Danier Leather Inc.

Danier Leather Inc.

May 30, 2006 17:06 ET

Danier Leather to Reduce Costs and Improve Efficiencies

TORONTO, ONTARIO--(CCNMatthews - May 30, 2006) - Danier Leather Inc. (TSX:DL) today announced initiatives to reduce its selling, general and administrative costs and improve operational efficiencies. The cost reduction initiatives have started to be implemented and the benefits are expected to be realized during fiscal 2007 which covers the period between July 2006 and June 2007.

Mr. Jeffrey Wortsman, President and Chief Executive Officer of Danier Leather Inc., said: "We are taking the necessary steps to return the Company to profitability and are employing strategies that focus on our key customers."

Danier is implementing a number of operational efficiency initiatives including:

- Shift in promotional and advertising activities - Danier to place greater emphasis in favour of newspapers flyer inserts, and less transit shelter, billboard and magazine advertising. The company expects to achieve advertising expense reductions of about $2.5 million during Fiscal 2007.

- Staff reductions - Today, Danier reduced its 136 head office staff by 23 individuals for an annual savings of approximately $1 million. A one-time charge of approximately $0.6 million for severance payments and outplacement counselling for the affected employees will be recognized in the fourth quarter.

- Merchandise planning - Danier is seeking to improve its merchandise planning to include earlier planning and better purchasing. As part of this initiative, Danier will be hiring for the newly created position of Chief Sourcing Officer who will manage the supply chain.

- E-Commerce / Website - The Danier website will no longer process transactions, but rather be used as a marketing and informational tool. This is expected to result in savings of approximately $0.3 million during fiscal 2007.

- Closure of underperforming stores and power centres - Two underperforming power centre locations whose leases will expire during the latter part of fiscal 2007 are expected to be closed. Typically, Danier seeks to relocate staff to other stores. Additionally, Danier will continue to monitor store performance and may during the course of the year, close other stores that are not generating acceptable profits levels.

Mr. Wortsman added, "The company remains committed to work towards achieving sustained profitability. In addition to these initiatives, other expenses will be examined with a view to maximize operational efficiency at Danier."

About Danier

Danier Leather Inc. is a leading integrated designer, manufacturer, and retailer of high-quality leather and suede clothing and accessories. The Company's merchandise is marketed exclusively under the well-known Danier brand name and is available only at its 95 shopping mall, street-front, and power centre stores, and through its corporate sales division.

Note: This press release may contain forward-looking statements that involve risks, estimates, and uncertainties. Therefore, actual results may differ materially. Examples of such risks and uncertainties include those associated with product sales, demand for Danier's products, availability of raw materials, foreign sourcing and manufacturing, the class action lawsuit, continued growth of the leather apparel industry, and competition and other associated risks with Danier's business. For an expanded discussion of risks and uncertainties, please see the documents filed by Danier Leather Inc. with the Ontario Securities Commission. Danier disclaims any responsibility to update or revise such forward-looking statements whether as a result of new information, future events or otherwise.

Contact Information

  • Investor Relations Contact
    Danier Leather Inc. - Jeffrey Wortsman
    President and Chief Executive Officer
    (416) 762-8175, ext. 302
    (416) 762-7408 (FAX)
    Danier Leather Inc.
    Bryan Tatoff
    Senior Vice-President and Chief Financial Officer
    (416) 762-8175, ext. 328
    (416) 762-6072 (FAX)