Groupe Les Ailes de la Mode Inc.
TSX : MOD

Groupe Les Ailes de la Mode Inc.

September 13, 2005 08:54 ET

Groupe Les Ailes de la Mode Announces Second Quarter Results

BOUCHERVILLE, QUEBEC--(CCNMatthews - Sept. 13, 2005) - Groupe Les Ailes de la Mode inc.("GLAM") (TSX:MOD) today reported its financial results for the second quarter of 2005.

The presentation of the Company's financial results, including both the current and historical periods, reflect the sale of its subsidiary Les Ailes de la Mode Incorporees on August 8, 2005 (effective July 30, 2005) for proceeds of $6.2 million including the assumption of debt, and subject to certain adjustments including changes in working capital. As a result, these operations are being reported as a discontinued operation and their impact to GLAM's consolidated results of operations is included as a single line item.

For the three-month period ended July 30, 2005, net sales from continuing operations increased 31% to $15.0 million, compared to $11.4 million for the same period last year. The operating margin for the period improved to 21.4% from 16.6% in the previous year primarily as a result of the increase in sales over the same period last year.

Comparable sales for the swimwear division, Bikini Village and Ocean Bikini Village, increased 29%, due to an exceptional performance in June and July primarily as a result of our new merchandising strategy of faster turnover of new products bought in smaller quantities, as well as opportunistic buying at popular price points.

Income from continuing operations for the second quarter of 2005 was $1.9 million ($0.11 per basic share, $0.05 per diluted share) compared to $0.7 million ($0.03 per basic and diluted share) in 2004. The 2004 figure includes reorganization costs of $1.1 million.

Loss from discontinued operations for the quarter ended July 30 2005 was $13.8 million ($0.78 per basic and diluted share) compared to $6.3 million ($0.51 per basic and diluted share) for the same quarter in 2004. The loss from discontinued operations for the 2005 quarter includes a loss on the disposal of an investment in the subsidiary Les Ailes de la Mode Incorporees for an amount of $10.7 million mainly related to the write down of assets but also including $1.4 million in different fees and adjustments related to the sale transaction. As a result, net loss for the second quarter of 2005 was $11.9 million ($0.67 per basic share, $0.73 per diluted share) compared to $5.6 million ($0.48 per basic and diluted share).

"The second quarter is traditionally the strongest quarter for our swimwear division and we are pleased with the significant increase in sales achieved during the period as well as the gross margin improvement" said Leslie Glazerman, Interim CEO and Interim CFO of Groupe Les Ailes de la Mode. "With the sale of the Les Ailes de La Mode subsidiary, we now have a more stable platform for growth allowing us the opportunity to explore additional strategic and financial alternatives, with the view of enhancing shareholder value while continuing to contain costs" added Mr. Glazerman.

For the six months ended July 30, 2005, net sales from continuing operations were $22.7 million compared to sales of $19.5 million in the corresponding 2004 period, an increase of 16.6%. Comparable sales for the swimwear division improved by 14.5%. Income from continuing operations for the first half of 2005 was $1.4 million ($0.08 per basic share, $0.05 per diluted share) compared to $0.1 million in 2004. The 2004 figure includes reorganization costs of $1.8 million. Loss from discontinued operations for the six months ended July 30, 2005 was $16.1 million ($0.93 per basic and diluted share) compared to $11.5 million ($0.94 per basic and diluted share) in 2004. As a result, net loss for the first half of 2005 was $14.8 million ($0.85 per basic share, $0.88 per diluted share) compared to $11.4 million ($0.98 per basic and diluted share).

Subsequent events

GLAM redeemed at par all of its outstanding secured debentures, or $3.7 million in principal on August 8, 2005.

On August 31, 2005, the sale of the head office building was completed for a net amount of $2.9 million. With the proceeds from the sale, the Company reimbursed the outstanding balance of the mortgage loan in the amount of $1.3 million plus accrued interest and the short term loan of $1.5 million plus accrued interest that was obtained by a private financing on June 3, 2005.

Effective July 31, 2005 Real Mimeault resigned from the Board of Directors. Mr. Mimeault has agreed to act as a consultant to the Company as required.

Financing activities

GLAM is currently negotiating amendments to its credit facility primarily due to the sale of Les Ailes de la Mode Incorporees subsidiary and the impact it has had on the equity position on the balance sheet. The Company is also continuing to review additional strategic, financial and operating measures to meet its longer-term financial needs and our strategic goals with a view to maximizing shareholder value.

ABOUT GROUPE LES AILES DE LA MODE INC.

Groupe Les Ailes de la Mode inc.'s swimwear division operates 59 swimwear boutiques in Quebec and Ontario under the Bikini Village and Ocean Bikini Village banners. Groupe employs 600 people.

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 with our expectations and predictions is subject to a number of risks, uncertainties and assumptions. Consequently, all of the forward-looking statements made in 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 and our subsidiaries or their businesses or operations.

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.



GROUPES LES AILES DE LA MODE INC.
Financial Highlights
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(in thousands of dollars, except per share amounts and statistics)

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Before reorganization
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Period of Periode of Period of Period of
three six three six
months months months months
ending ending ending ending
July 30, July 30, July 31, July 31,
2005 2005 2004 2004
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OPERATING RESULTS
Net sales $ 14,998 $ 22,699 $ 11,432 $ 19,473
Operating income
(EBITDA) 3,210 3,100 1,896 2,160
Operating margin 21.40% 13.66% 16.59% 11.09%
Net earnings related
to continuing
operations
before reorganization
cost 1,918 1,384 1,747 1,913
Net earnings related
to continuing
operations before
reorganization
cost / net sales 12.79% 6.10% 15.28% 9.82%
Net earnings related to
continuing operations 1,918 1,384 683 115
Net earnings on
continuing operations
/ net sales 12.79% 6.10% 5.97% 0.59%
Net loss due to
discontinued
operations -13,838 -16,143 -6,271 -11,543
Net loss -11,920 -14,759 -5,588 -11,428
Cash flow from
continuing
operations 2,513 2,417 1,364 1,445
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PER SHARE
Basic
From continuing
operations 0.11 0.08 0.03 -0.04
From discontinued
operations -0.78 -0.93 -0.51 -0.94
Net loss -0.67 -0.85 -0.48 -0.98

Diluted
From continuing
operations 0.05 0.05 0.03 -0.04
From discontinued
operations -0.78 -0.93 -0.51 -0.94
Net loss -0.73 -0.88 -0.48 -0.98

Cash flow from
continuing operations 0.14 0.14 0.11 0.12
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OTHER STATISTICS
Capital expenditures 156 434 45 90
Number of stores at
the end of the period 59 59 57 57
Number of employees 600 600 600 600
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Contact Information

  • Roch Landriault
    (514) 843-2345