La Senza Corporation

La Senza Corporation

March 29, 2005 14:45 ET

La Senza Corporation Reports Improved Annual and Fourth Quarter Results


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: LA SENZA CORPORATION

TSX SYMBOL: LSZ.SV

MARCH 29, 2005 - 14:45 ET

La Senza Corporation Reports Improved Annual and
Fourth Quarter Results

MONTREAL, QUEBEC--(CCNMatthews - March 29, 2005) - (TSX:LSZ.SV) La Senza
Corporation reported today net earnings of $81,000 or $0.01 per share
for the year ended January 29, 2005 compared to a net loss of $12.6
million or $0.95 per share for the year ended January 31, 2004.

Financial results for the year ended January 29, 2005 include a loss
from discontinued operations relating to the planned closure of the
company's U.S. operation. The financial results for year ended January
31, 2004 include the restatement of La Senza U.S. as a discontinued
operation as well as losses from discontinued operations related to the
closures of the anne.x and Suzy Shier divisions. Excluding losses from
discontinued operations, earnings from continuing operations amounted to
$7.6 million or $0.57 per share for fiscal 2005 compared to $2.4 million
or $0.18 per share for fiscal 2004. Operating income amounted to $17.6
million for fiscal 2005 compared to $16.5 million for fiscal 2004.

For the fourth quarter of fiscal 2005, the Company achieved net earnings
of $6.9 million or $0.51 per share compared to a net loss of $4.2
million or $0.31 per share for the fourth quarter of fiscal 2004.
Excluding losses from discontinued operations, earnings from continuing
operations amounted to $10.8 million or $0.80 per share for the fourth
quarter of fiscal 2005 compared to earnings of $3.2 million or $0.24 per
share for the fourth quarter of fiscal 2004. Operating income for the
fourth quarter of fiscal 2005 amounted to $13.3 million compared to
$10.4 million for the fourth quarter of fiscal 2004.

Sales for year ended January 29, 2005 amounted to $354.9 million,
excluding sales from discontinued operations, compared to sales of
$331.3 million for year ended January 31, 2004, an increase of 7.1%.
Sales for the fourth quarter of fiscal 2005 amounted to $115.4 million
compared to sales of $108.0 million for the fourth quarter of fiscal
2004, an increase of 6.9%.

Mr. Irving Teitelbaum, Chairman and Chief Executive Officer of the
Corporation, said, "In the past fiscal year we continued our strategy of
transforming La Senza Corporation into a pure play primarily as an
international lingerie retailer. La Senza Girl's results improved
considerably under new and dedicated management. Our renewed focus on
our core La Senza lingerie division has led to high single digit
comparable store sales increases in the first two months of the current
year (February & March). La Senza International continued its strong
progress and has recently signed agreements with licensees in Australia
and Turkey."

The Board declared a quarterly dividend of $0.04 per share payable on
April 26, 2005 to shareholders of record as of April 12, 2005.

La Senza Corporation, headquartered in Montreal, is a specialty retailer
with 299 corporate owned stores as at March 29, 2005, offering
fashionable lingerie and sleepwear sold in its 218 "La Senza" and "Silk
& Satin" stores, and fashionable apparel for girls sold in its 76 "La
Senza Girl" stores. Stores are located in every province in Canada and
five La Senza stores are located in United States. In addition, 237
independently owned "La Senza" and "La Senza Girl" stores are operating
in 21 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
concerning the future performance of the Company. These statements are
based on suppositions and uncertainties, as well as on management's best
possible evaluation of future events. Such factors may include, without
excluding other considerations, fluctuations in quarterly results,
evolution in customer demand for the Company's products and services,
the impact of price pressures exerted by competitors, and general market
trends or economic changes. As a result, readers are advised that actual
results may differ from expected results.



