Groupe Bikini Village inc.

Groupe Bikini Village inc.

December 12, 2007 15:06 ET

Groupe Bikini Village Inc. Announces Third Quarter Results

Renovation and expansion strategy already yielding growth

BOUCHERVILLE, QUEBEC--(Marketwire - Dec. 12, 2007) - Groupe Bikini Village inc. (TSX:GBV) (the "Company") today released the results of its third quarter and first nine-month period of the year, which ended November 3, 2007.

Net sales for the third quarter and the nine-month period ended November 3, 2007 were $5.4 million and $26.9 million, respectively, compared to $5.6 million and $28.2 million in the corresponding periods of the previous year; comparable sales decreased by 5.2% and 5.9%, respectively. However, due to a shift in the reporting calendar in 2007 vs. 2006, these results compare a third quarter of 2007 which includes one less "high-season" week and one more "low-season" week than the third quarter of 2006 did - causing the performance to look less strong than it was. In fact, when the same weeks in 2006 and 2007 are compared, net sales for the third quarter are up by 6.4% in 2007 vs. 2006, and comparable sales for the same set of weeks are up by 6.0%. The results, which reflect growth in sales in comparable weeks of 2007 versus 2006 despite the temporary closure of an important number of stores for renovations, clearly illustrate that the Company's management strategies to enhance shareholder value are yielding positive results.

"We are excited about and encouraged by these results, especially given that we achieved these increases despite renovations which led to average temporary shutdowns of six weeks in each of the stores we renovated," said Yves Simard, President and CEO of Groupe Bikini Village inc. "Had all of our stores been fully operational for the entire quarter, our growth rate would have been even stronger on a comparable week basis."

Capital asset investments made in Groupe Bikini Village inc.'s store network, totalling $2.1 million in the quarter and $3.7 million for the nine month period ended November 3, 2007, continued to generate positive sales results beyond the third quarter: net sales for November 2007 were $2.9.million compared to $2.5 million in November 2006, a 15.6% increase. For the same period, comparable sales increased by 10.9%. Net sales for November 2007 compared to the same weeks in 2006 increased by 8.9%. "With these capital investments, we have made a significant improvement in our retail presence, having evolved in the space of one year from an aging retail network to one in which fully one-third of our retail stores are brand new," said Mr. Simard. "This puts us in a stronger competitive position, better able to attract customers; we will make further capital investments in our retail infrastructure in the months ahead, to build further on this strategy to increase shareholder value."

Operating income (loss) (EBITDA(1)) for the third quarter and first nine-month period of 2007 totalled ($1.7 million) and $586,000, respectively, compared to operating income (loss) of ($1.3 million) and $1.3 million in the same periods in 2006. The $344,000 increase in operating loss in the third quarter of 2007 was almost entirely due to higher operating expenses related to the greater number of stores in operation, non-recurring charges related to the opening of new stores or re-opening of newly renovated stores, and broker fees related to new and renewed leases. The decrease in sales volume and its related contribution was almost entirely offset by stronger gross margins. For the nine-month period ended November 3, 2007, the $762,000 decrease in operating income was due to a reduced business volume partially mitigated by stronger margins and the higher operating expenses described above.

For the quarter ended November 3, 2007, losses before taxes on continuing operations were $2 million, versus $1.5 million for the same period the previous year. In the first nine-month period of 2007, the Company registered $153,000 in losses before taxes on continuing operations, compared to earnings of $375,000 for the same period in 2006. An unusual, non-recurring item of $0.5 million related to stock-based compensation impacted earnings before taxes on continuing operations in the first nine months of 2006.

