MONTRÉAL, May 27, 2019 (GLOBE NEWSWIRE) -- Le Château Inc. (TSX VENTURE: CTU), today reported that sales for the year ended January 26, 2019 amounted to $190.9 million as compared with $204.4 million last year, a decrease of 6.6%, with 21 fewer stores in operation. Comparable store sales, which include online sales, increased 1.1% versus the same period a year ago, with comparable regular store sales increasing 0.7% and comparable outlet store sales increasing 3.6% (see non-GAAP measures below).

Adjusted EBITDA (see non-GAAP measures below) for the year ended January 26, 2019 amounted to $(5.6) million, compared to $(5.4) million last year. The decrease of $200,000 in adjusted EBITDA for 2018 was primarily attributable to the decrease in gross margin dollars of $8.9 million, offset by the reduction of $8.7 million in selling, general and administrative (“SG&A”) expenses. The decrease in SG&A expenses resulted primarily from the reduction in store operating expenses due mainly to store closures. The decrease of $8.9 million in gross margin dollars was the result of the 6.6% overall sales decline for 2018, combined with the slight decrease in the gross margin percentage to 64.3% from 64.4% in 2017.

Net loss for the year ended January 26, 2019 amounted to $23.8 million or $(0.79) per share compared to a net loss of $24.0 million or $(0.80) per share the previous year.

During the year ended January 26, 2019, the Company renovated two existing locations and, as planned, closed 21 underperforming stores. As at January 26, 2019, the Company operated 139 stores (including 21 fashion outlet stores) compared to 160 stores (including 40 fashion outlet stores) as at January 27, 2018. Total square footage for the Le Château network as at January 26, 2019 amounted to 794,000 square feet (including 201,000 square feet for fashion outlet stores), compared to 896,000 square feet (including 293,000 square feet for fashion outlet stores) as at January 27, 2018. The Company continues to monitor store performance and is planning to close 10 stores with total square footage declining to approximately 703,000 square feet.

Fourth Quarter Results
Sales for the fourth quarter ended January 26, 2019 amounted to $51.4 million as compared with $56.0 million for the fourth quarter ended January 27, 2018, a decrease of 8.3%, with 21 fewer stores in operation. Comparable store sales, which include online sales, decreased 1.7% for the fourth quarter as compared to last year, with comparable regular store sales decreasing 2.1% and comparable outlet store sales increasing 0.8%.

Adjusted EBITDA for the fourth quarter of 2018 amounted to $(1.7) million, compared to $1.7 million for the same period last year. The decrease of $3.4 million in adjusted EBITDA for the fourth quarter was primarily attributable to the decline in gross margin dollars of $4.5 million, partially offset by the reduction of $1.1 million in SG&A expenses. The decrease in SG&A expenses resulted primarily from the reduction in store operating expenses due mainly to store closures. The decrease of $4.5 million in gross margin dollars was the result of the 8.3% overall sales decline for the fourth quarter of 2018, combined with the decrease in the gross margin percentage to 59.9% from 63.1% in 2017. The decline in the gross margin percentage was the result of increased promotional activity in the fourth quarter, combined with the short-term liquidation process of store merchandise during the closing period for certain stores.

Net loss for the fourth quarter ended January 26, 2019 amounted to $6.1 million or $(0.20) per share compared to a net loss of $3.0 million or $(0.10) per share for the same period last year.

Outlook
Over the past few years, the Company has made noteworthy progress in its retail right-sizing strategy by significantly reducing its number of stores and overall footprint. These efforts were necessary considering lower mall traffic and the rapid rise of e-commerce. In the past fiscal year, the Company closed 21 locations, most of which were outlet stores. The Company continues to monitor store performance and is planning to close 10 stores with total square footage declining to approximately 703,000 square feet. At this time, the Company considers its retail network of approximately 129 stores as the new base level when combined with its e-commerce strategy. 

As the Company exits this critical phase, management will be in a better position to focus its energy on re-building the position of the brand in an era where on-line shopping has become an increasingly important pillar in the strategy of retailers. 

Profile
Le Château 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 133 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 disclosed in the consolidated statements of loss for the fourth quarters and years ended January 26, 2019 and January 27, 2018:

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. Online sales are included in comparable store sales.

The following table reconciles comparable store sales to total sales disclosed in the consolidated statements of loss for the fourth quarters and years ended January 26, 2019 and January 27, 2018:

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 audited consolidated financial statements and Management’s Discussion and Analysis for the year ended January 26, 2019 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.