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

As at As at
January 29, 2005 January 31, 2004

Restated
---------------------------------------------------------------------
ASSETS

Current
Cash $18,347 $9,960
Short-term investments 23,216 7,951
Marketable securities 25,782 17,360
Accounts and sundry receivables 7,063 9,267
Income taxes recoverable 1,428 2,358
Inventory 39,753 48,728
Prepaid expenses 2,190 2,341
Assets of discontinued operations 2,286 369
Future income taxes 8,387 8,664
---------------------------------------------------------------------
128,452 106,998

Fixed Assets 82,844 85,905
Trademarks 1,199 1,113
Assets of Discontinued Operations 359 1,581
Future Income Taxes 2,872 813
Investment in Significantly Influenced
Company - 26,926
---------------------------------------------------------------------
215,726 223,336
---------------------------------------------------------------------
---------------------------------------------------------------------

LIABILITIES

Current
Accounts payable and accrued
liabilities 35,169 38,239
Current maturity of obligations
under capital leases 11,588 9,658
Current maturity of long-term debt 104 1,096
Liabilities of discontinued operations 4,317 6,286
---------------------------------------------------------------------
51,178 55,279

Obligations Under Capital Leases 25,326 24,157
Long-Term Debt 2,711 6,463
Deferred Lease Inducements 8,193 7,021
Future Income Taxes 70 1,179
---------------------------------------------------------------------
87,478 94,099
---------------------------------------------------------------------

SHAREHOLDERS' EQUITY

Capital Stock 31,781 31,606
Contributed Surplus 9,423 7,852
Retained Earnings 87,044 89,779
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128,248 129,237
---------------------------------------------------------------------
$215,726 $223,336
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---------------------------------------------------------------------

See accompanying financial information



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

Twelve Months Ended
---------------------------------------------------------------------
January 29, 2005 January 31, 2004
Restated
Balance - Beginning of Year
As previously reported $90,580 $105,583
Change in accounting policy (801) (1,074)
---------------------------------------------------------------------
As restated 89,779 104,509
Stock-based compensation (667) -
Net earnings (loss) 81 (12,598)
Dividends on subordinate voting shares (1,350) (1,333)
Dividends on multiple voting shares (799) (799)
---------------------------------------------------------------------

Balance - End of Year $87,044 $89,779
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying financial information



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

Fourth Quarter Ended Twelve Months Ended
---------------------------------------------------------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
Restated Restated

Sales $115,426 $107,974 $354,910 $331,313
---------------------------------------------------------------------

Cost, Expenses and
Other
Cost of sales and
store, warehouse,
general,
administrative
and sales support
expenses 95,618 92,347 315,077 295,881
Amortization 5,561 4,638 19,551 16,160
Interest on obligations
under capital leases 495 316 2,013 1,422
Interest on long-term
debt 93 62 326 307
Other interest 28 291 334 417
Foreign exchange loss
(gain) 344 (44) (32) 604
---------------------------------------------------------------------
102,139 97,610 337,269 314,791
---------------------------------------------------------------------

Operating Income 13,287 10,364 17,641 16,522

Interest income on
short-term investments 222 112 718 788
Other income (18) 193 106 636
Foreign exchange gain
(loss) on investment
activities 175 (296) (2,402) (2,380)
Loss in a significantly
influenced company - (1,964) (6,480) (5,887)
---------------------------------------------------------------------
Earnings from Continuing
Operations Before
Income Taxes 13,666 8,409 9,583 9,679
---------------------------------------------------------------------

Income Taxes
Current 863 1,041 1,134 3,169
Future 1,984 4,154 821 4,154
---------------------------------------------------------------------
2,847 5,195 1,955 7,323
---------------------------------------------------------------------

Earnings from Continuing
Operations 10,819 3,214 7,628 2,356

Discontinued operations,
net of income taxes (3,917) (7,366) (7,547) (14,954)
---------------------------------------------------------------------

Net Earnings (Loss) $6,902 $(4,152) $81 $(12,598)
---------------------------------------------------------------------
---------------------------------------------------------------------