Income taxes in the third quarter of 2007 had a significant positive impact on the Company's net losses on continuing operations; the Company's income tax was close to nil in 2006 because it did not record future income tax assets on its balance sheet at that time. Accordingly, for the quarter ended November 3, 2007, net losses on continuing operations were $1.3 million (($0.01) per share, basic and diluted), as compared to $1.4 million (($0.01) per share, basic and diluted) for the same period in the previous year. For the first nine months of 2007, net losses on continuing operations totalled $130,000 (nil per share, basic and diluted), as compared to net earnings of $375,000 (nil per share, basic and diluted) in the same period in 2006. Also in the quarter ended November 3, 2007, Groupe Bikini Village realized a net gain of $161,000, and on a cumulative basis for the nine-month period, $478,000, relative to operations discontinued in 2005.

Overall, Groupe Bikini Village's net losses for the third quarter of 2007 totalled $1.2 million (($0.01) per share, basic and diluted) compared to net losses of $1.4 million in the third quarter of 2006 (($0.01) per share, basic and diluted). For the first nine-month period of 2007, net earnings totalled $348,000 (nil per share, basic and diluted) compared to net earnings of $375,000 in 2006 (nil per share, basic and diluted).

Groupe Bikini Village inc. continues to have a positive outlook for the balance of 2007. "We are encouraged by the strong prospects that lie ahead of us," said Mr. Simard, "especially given the strength of the Canadian dollar and how that tends to encourage winter travel for our Canadian customers."

In the fourth quarter and beyond, Groupe Bikini Village will continue to execute on its growth and value-creation strategies with the objective of further growing shareholder value. Thanks to its strong cash position, the Company will be able to continue strengthening its penetration of the swimwear market, by increasing the number of stores in its chosen markets and looking at new markets for expansion, as it did with the opening of its first store in Nova Scotia, on October 18, 2007. Finally, the Company plans to consider opportunities to grow through strategic acquisitions.

"We are very encouraged by the positive results we are already seeing from our renovation and expansion strategy, and look forward to building on that growing momentum in the months and quarters ahead," said Mr. Simard.

About Groupe Bikini Village

Groupe Bikini Village, serving Canadians for almost a quarter-century, is one of Canada's most popular swimwear retailers, with 58 boutiques in Quebec, Ontario and Nova Scotia operating under the Bikini Village and Ocean Bikini Village banners. Groupe Bikini Village sells brands and styles to suit every figure - supermodel, mature, active and homebody. No other retailer offers as vast a selection of swimsuits, beach accessories, and cruisewear. Headquartered in Boucherville, Quebec, Groupe Bikini Village employs approximately 415 people; its securities trade on the Toronto Stock Exchange under the stock symbol GBV.


(1) The term EBITDA (earnings before interest, taxes, depreciation, amortization and reorganisation fees and unusual items) does not have any standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and may not be comparable to similar measures presented by other companies. Please refer to the section of Groupe Bikini Village inc.'s Annual MD&A dated April 16, 2007, entitled "Non-GAAP Financial Measures," available on SEDAR at

Forward looking statements

This news release contains certain forward-looking statements concerning our future operations, economic performances, financial conditions and financing plans. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. However, whether actual results and developments will conform to our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements, and there can be no assurance that the results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to or effects on us. We undertake no obligation and do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable law.

(in thousands of dollars except per share amounts, unaudited)

Three months ended Nine months ended
November 3, October 28, November 3, October 28,
2007 2006 2007 2006

Operating revenue $5,398 $5,628 $26,898 $28,190

Cost of goods sold,
operating and
expenses 7,049 6,935 26,312 26,842


Operating income
(loss) (EBITDA(1)) (1,651) (1,307) 586 1,348

Interest 54 (5) 52 11

Amortization 263 180 687 514
Earnings (losses)
before income taxes
and the undernoted
items (1,968) (1,482) (153) 823
Unusual items
- stock based
compensation - - - 448
Earnings (losses)
before income taxes
from continuing
operations (1,968) (1,482) (153) 375

Income taxes (641) (98) (23) -


Earnings (losses)
from continuing
operations (1,327) (1,384) (130) 375

operations, net
of related income
taxes 161 - 478 -
(LOSSES) $(1,166) $(1,384) $348 $375


PER SHARE, basic
and diluted (0.01) (0.01) - -


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