Inc. reported sales increased 4.9% in the first quarter ended May 2 to C$40.8
million (U.S. $36.9mm). The net loss in the period for
narrowed to C$2.6 million ($2.4mm), or C4 cents a share, from C$4.2 million
($3.8mm), or 7 cents, a year ago.
Comps
increased 2.9% on a consolidated basis and 7.7% for the core West 49 banner.
The company reported comparable store sales declines of 8.1% on a consolidated
basis and 7.4% for the West 49 banner in the first quarter.
Gross
margin increased 580 basis points to 18.1% from 12.3% a year earlier as a
result of improved product margins.
The
company's continued focus on managing its expenses, especially its variable
store operating costs, contributed a 20 basis point reduction in selling,
general and administrative (SG&A) expenses as a rate to net sales. The
company's SG&A rate decreased to 23.5% of net sales from 23.7% a year
earlier.
EBITDA
loss narrowed to C$2.2 million ($2mm) from C$4.3 million ($3.9mm)a year ago,
primarily due to the higher net sales and improvement in gross margin rate
achieved.
“In
spite of the challenging economy, we improved our margins while growing both
our net sales and comparable store sales in the first quarter,” said Sam
Baio, CEO of West 49 Inc. “The strategies we have been executing over the
past several quarters are beginning to pay off during the first quarter of
fiscal 2010. Our stronger comparable store sales and top line growth are a testament
to the exceptional brands we offer and our competitive pricing. Our improved
focus on inventory and merchandising, and partnering with our vendors yielded
higher margins. In addition, we benefited from the continued improvement in our
expense management.”
Store Real Estate Activity
During
the quarter, the company opened a West 49 store in the Milton Centre in
and closed an Off The Wall store and a Duke's Northshore store. The company
closed its Off The Wall store in the Lougheed Town Centre in
due to under-performance when its lease expired. The Duke's Northshore location
in the Park Royal Shopping Centre in
Vancouver
closed as the company continues to exit from this test concept. In addition,
the company relocated and expanded an Amnesia store in the Les Promenades de
L'Outaouais mall in
end of the quarter, the company was operating 133 stores, compared to 134
stores a year earlier.
Banking Arrangements
As
previously disclosed and anticipated by management, at the end of the first
quarter the company was in breach of one of its banking covenants. The company
has since received a waiver from its bank and continues to work closely with
the bank towards completing its annual renewal process during the second
quarter.
Outlook
“Regardless
of the current economic environment, our business continues to show strong
growth potential, especially our core West 49 banner,” said Baio. “We
believe that our competitive retailing strategies and prudent management of
operations better position us for this challenging economic climate. We will
strategically open new stores, continue our efforts to maximize returns from
our existing stores, and will continue to review our portfolio for any under-performing
stores that should be targeted for closure. These efforts, along with our
continuous focus on our customers and our products, ensure that we will be the
retail destination of choice for the Canadian tween and teen action sports
lifestyle.”
Results
were converted from Canadian dollars to U.S. dollars at current exchange rate.