Basic Earnings (Loss)
Per Share
---------------------------------------------------------------------
---------------------------------------------------------------------
Continuing Operations $0.80 $0.24 $0.57 $0.18
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Earnings (Loss) $0.51 $(0.31) $0.01 $(0.95)
---------------------------------------------------------------------
---------------------------------------------------------------------
Weighted Average
Number of Shares
Outstanding - Basic 13,448,831 13,377,406 13,433,066 13,322,212
---------------------------------------------------------------------
---------------------------------------------------------------------
Diluted Earnings (Loss)
Per Share
---------------------------------------------------------------------
---------------------------------------------------------------------
Continuing Operations $0.80 $0.24 $0.57 $0.18
---------------------------------------------------------------------
---------------------------------------------------------------------
Net Earnings (Loss) $0.51 $(0.31) $0.01 $(0.94)
---------------------------------------------------------------------
---------------------------------------------------------------------

See accompanying financial information



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

Fourth Quarter Ended Twelve Months Ended
---------------------------------------------------------------------
January January January January
29, 2005 31, 2004 29, 2005 31, 2004
Restated Restated

Funds Provided (Used)
Operating Activities
Earnings from
continuing operations $10,819 $3,214 $7,628 $2,356
Amortization 5,561 4,638 19,551 16,160
Amortization of
deferred lease
inducements (446) (389) (1,738) (1,369)
Stock-based
compensation expense 193 - 904 -
Loss in a significantly
influenced company - 1,964 6,480 5,887
Future income taxes 1,984 4,154 821 4,154
Deferred lease
inducements 761 745 2,910 2,036
Foreign exchange (gain)
loss on investment
activities (175) 296 2,402 2,380
---------------------------------------------------------------------
18,697 14,622 38,958 31,604
Changes in non-cash
operating elements of
working capital 20,593 54,906 7,716 (7,269)
---------------------------------------------------------------------
39,290 69,528 46,674 24,335
---------------------------------------------------------------------

Financing Activities
Issue of subordinate
voting shares 35 192 175 685
Repayments of
obligations under
capital leases (2,862) (2,160) (10,379) (7,739)
Repayment of long-term
debt (22) (594) (87) (1,878)
Dividends (534) (535) (2,149) (2,132)
---------------------------------------------------------------------
(3,383) (3,097) (12,440) (11,064)
---------------------------------------------------------------------

Investing Activities
Short-term investments
and marketable
securities (5,902) (5,892) (26,089) 4,925
Additions to fixed
assets (1,608) (1,240) (9,180) (7,565)
Additions to trademarks (41) (45) (251) (353)
Net proceeds on sale of
a significantly
influenced company - - 20,446 -
---------------------------------------------------------------------
(7,551) (7,177) (15,074) (2,993)
---------------------------------------------------------------------

Cash provided in
continuing operations 28,356 59,254 19,160 10,278
Cash used in
discontinued operations (1,184) (5,942) (10,773) (20,679)
---------------------------------------------------------------------

Net Decrease in Cash
and Cash Equivalents 27,172 53,312 8,387 (10,401)

Cash and cash
equivalents

Beginning of Period (8,825) (43,352) 9,960 20,361
---------------------------------------------------------------------

End of Period $18,347 $9,960 $18,347 $9,960
---------------------------------------------------------------------
---------------------------------------------------------------------



See accompanying financial information



Selected Financial Information - Unaudited
(tabular amounts are expressed in thousands of dollars)

Discontinued Operations

The Company discontinued the operations of Suzy Shier and anne.x with
the sale agreements taking effect in July 2003 and February 2004,
respectively. In January 2005, the Company approved a plan to
discontinue the U.S. operations of La Senza.

The results of discontinued operations for the three-month and
twelve-month periods ended January 29, 2005 were as follows:

Fourth Quarter Ended Twelve Months Ended
--------------------------------------------------------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
--------------------------------------------------------------------
Sales $2,826 $8,650 $10,774 $73,913
--------------------------------------------------------------------
Operating loss (831) (4,935) (5,574) (17,329)
--------------------------------------------------------------------
Write-down of net assets (5,605) (2,350) (5,605) (2,350)
--------------------------------------------------------------------
Income taxes (2,519) 81 (3,632) (4,725)
--------------------------------------------------------------------
Loss from discontinued
operations $(3,917) $(7,366) $(7,547) $(14,954)
--------------------------------------------------------------------
---------------------------------------------------------------------

The net assets of discontinued operations are summarized as follows:

