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Le Chateau Reports Second Quarter Results

MONTREAL, QUEBEC--(Marketwired - Sep 11, 2015) - Le Château Inc. (TSX:CTU.A), a leading Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories and footwear for style-conscious women and men, today reported its results for the second quarter ended August 1, 2015. The 2015 year refers to the 26-week period ended August 1, 2015 while the 2014 year refers to the 26-week period ended July 26, 2014.

Sales for the second quarter ended August 1, 2015 decreased 7.3% to $63.3 million from $68.3 million for the second quarter ended July 26, 2014. Sales were negatively impacted for the second quarter of 2015 by reduced mall and store traffic. The retail environment remains competitive but some signs of improvements are appearing in the aftermath of significant industry consolidation. Comparable store sales decreased 3.9% for the second quarter as compared to last year. Included in comparable store sales are online sales which increased 34.5% for the second quarter.

Earnings (loss) before interest, income taxes, depreciation, amortization, write-off and/or impairment of property and equipment ("Adjusted EBITDA") (see non-GAAP measures below) for the second quarter amounted to $2.2 million, compared to $2.9 million for the same period last year. The decrease of $647,000 in adjusted EBITDA for the second quarter was primarily attributable to the decrease of $1.7 million in gross margin dollars, offset by a decrease in selling, general and administrative expenses of $1.1 million. The decrease of $1.7 million in gross margin dollars was the result of the 7.3% decline in sales for the second quarter of 2015, offset by the increase in gross margin percentage to 66.6% from 64.2% in 2014. The gross margin improvement in the second quarter of 2015 resulted from reduced promotional activity.

Net loss for the second quarter ended August 1, 2015 amounted to $4.0 million or $(0.13) per share compared to a net loss of $3.0 million or $(0.10) per share for the same period last year.

Six-month Results

Sales for the six months ended August 1, 2015 decreased 6.2% to $114.0 million from $121.6 million last year. Comparable store sales decreased 5.0% versus the same period a year ago. Included in comparable store sales are online sales which increased 29.3% for the six months ended August 1, 2015.

Adjusted EBITDA for the six months ended August 1, 2015 amounted to $(4.9) million, compared to $(6.4) million last year. The improvement of $1.5 million in adjusted EBITDA for the first six months was primarily attributable to a decline in selling, general and administrative expenses of $3.0 million, offset by a decrease of $1.5 million in gross margin dollars. The decrease of $1.5 million in gross margin dollars was the result of the 6.2% decline in sales for the first half of 2015, offset by the increase in gross margin percentage to 65.6% from 62.7% in 2014. The gross margin improvement in the first half of 2015 resulted from reduced promotional activity.