La Senza Corporation
TSX : LSZ.SV

La Senza Corporation

March 29, 2006 14:34 ET

La Senza Corporation Posts Record Results for Fiscal 2006 and Increases Quarterly Dividend by 25% From $0.16 to $0.20

MONTREAL, QUEBEC--(CCNMatthews - March 29, 2006) - (TSX:LSZ.SV) La Senza Corporation reported today net earnings of $17.7 million or $1.30 per share for the year ended January 28, 2006 (fiscal 2006) compared to net earnings of $81,000 or $0.01 per share for the year ended January 29, 2005 (fiscal 2005).

Excluding losses from discontinued operations related to the closure of the Company's U.S. operation, earnings from continuing operations amounted to $19.7 million or $1.44 per share for fiscal 2006 compared to $7.6 million or $0.57 per share for fiscal 2005.

Earnings from continuing operations before income taxes and discontinued operations increased by 27.7% from $14.1 million to $18.1 million in the fourth quarter. After giving effect to an adjustment in income taxes resulting from previously unrecognized losses in the fourth quarter of fiscal 2005, the Company achieved the same $11.3 million earnings from continuing operations in the fourth quarter of each fiscal year or $0.82 per share for fiscal 2006 and $0.84 per share for fiscal 2005. In the fourth quarter of fiscal 2005, the Company sustained a loss from discontinued operations in the amount of $4.6 million. In the fourth quarter of fiscal 2006, the Company posted net earnings of $11.3 million or $0.82 per share compared to net earnings of $6.8 million or $0.50 per share for the fourth quarter for fiscal 2005.

Sales for the year ended January 28, 2006 amounted to $410.9 million compared to sales of $354.9 million for the year ended January 29, 2005, an increase of 15.8%. Sales for the fourth quarter of fiscal 2006 amounted to $133.4 million compared to sales of $115.4 million for the fourth quarter of fiscal 2005, an increase of 15.5%. Comparative store sales (stores open for more than a year) increased by 8.2% for the year and by 6.8% for the fourth quarter.

Mr. Irving Teitelbaum, Chairman and Chief Executive Officer of the Corporation, said "Our strategic focus on the La Senza brand in our Canadian and international licensing operations paid-off handsomely with superlative year-end results. Both La Senza Girl and our e-commerce division became profitable during the year, and La Senza International achieved a particularly strong performance. Early this year we will be renovating and converting our Silk & Satin stores to the La Senza Express banner, and our aggressive rate of expansion will continue in the current year, further strengthening our brand prominence."

The Board increased the quarterly dividend by 25% from $0.16 per share to $0.20 per share. The dividend will be payable on April 26, 2006 to shareholders of record as of April 12, 2006.

The Board announced that the number of directors was increased to ten and that Maryse Bertrand had been elected to the Board. Ms. Bertrand is a senior partner in the Montreal office of the law firm Davies Ward Phillips & Vineberg LLP.

La Senza Corporation, headquartered in Montreal, is a specialty retailer with 305 corporate owned stores as at January 28, 2006, offering fashionable lingerie and sleepwear sold in its 227 "La Senza" and "Silk & Satin" stores, and fashionable apparel for girls sold in its 78 "La Senza Girl" stores. Stores are located in every province in Canada. In addition, 272 independently owned "La Senza" and "La Senza Girl" stores are operating in 27 other countries under license.

Forward-looking statement

Except for historical information provided herein, this press release may contain information and statements of a forward-looking nature relating to the Corporation and/or the environment in which it operates that are based on the Corporation's expectations, estimates and forecasts. These statements are subject to important risks, uncertainties and assumptions that are difficult to predict and/or are beyond the Corporation's control, as well as on management's reasonable evaluation of future events and are not meant as guarantees of future performance. A number of factors may cause actual outcomes and results to differ materially from those expressed. These factors include those set forth in other public filings of the Corporation. Accordingly, readers should not place undue reliance on these forward-looking statements. In addition, these forward-looking statements speak only as of the date made and the Corporation disavows any intention or obligation to update or revise any such statements as a result of any event, circumstance or otherwise.

Factors which could cause actual results or events to differ materially from current expectations include, among other things: the ability of the Corporation to successfully implement its strategic initiatives and whether such strategic initiatives will yield the expected benefits; competitive conditions in the industries in which the Corporation participates; changes in consumer spending; general economic conditions and normal business uncertainty; customer preferences towards product offerings; seasonal weather patterns; fluctuations in foreign currency exchange rates; changes in the Corporation's relationship with its suppliers and licensees; changes in the Corporation's key personnel; interest rate fluctuations and other changes in borrowing costs; and changes in laws, rules and regulations applicable to the Corporation.