As at As at
January January
29, 2005 31, 2004
--------------------------------------------------------------------
Current assets $2,286 $369
Fixed assets 359 1,581
--------------------------------------------------------------------
2,645 1,950
Current liabilities 4,317 6,286
--------------------------------------------------------------------
Net assets from discontinued operations $(1,672) $(4,336)
--------------------------------------------------------------------
---------------------------------------------------------------------

The cash flows from discontinued operations are summarized as
follows:

Fourth Quarter Ended Twelve Months Ended
--------------------------------------------------------------------
January 29, January 31, January 29, January 31,
2005 2004 2005 2004
--------------------------------------------------------------------
Cash flows used in
operating activities $(1,184) $(5,942) $(12,473) $(24,679)
Cash flows from
investing activities - - 1,700 4,000
--------------------------------------------------------------------
$(1,184) $(5,942) $(10,773) $(20,679)
--------------------------------------------------------------------
---------------------------------------------------------------------


Segmented Information


Fourth Quarter Ended
--------------------------------------------------------------------
January January
29, 31,
La Senza 2005 La Senza 2004
La Senza Girl Total La Senza Girl Total
--------------------------------------------------------------------
Sales $97,090 $18,336 $115,426 $90,625 $17,349 $107,974
Cost of sales,
store and
sales
support
expenses 75,780 15,584 91,364 71,462 17,629 89,091
Amortization 2,839 1,159 3,998 2,547 602 3,149
Interest
expense 373 108 481 502 91 593
--------------------------------------------------------------------
Segmented
operating
income
(loss) $18,098 $1,485 19,583 $16,114 $(973) 15,141
Unallocated
expenses
Warehouse,
general
and
adminis-
trative
expenses 4,254 3,256
Amortization 1,563 1,489
Interest
expense 135 74
Foreign
exchange
(gain) loss 344 (44)
--------------------------------------------------------------------
6,296 4,775
--------------------------------------------------------------------

Operating
income $13,287 $10,366
--------------------------------------------------------------------
--------------------------------------------------------------------



Twelve Months Ended
--------------------------------------------------------------------
January January
29, 31,
La Senza 2005 La Senza 2004
La Senza Girl Total La Senza Girl Total
--------------------------------------------------------------------
Sales $296,978 $57,932 $354,910 $275,707 $55,606 $331,313
Cost of
sales, store
and sales
support
expenses 246,171 53,329 299,500 223,947 57,203 281,150
Amortization 9,826 3,680 13,506 9,250 2,201 11,451
Interest
expense 1,634 474 2,108 1,478 420 1,898
--------------------------------------------------------------------
Segmented
operating
income
(loss) $39,347 $449 39,796 $41,032 $(4,218) 36,814
Unallocated
expenses
Warehouse,
general
and admi-
nistrative
expenses 15,577 14,731
Amortization 6,045 4,709
Interest
expense 565 305
Interest
income - (57)
Foreign
exchange
(gain)
loss (32) 604
--------------------------------------------------------------------
22,155 20,292
--------------------------------------------------------------------

Operating
income $17,641 $16,522
--------------------------------------------------------------------
--------------------------------------------------------------------


Income Taxes

2005 2004
--------------------------------------------------------------------

Statutory tax rates 36.3% 36.3%
--------------------------------------------------------------------
--------------------------------------------------------------------

Earnings from continuing operations
at the statutory rates $3,479 $3,513
Changes in tax rates - 616
Non-deductible equity in loss of
a significantly influenced company 1,410 2,136
Adjustment in income taxes resulting
from unrecognized losses and other
unclaimed deductions (2,601) -
Unrealized foreign exchange loss
on short-term investments 286 258
Stock-based compensation 328 -
Change in accounting policy with respect
to vendor discounts (473) -
Non-taxable portion of capital gains (503) -
Other (511) 800
--------------------------------------------------------------------

$1,955 $7,323
--------------------------------------------------------------------
--------------------------------------------------------------------

Effective tax rates 20.4% 75.6%
--------------------------------------------------------------------
--------------------------------------------------------------------


-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    La Senza Corporation
    Anna Palestini, CA, Chief Financial Officer
    For financial & investor relation information
    (514) 421-8713