West 49 Inc., Canada's action sport retailer, sales increased 0.2% in the first quarter to Canadian $40.9 million (U.S. $40 million). Comparable store sales decreased 2.6%, with the core West 49
banner experiencing a decrease of 3.0%, compared to last year, with
comparable store sales growth of 2.9% on a consolidated basis and growth
of 7.7% for the West 49 banner. Sales results were particularly
challenged in Alberta and British Columbia largely due to weather and
the economy.

Among the highlights:

  • Selling, general and administrative (“SG&A”) expense reductions offset gross margin decreases;
  • EBITDA loss improved slightly to $2.1 million from $2.2 million for the first quarter of last year; and
  • The company opened three new stores, relocated and expanded a store and closed a store during the quarter.

“While we had slight improvements in a few areas, our financial results were essentially flat to the first quarter of last year,” said Sam Baio, Chief Executive Officer of West 49 Inc. “We did, however, continue to gain efficiencies in our operations and offer unique marketing promotions, which continue to set us apart from other tween and teen retailers.”
 
(Amounts in thousands of Canadian $


     except per share amounts and weighted averages)



                                                        First Quarter Ended

                                                   May 1, 2010  May 2, 2009



    Net sales                                             40,873      40,828

    Gross margin                                           7,342       7,416

    EBITDA(1)                                             (2,054)     (2,208)

    Net income (loss)                                     (2,643)     (2,617)

    Basic income (loss) per share                         ($0.04)     ($0.04)

    Weighted average common shares outstanding        63,803,519  63,803,519

Net sales for the quarter increased $0.1 million, or 0.2%, to $40.9 million. Consolidated comparable store sales decreased 2.6%, with the core West 49 banner experiencing a decrease of 3.0%, compared to last year, with comparable store sales growth of 2.9% on a consolidated basis and growth of 7.7% for the West 49 banner. Sales results were particularly challenged in Alberta and British Columbia largely due to weather and the economy.

Gross margin decreased $0.1 million, to $7.3 million. As a rate to net sales, gross margin decreased by 30 basis points to 17.8% as a result of continued pressure in a competitive retail landscape. SG&A expenses decreased $0.2 million to $9.4 million, or 23.0% of net sales.

EBITDA for the quarter was a loss of $2.1 million, slightly improved from the loss of $2.2 million for the first quarter a year ago. The Company had a net loss for the quarter of $2.6 million, or $0.04 per share, unchanged from the prior year.

Store Real Estate Activity

During the quarter, the company opened a West 49 store at Shoppers' Mall, in Brandon, Manitoba, and two West 49 Outlets: one at Signal Hill Shopping Centre, in Calgary, Alberta and one at Riocan Durham Centre in Ajax, Ontario. The company also relocated and expanded a D-Tox store in Carrefour Angrignon, Montreal, Quebec. An Off The Wall store was closed in Coquitlam, British Columbia as a result of a lease expiry in an underperforming location.

Outlook

“Our outlook remains cautiously optimistic.” said Mr. Baio. “We continue to operate in a retail environment where overall consumer confidence has yet to be restored. Until then, we will remain focused on our unique marketing programs and offering our customers exceptional value. We also remain committed to real estate growth opportunities, mainly in our core West 49 banner, and have plans to open up to four more stores and relocate and expand as many as five more stores this year.”

At May 1, 2010, the company operated 138 stores in nine provinces, under the banners West 49, Billabong, Off The Wall, Amnesia/Arsenic and D-Tox.