La Senza Corporation - Corporation La Senza
Consolidated Balance Sheets
Unaudited (thousands of dollars)

As at As at
January 28, January 29,
2006 2005
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ASSETS

Current
Cash $28,899 $18,347
Short-term investments 32,793 23,216
Marketable securities 24,971 25,782
Accounts and sundry receivables 10,867 7,063
Income taxes recoverable - 1,428
Inventory 48,990 39,753
Prepaid expenses 2,428 2,190
Assets of discontinued operations - 2,286
Future income taxes 1,488 8,387
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150,436 128,452

Property and Equipment 79,971 82,844
Trademarks 1,217 1,199
Assets of Discontinued Operations - 359
Future Income Taxes 1,120 2,872
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232,744 215,726
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LIABILITIES

Current
Accounts payable and accrued liabilities 41,656 35,169
Income taxes payable 1,284 -
Current maturity of obligations under
capital leases 11,380 11,588
Current maturity of long-term debt 127 104
Liabilities of discontinued operations - 4,317
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54,447 51,178

Obligations Under Capital Leases 23,552 25,326
Long-Term Debt 2,582 2,711
Deferred Lease Obligations 8,871 8,193
Future Income Taxes 110 70
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89,562 87,478
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SHAREHOLDERS' EQUITY

Capital Stock 36,328 31,781
Contributed Surplus 9,182 9,423
Retained Earnings 97,672 87,044
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143,182 128,248
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$232,744 $215,726
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See accompanying selected financial information



La Senza Corporation - Corporation La Senza
Consolidated Statements of Retained Earnings
Unaudited (thousands of dollars)


Fiscal Year Ended
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January 28, January 29,
2006 2005

Balance - Beginning of Year $87,044 $89,112
Net earnings 17,737 81
Dividends on subordinate voting shares (4,512) (1,350)
Dividends on multiple voting shares (2,597) (799)
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Balance - End of Year $97,672 $87,044
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See accompanying selected financial information



La Senza Corporation - Corporation La Senza
Consolidated Statements of Earnings
Unaudited (thousands of dollars, except earnings per share)

Fourth Quarter Fiscal Year
Ended Ended
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January 28, January 29, January 28, January 29,
2006 2005 2006 2005

Sales $133,353 $115,426 $410,852 $354,910
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Cost, Expenses
and Other
Cost of sales and
store, warehouse,
general,
administrative
and sales support
expenses 110,342 95,813 358,181 315,077
Amortization 4,733 5,561 20,290 19,551
Interest on
obligations under
capital leases 465 495 1,998 2,013
Interest on
long-term debt 36 93 191 326
Other interest (93) 28 (183) 334
Foreign exchange
(gain) loss 71 (322) 590 (32)
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115,554 101,668 381,067 337,269
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Operating Income 17,799 13,758 29,785 17,641

Interest income
on short-term
investments 306 222 1,149 718
Other income 12 (18) 221 106
Foreign exchange
gain (loss) on
investment
activities (62) 175 (300) (2,402)
Loss in a
significantly
influenced
company - - - (6,480)
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Earnings from
Continuing
Operations Before
Income Taxes 18,055 14,137 30,855 9,583
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Income Taxes
Current (1,931) 792 2,480 1,134
Future 8,691 1,984 8,691 821
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6,760 2,776 11,171 1,955
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Earnings from
Continuing
Operations 11,295 11,361 19,684 7,628

Discontinued
operations, net
of income taxes - (4,583) (1,947) (7,547)
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Net Earnings $11,295 $6,778 $17,737 $81
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Basic Earnings
Per Share
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Continuing
Operations $0.82 $0.84 $1.44 $0.57
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Net Earnings $0.82 $0.50 $1.30 $0.01
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Weighted Average
Number of Shares
Outstanding-Basic 13,773,959 13,448,831 13,626,186 13,433,066
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Diluted Earnings
Per Share
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Continuing
Operations $0.81 $0.84 $1.43 $0.57
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Net Earnings $0.81 $0.50 $1.29 $0.01
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Weighted Average
Number of Shares
Outstanding-
Diluted 13,859,421 13,448,831 13,738,940 13,453,210
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See accompanying selected financial information



La Senza Corporation - Corporation La Senza
Consolidated Statements of Cash Flows
Unaudited (in thousands of dollars)

Fourth Quarter Fiscal Year
Ended Ended
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January 28, January 29, January 28, January 29,
2006 2005 2006 2005

Funds Provided
(Used)
Operating
Activities
Earnings from
continuing
operations $11,295 $11,361 $19,684 $7,628
Amortization 4,733 5,561 20,290 19,551
Amortization
of deferred
lease
obligations (504) (445) (1,685) (1,738)
Stock-based
compensation 239 193 1,047 904
Loss in a
significantly
influenced
company - - - 6,480
Future income
taxes 6,372 1,481 8,691 821
Deferred lease
obligations 516 761 2,363 2,910
Foreign exchange
(gain) loss on
investment
activities 62 (175) 300 2,402
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22,713 18,737 50,690 38,958
Changes in non-
cash operating
elements of
working capital 18,974 18,179 (4,080) 7,716
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41,687 36,916 46,610 46,674
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Financing
Activities
Issue of
subordinate
voting shares 457 35 3,259 175
Repayments of
obligations under
capital leases (3,167) (2,862) (12,227) (10,379)
Repayment of
long-term debt (30) (22) (106) (87)
Obligations under
capital leases 4,153 6,608 10,245 13,478
Dividends (2,206) (534) (7,109) (2,149)
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(793) 3,225 (5,938) 1,038
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Investing
Activities
Short-term
investments and
marketable
securities (9,576) (5,902) 2,540 (26,089)
Additions to
property and
equipment (5,425) (5,250) (17,230) (22,658)
Additions to
trademarks (45) (41) (205) (251)
Net proceeds
on sale of a
significantly
influenced
company - - - 20,446
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(15,046) (11,193) (14,895) (28,552)
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Cash provided
in continuing
operations 25,848 28,948 25,777 19,160
Cash used in
discontinued
operations (710) (1,776) (3,619) (10,773)
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Net Increase in
Cash and Cash
Equivalents 25,138 27,172 22,158 8,387

