President's Report

To our shareholders,

Sales for the first quarter ended May 1, 2010 increased 3.2% to $238,978,000 as compared with $231,652,000 for the first quarter ended May 2, 2009. Same store sales increased by 1.7%. Operating earnings before depreciation and amortization (EBITDA1) for the period increased 47.5% to $37,560,000 as compared with $25,460,000 last year. The Company's gross margin increased from 63.7% to 68.2% in the first quarter of fiscal 2011 primarily due to the strengthening of the Canadian dollar vis-à-vis the US dollar and sales growth generated from new and existing stores. The average rate for a US dollar in the first quarter of fiscal 2011 was $1.03 Canadian as compared to $1.24 Canadian in the first quarter of fiscal 2010.

Net earnings increased 111.1% to $16,471,000 or $0.24 diluted earnings per share, as compared with $7,801,000 or $0.11 diluted earnings per share last year.

During the first quarter, the Company opened 11 new stores comprised of 5 Reitmans, 2 Cassis, 3 Penningtons and 1 Addition Elle; 6 stores were closed. Accordingly, at May 1, 2010, there were 982 stores in operation, consisting of 369 Reitmans, 163 Smart Set, 66 RW & CO., 76 Thyme Maternity, 19 Cassis, 165 Penningtons and 124 Addition Elle, as compared with a total of 974 stores last year. During the year, we plan to open 30 new stores, close 11 stores and remodel 30 stores.

Sales for the month of May increased 7.3% with same store sales increasing 5.4%.

At the Board of Directors meeting held on June 2, 2010, a quarterly cash dividend (constituting eligible dividends) of $0.20 per share on all outstanding Class A non-voting and Common shares of the Company was declared, payable July 29, 2010 to shareholders of record on July 15, 2010. This is an increase of 11.1% over the previous quarterly rate of $0.18 per share resulting in an annual dividend rate of $0.80 per share.

On behalf of the Board of Directors,

Jeremy H. Reitman
Chairman and Chief Executive Officer

Montreal, June 2, 2010