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Le Chateau Says There are "Significant Doubts" About its Ability to Continue Business

Le Chateau Says There are "Significant Doubts" About its Ability to Continue Business

By Ambia Staley

Clothing retailer Le Chateau released its latest earnings report earlier this week along with a dire warning that brings the continued operations of the brand under doubt.

On July 6, Le Chateau released the results of their fourth quarter and year, which ended on January 25, 2020. The results showed the brand experienced a sales decline of 6.5% year-over-year. While the company reported a significant increase of online sales in the fourth quarter, the company recorded a net loss of $51.2 million, up from $6.1 million the previous year, which included a $42 million write-off and write-down of long-term assets.

While these latest results are from before the COVID-19 outbreak in Canada, the company also noted that the pandemic has had "significant impacts for the Company", with physical locations closed from March 11 until provincial guidelines allowed them to reopen between May 4 and June 26. The company stated, "the COVID-19 pandemic will have a material and adverse impact on revenue, operating cash flows and results from operations and the Company is not expecting resumption of normal operations before 2022."

The standout statement of Le Chateau's earnings report is that the retailer expressed "there are material uncertainties that cast significant doubt upon the Company’s ability to continue," and that their ability to continue operating for the next year "involves significant judgment and is dependent on its ability to obtain necessary financing."

Despite significant doubts expressed in Le Chateau's earnings report, the company did not state any intention to close stores at this time.

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