By  on July 7, 2005

MONTREAL — Specialty retailer Le Château is negotiating with a French licensor as part of its first expansion outside North America.

The unnamed French partner operates 600 stores and carries well-known fashion brands, Le Château's chief executive officer, Herschal Segal, said here during the company's recent annual meeting. The initial testing of three Le Château stores in undisclosed locations could be announced within the next few months, he added.

The company operates 174 stores in Canada and four in the New York area, with a fifth scheduled to open this fall in Jersey City, N.J. The U.S. operations reported a net loss of $81,000 for the first quarter ended April 30 versus a loss of $75,000 a year earlier. The company blames the loss on the high rents at its two Manhattan stores.

By comparison, Le Château as a whole earned $3.7 million, or 63 cents, up from $1.7 million, or 33 cents, a year ago. Sales rose 20 percent to $49 million. All figures have been converted from Canadian dollars at the current exchange rate.

Unlike the other four U.S. stores, the one in New Jersey will be based on the new store design being implemented in Canada, explained Franco Rocchi, vice president of sales and operations. Le Château has spent $32 million over the last three years on store renovations and plans an additional $18 million this year for upgrades and new store openings.

"The new store design reflects our new brand image of catering to a slightly older clientele," Rocchi said. "We're getting rid of the old clubby image in our stores. Eventually, the other four U.S. stores will also get a design makeover."

Although it is test-marketing other countries, Canada will remain Le Château's primary focus, said company president Emilia Di Raddo, with more emphasis on expanding into secondary markets. Le Château plans to open 12 to 15 stores in Canada this year, Di Raddo said.

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