By  on April 24, 2007

MONTREAL — Canadian retailer Le Château is looking at opportunities to grow overseas despite losses at its five U.S. stores.

Le Château expects to make a decision by yearend about the future of its U.S. operations, which lost $972,000 on sales of $7.3 million for the year ended Jan. 27, compared with a loss of $789,000 on revenue of $6.8 million a year ago. All figures have been converted from Canadian dollars at the current exchange rate.

"The New Jersey stores in the Garden State mall and Newport [in New Jersey], as well as our Staten Island [N.Y.] store are doing OK, as they resemble our Canadian operations, which are primarily mall-based," Johnny Del Ciancio, vice president of finance, said in an interview Tuesday. "Our stores on Broadway and West 34th Street [in Manhattan] are street-level stores that pay higher rent and are having a tougher time."

Given their relatively small contribution to the retailer's entire operations, Del Ciancio conceded it might be easier to sell the U.S. stores. However, he added, "But we have a New York buying office and [the U.S. stores] act as a sort of an R&D center. We also might grow our U.S. operations under a licensing agreement like we have in the Middle East."

Including U.S. results, the women's and men's retailer on Tuesday reported a profit for the year of $21.8 million on sales of $268.7 million, up from $20.8 million on revenue of $246.7 million.

During the year, Le Château added 10 stores and expanded 20 locations. For the first 10 weeks of fiscal 2008 ended April 7, same-store sales increased 11 percent from a year earlier, and total sales were up 15.6 percent.

Le Château added two stores to the four it operates through a licensee in the Middle East and could add another four stores in the region this year. It is also exploring other overseas areas.

In Canada, the company is on target to operate 1 million square feet of retail space by 2009 through expansion and new stores. It currently has 854,000 square feet and 195 stores.

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