Groupe Bikini Village inc.
TSX : GBV

Groupe Bikini Village inc.

April 17, 2008 15:09 ET

Groupe Bikini Village Inc. Fourth Quarter Results Illustrate Growing Momentum From Turnaround Strategy

Fourth quarter key performance indicators reflect growth

BOUCHERVILLE, QUEBEC--(Marketwire - April 17, 2008) - Groupe Bikini Village inc. (TSX:GBV) (the "Company") today released its fourth quarter and year-end 2007 results, illustrating through growth in earnings, sales, and gross margins that its renovation and expansion strategy is leading the Company to improved financial and operational performance.

"We are delighted to report results illustrating that, despite the relative youth of many of our stores which have either been opened or renovated in the last year, our strategy is well-founded, our execution is hitting the mark, and we are delivering on our objective to enhance shareholder value," said Yves Simard, President and CEO of Groupe Bikini Village inc.

In the fourth quarter of fiscal 2007, which ended on February 2, 2008, Groupe Bikini Village inc.'s EBITDA(1) was $1.8 million, or 14.2% of sales, compared to $983,000, or 8.0% of sales, for the fourth quarter of 2006. EBITDA(1) for the year ended February 2, 2008 totalled $2.4 million, or 6.1% of sales, compared to $2.3 million, or 5.8% of sales, in the corresponding period last year.

The Company's sales in the fourth quarter of fiscal 2007 grew by 9.3% when the same set of weeks in 2007 and 2006 are compared (a comparison of the two fourth quarters year-over-year reflects an increase of 4.8%, but does not account for the fact that the fourth quarter of fiscal 2006 encompassed 14 weeks, versus 13 weeks in 2007). Overall in 2007, the Company's sales increased slightly, by 0.3%, when the 52 weeks of fiscal 2007 are compared with the same 52 weeks in fiscal 2006. "We are proud to have been able to deliver this growth despite the cumulative 57 weeks in which we had stores closed for renovations, mostly in the fall of 2007," said Mr. Simard. "This shows that we are generating more sales in our stores than we were at the same time a year earlier, before many of our renovations had taken place. Clearly, our strategy is having the intended effect on our results."

Renovations and expansion in retail network driving momentum

In late 2006, Groupe Bikini Village inc. undertook an aggressive expansion and renovation strategy, as a means of capitalizing on the potential offered by a number of its older stores. In 2007, the Company accelerated its renovation calendar, completing thirteen total store renovations (most of which were completed in the fall of 2007, in time for the fourth quarter), closed two non-performing stores, opened two stores in Quebec and one in Ontario, and opened its first store in Nova Scotia.

"The $3.8 million Groupe Bikini Village inc. invested in capital improvements in its stores in 2007 transformed our formerly aging retail network into a chain in which a third of the stores are new," said Mr. Simard. "As our results are already demonstrating, this fresh new appeal puts us in a stronger competitive position, better able to attract customers. It is also providing us with better positioning in relation to our partners managing the retail malls in which our stores are located: since our renovated stores are bringing in more shoppers, we offer more appeal for mall managers, and are therefore better-positioned to negotiate mall locations in high-traffic areas which should, in turn, further improve our sales. We are now mid-way through our renovation and expansion strategy: in 2008, we will continue to move forward, making further capital investments in our retail infrastructure to take even better advantage of the potential of our market and our brand."

Operational improvements lead to increased profitability

Throughout 2007, the Company continued its progress on a series of initiatives aimed at enhancing efficiency and performance which, together, delivered a 1.5% increase in gross margins for the year ending February 2, 2008. These profitability-enhancing initiatives included better initial mark-ups, a decreased level of mark-downs, reduced point-of-sale discounts, and the combined effect of higher quick-pay discounts and a favourable exchange rate on certain purchases.

Strong balance sheet - ability to complete renovations and expansion without additional financing

At the end of fiscal 2007, Groupe Bikini Village enjoyed an improved financial situation compared to a year earlier. Shareholders' equity increased by $2.3 million during the year, due in part to the $1 million equity component of the convertible debentures issued to the Solidarity Fund QFL. Taken together, Groupe Bikini Village inc.'s growing momentum in sales, continued operational efficiencies, ongoing retail network improvements, and solid financial foundation position the Company to continue executing on its value-enhancing renovation and expansion strategy, without having to seek additional financing.

