Le Chateau doubles loss in third quarter to $11.1 million on lower sales

MONTREAL – Clothing retail chain Le Chateau more than doubled its loss in the third quarter due to a decrease in its gross margin as it saw less traffic and increased promotions in its stores.

The Montreal-based fashion retailer said it had a net loss of $11.1 million, or 37 cents per dilluted share, for the period ended Oct. 25. This compared with a net loss of $5 million, or 18 cents per dilluted share, for the same period a year earlier.

Le Chateau said the loss also included a $1.1 million of write-offs and net impairment, compared to $96,000 a year ago. It added that an unrecognized tax benefit of non-capital losses also accounted for $2.3 million of the net loss.

Sales during the quarter were $58.1 million, down 11 per cent from $65.4 million in the prior year.

Same-store sales for outlets open at least a year decreased 9.7 per cent, while online sales were flat.

Le Chateau operates 224 retail locations in Canada. It also has five stores under licence in the Middle East.

“The retail environment continued to be challenging in the third quarter as consumers remained cautious with discretionary spending,” the company said in a news release after markets closed Friday.