Cash and Cash
Equivalents

Beginning of
Period 15,367 (8,825) 18,347 9,960
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End of Period $40,505 $18,347 $40,505 $18,347
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Cash and cash
equivalents
comprise the
following:

Cash $28,899 $18,347 $28,899 $18,347
Short-term
investments 11,606 - 11,606 -
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$40,505 $18,347 $40,505 $18,347
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See accompanying selected financial information



La Senza Corporation
Selected Financial Information
January 28, 2006
Unaudited
(tabular amounts are expressed in thousands of dollars, except per
share amounts)


Note 1 - Discontinued Operations

In January 2005, the Company approved a plan to discontinue the U.S.
operations of La Senza and, accordingly, the results and cash flows
of the U.S. operations for the current and prior periods have been
presented as discontinued operations. The net assets of these
operations were presented as assets and liabilities of discontinued
operations in the periods in which they qualified as held for sale.
In fiscal 2006, all of the U.S. stores were closed.

The results of discontinued operations are as follows:

2006 2005
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Sales $3,507 $10,774
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Operating losses (3,198) (5,574)
Write-down of net assets - (5,605)
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Discontinued operations before income taxes (3,198) (11,179)
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Income taxes
Current (1,251) 80
Future - (3,712)
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(1,251) (3,632)
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Discontinued Operations, Net of Income Taxes $(1,947) $(7,547)
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Basic loss per share $(0.14) $(0.56)
Diluted loss per share (0.14) (0.56)
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The cash flows used in discontinued
operations are summarized as follows:

2006 2005
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Cash flows used in operating activities $(3,619) $(12,473)
Cash flows from investing activities - 1,700
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$(3,619) $(10,773)
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The write-down of net assets comprised the write-downs of the assets
in the disposal group to fair value less cost to sell as follows:

2006 2005
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Write-Down of Net Assets $- $5,605
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The net assets of discontinued operations are
summarized as follows:

2006 2005
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Current assets $- $2,286
Property and equipment - 359
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- 2,645
Current liabilities - 4,317
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Net Assets of Discontinued Operations $- $(1,672)
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Future income tax assets recorded on the results of discontinued
operations have been excluded from the net assets of discontinued
operations since the Company will be the beneficiary of the future
reduction in income taxes.



Note 2 - Income Taxes

Income taxes reported differ from the amount computed by applying the
statutory rates to earnings from continuing operations. The reasons
are the following:

2006 2005
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Statutory tax rates 34.43% 34.47%

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Earnings from continuing operations at the
statutory rates $10,623 $3,303
Non-deductible equity in loss of a
significantly influenced company - 1,410
Adjustment in income taxes resulting from
previously unrecognized losses and other
unclaimed deductions - (2,061)
Unrealized foreign exchange loss on
short-term investments 72 286
Stock-based compensation 360 328
Change in accounting policy with respect to
vendor rebates - (473)
Non-taxable portion of capital gain (352) (503)
Other 468 (335)
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$11,171 $1,955

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Effective tax rates 36.21% 20.4%

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Note 3 - Capital Stock

2006 2005
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Authorized -

Unlimited first preferred shares,
issuable in series
Unlimited second preferred shares,
issuable in series
Unlimited third preferred shares,
issuable in series
Unlimited subordinate voting shares
Unlimited multiple voting shares

The directors are authorized to define the rights,
privileges, restrictions and conditions
attributed to each series of first, second and
third preferred shares upon their issuance.

The subordinate voting shares are entitled
to one vote per share and the multiple voting
shares are entitled to ten votes per share.

The multiple voting shares are convertible
at the option of the holder into an equivalent
number of subordinate voting shares.

Issued -

8,792,566 (2005 - 8,460,266)
subordinate voting shares $34,934 $30,387
4,992,569 multiple voting shares 1,394 1,394
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$36,328 $31,781

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During fiscal 2006, 332,300 (2005 - 36,900) options to purchase an
equivalent number of subordinate voting shares were exercised under
the share option plan for cash consideration of $3,259,000 (2005 -
$175,000). An amount of $1,288,000 was reclassified from contributed
surplus due to the exercise of these share options.


Contact Information

  • La Senza Corporation
    Financial & investor relation
    Anna Palestini, CA
    Chief Financial Officer
    (514) 421-8713