Outlook

Early results in fiscal 2008 support the Company's belief that its renovation and expansion strategy will yield further improvement in the year ahead. Net sales for February and March 2008 were $7.6 million compared to $6.2 million in February and March 2007 - a 21.6% increase. For the same period, comparable sales increased by 16.4%.

In the quarters to come, Groupe Bikini Village inc. will continue to move forward on a number of growth and value-creation strategies aimed at further strengthening its marketshare and delivering increased shareholder value. Its current cash situation and financing facilities will allow the Company to accelerate its renovation strategy and its penetration of the swimwear market by increasing the number of stores in its chosen markets of Ontario, Quebec and the Maritimes.

The Company will also make sustained efforts in 2008 to drive operational efficiencies and improve inventory management throughout the organization. Its plans to achieve these goals in the year ahead include the replacement of its aging merchandising solution and the relocation of its head office to a location that will provide greater efficiencies. The Company's current financial situation is also sufficient to support all of these projects without any additional financing.

"We are pleased with the positive results our renovation and expansion strategy delivered in the fourth quarter of 2007, as well as how those results positively impacted our year-end performance," said Mr. Simard, "and we are encouraged by the even stronger performance we're seeing so far in 2008. We look forward to building on that growing momentum in the quarters ahead."

About Groupe Bikini Village

Groupe Bikini Village inc., serving Canadians for almost a quarter-century, is a leading swimwear retailer with a network of new and renovated boutiques across Eastern Canada. In its bright and inviting stores with comfortable change rooms and knowledgeable staff, Groupe Bikini Village helps its customers choose from among Canada's widest selection of swimsuits, beach accessories, and cruisewear, in the most popular brands the industry has to offer and styles to suit every figure. Headquartered in Boucherville, Quebec, Groupe Bikini Village inc. operates 58 stores and employs approximately 500 people; its securities trade on the Toronto Stock Exchange under the stock symbol GBV. For more information about Groupe Bikini Village inc., please visit our website at www.bikinivillage.com.

Notes

(1) The term EBITDA (earnings before interest, taxes, depreciation, amortization and reorganization 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 page 6 of Groupe Bikini Village inc.'s MD&A for the year ended February 2, 2008; reconciliation with the most directly comparable financial GAAP measures is presented on page 8 of that report, which is available at www.sedar.com.

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 under 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 we have anticipated 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.



GROUPE BIKINI VILLAGE INC.
STATEMENT OF OPERATIONS
(in thousands of dollars except per share amounts)

Three months ended Year ended
February 2, February 3, February 2, February 3,
2008 2007 2008 2007
(unaudited) (unaudited) (audited) (audited)
(13 weeks) (14 weeks) (52 weeks) (53 weeks)
--------------------------------------------------------------------------

Operating revenue $12,928 $12,333 $39,827 $40,523

Cost of goods sold,
operating and
administrative
expenses 11,088 11,350 37,401 38,191
--------------------------------------------------------------------------

Operating income -
EBITDA(1) 1,840 983 2,426 2,332

Interest 73 (7) 125 4

Amortization 302 256 989 771
--------------------------------------------------------------------------
Earnings before
income taxes 1,465 734 1,312 1,557
and the
undernoted items

Unusual items -
stock based
compensation - - - 448
--------------------------------------------------------------------------

Earnings before
income taxes
from continuing
operations 1,465 734 1,312 1,109

Income taxes 524 (848) 501 (848)
--------------------------------------------------------------------------

Earnings from
continuing
operations 941 1,582 811 1,957

Discontinued
operations, net
of related
income taxes - - 478 -
--------------------------------------------------------------------------

NET EARNINGS $941 $1,582 $1,289 $1,957
--------------------------------------------------------------------------
--------------------------------------------------------------------------

EARNINGS PER SHARE,
basic and diluted 0.01 0.01 0.01 0.01
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Contact Information