Canadian brand Le Château reported its results for the fourth quarter ended January 30, 2016. Q4 sales amounted to $65.2 million, a decrease of 7.5% from $70.5 million for the 14-week period ended January 31, 2015.
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On a comparable week basis, the total sales decreased 2.1%, with 11 fewer stores in operations, compared to the 13-week period ended January 31, 2015. Comparable store sales increased 0.1% for the fourth quarter as compared to last year.
As expected, the benefits of the Canada-wide media campaign starting in August 2015 were well reflected in regular stores, online sales and also in the Ladies and Footwear divisions.
Comparable store sales for the company’s 146 regular stores (excluding fashion outlets) increased 0.7% for the fourth quarter as compared to last year. Included in comparable store sales are online sales which increased 41.3% for the fourth quarter.
Earnings (loss) before interest, income taxes, depreciation, amortization, write-off and/or impairment of property and equipment, and gain on disposal of property and equipment (Adjusted EBITDA) for the fourth quarter of 2015 amounted to $(675,000), compared to $(5.8) million for the same period last year.
The improvement of $5.2 million in adjusted EBITDA for the fourth quarter was primarily attributable to the decrease of $4.4 million in selling, general and administrative (SG&A) expenses, as well as an increase in gross margin dollars of $821,000.
The increase of $821,000 in gross margin dollars was the result of an increase in gross margin percentage to 61.9% from 56.1% in 2014.
The gross margin improvement in the fourth quarter of 2015 resulted from reduced promotional activity and fewer write-downs of finished goods inventory, partially offset by the pressure of the weaker Canadian dollar on merchandise purchased.
For the fourth quarter ended January 30, 2016, the company recorded net write-downs of inventory totaling $300,000, compared to $3.9 million the previous year. The reduced amount reflects company's on-going efforts over the past few years to reduce and improve the mix of inventory.
Net loss for the fourth quarter ended January 30, 2016 amounted to $6.9 million or $(0.23) per share compared to a net loss of $11.6 million or $(0.39) per share for the same period last year.
Year-end results
Sales for the 52-week period ended January 30, 2016 decreased 5.3% to $236.9 million from $250.2 million for the 53-week period ended January 31, 2015.
On a comparable week basis, the total sales for the 52-week period ended January 30, 2016 decreased 4.0%, with 11 fewer stores in operations, compared to the 52-week period ended January 31, 2015.
Comparable store sales decreased 1.9% versus the same period a year ago. Included in comparable store sales are online sales which increased 34.8% for the year ended January 30, 2016.
Adjusted EBITDA for the year ended January 30, 2016 amounted to $(12.8) million, compared to $(17.1) million last year.
The improvement of $4.3 million in adjusted EBITDA for 2015 was primarily attributable to a decrease of $3.9 million in SG&A expenses, as well as an increase of $428,000 in gross margin dollars.
SG&A expenses decreased due to reductions in store operating costs and head office expenses, offset by the launch of Canada-wide media campaign that started in August 2015.
The increase of $428,000 in gross margin dollars was the result of an increase in gross margin percentage to 64.2% from 60.6% in 2014, offset by the 5.3% decline in sales for 2015.
The gross margin improvement for 2015 resulted from reduced promotional activity and fewer write-downs of finished goods inventory, partially offset by the pressure of the weaker Canadian dollar on merchandise purchased.
For the year ended January 30, 2016, the company recorded net write-downs of inventory totaling $300,000, compared to $5.3 million the previous year.
The reduced amount reflects company's on-going efforts over the past few years to reduce and improve the mix of inventory. ■