gross margin dollars. The decrease in SG&A expenses resulted primarily from the reduction in store operating expenses due mainly to store closures. The decrease of $1.3 million gross margin dollars was the result of the 7.4% overall sales decline for the first quarter, partially offset by the increase in gross margin percentage to 63.0% from 61.1% in 2017. The gross margin benefited from the closure of non-performing stores in recent quarters and improved inventory levels and quality, partially offset by the short-term liquidation process of store merchandise during the closing period of stores. As for the comparable regular stores, the gross margin dollar contribution remained relatively stable when compared with the same period last year.

Net loss for the first quarter ended April 28, 2018 amounted to $10.8 million or $(0.36) per share compared to a net loss of $12.9 million or $(0.43) per share for the same period last year.

During the first quarter of 2018, the Company renovated one existing location and, as planned, closed nine underperforming stores. As at April 28, 2018, the Company operated 151 stores (including 31 fashion outlet stores) compared to 180 stores (including 50 fashion outlet stores) as at April 29, 2017. Total square footage for the Le Château network as at April 28, 2018 amounted to 850,000 square feet (including 247,000 square feet for fashion outlet stores), compared to 994,000 square feet (including 354,000 square feet for fashion outlet stores) as at April 29, 2017. The Company is planning to close 11 additional stores for the remainder of 2018.

Profile
Le Château de Montréal is a leading Canadian specialty retailer and manufacturer of exclusively designed apparel, footwear and accessories for contemporary and style-conscious women and men, with an extensive network of 150 prime locations across Canada and an e-com platform servicing Canada and the U.S. Le Château, committed to research, design and product development, manufactures approximately 30% of the Company’s apparel in its own Canadian production facilities.

Non-GAAP Measures
In addition to discussing earnings measures in accordance with IFRS, this press release provides adjusted EBITDA as a supplementary earnings measure, which is defined as earnings (loss) before interest, income taxes, depreciation, amortization, write-off and/or impairment of property and equipment and intangible assets and accretion of First Preferred shares series 1 (“Adjusted EBITDA”). Adjusted EBITDA is provided to assist readers in determining the ability of the Company to generate cash from operations and to cover financial charges. It is also widely used for valuation purposes for public companies in our industry.

The following table reconciles adjusted EBITDA to loss before income taxes for the first quarters ended April 28, 2018 and April 29, 2017:

The Company also discloses comparable store sales which are defined as sales generated by stores that have been open for at least one year on a comparable week basis. Comparable store sales exclude sales from stores converted to outlet or clearance stores during the year of conversion.

The following table reconciles comparable store sales to total sales disclosed in the unaudited interim condensed consolidated statements of loss for the first quarters ended April 28, 2018 and April 29, 2017:

The above measures do not have a standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

Forward-Looking Statements
This news release may contain forward-looking statements relating to the Company and/or the environment in which it operates that are based on the Company's expectations, estimates and forecasts. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict and/or are beyond the Company's control. A number of factors may cause actual outcomes and results to differ materially from those expressed. These factors also include those set forth in other public filings of the Company. Therefore, readers should not place undue reliance on these forward-looking statements. In addition, these forward-looking statements speak only as of the date made and the Company disavows any intention or obligation to update or revise any such statements as a result of any event, circumstance or otherwise except to the extent required under applicable securities law.

Factors which could cause actual results or events to differ materially from current expectations include, among other things: the ability of the Company to successfully implement its business initiatives and whether such business initiatives will yield the expected benefits; liquidity risks; competitive conditions in the businesses in which the Company participates; changes in consumer spending; general economic conditions and normal business uncertainty; seasonality and weather patterns; changes in the Company's relationship with its suppliers; lease renewals; information technology security and loss of customer data; fluctuations in foreign currency exchange rates; interest rate fluctuations and changes in laws, rules and regulations applicable to the Company. There can be no assurance that borrowings will be available to the Company, or available on acceptable terms, in an amount sufficient to fund the Company's needs or that additional financing will be provided by any of the controlling shareholders of the Company. The foregoing list of risk factors is not exhaustive and other factors could also adversely affect our results.

The Company’s unaudited interim condensed consolidated financial statements and Management’s Discussion and Analysis for the first quarter ended April 28, 2018 are available online at www.sedar.com.

For further information
Emilia Di Raddo, CPA, CA, President (514) 738-7000
Johnny Del Ciancio, CPA, CA, Vice-President, Finance, (514) 738-7000
MaisonBrison:  Pierre Boucher, (514) 731-0000
Source:  Le Château Inc.

NOTICE
The Company’s independent auditors have not performed a review of the accompanying interim condensed consolidated financial statements.