North West Company Fund Announces Third Quarter Earnings and a Distribution

Market Wire, December, 2007

North West Company Fund (the "Fund") (TSX: NWF.UN) today reported 2007 third quarter earnings of $18.5 million for the period ended October 31, 2007. The Fund also announces a quarterly distribution of $0.27 per unit to unitholders of record on December 31, 2007 and distributable by January 15, 2008.

Report to Unitholders

The North West Company Fund reports third quarter earnings to October 31, 2007 of $18.5 million, an increase of 24.6% over last year's third quarter earnings of $14.8 million. Diluted earnings per unit improved to $0.39 compared to $0.31 last year. The quarter had 92 days of operations compared to 91 days last year as a result of changing the year end to January 31 and adopting a fixed calendar quarter end.

Sales increased 8.3% to $255.7 million compared to the third quarter last year. On an equivalent 13-week basis, sales increased 7.2% and were up 4.7% on a same store basis excluding the foreign exchange impact of a stronger Canadian dollar. Strong food sales growth across all of our banners was the leading factor contributing to the sales increase in the quarter.

The Trustees have approved a quarterly distribution of $0.27 per unit to unitholders of record on December 31, 2007.

"Our Alaska retail and Canadian arctic shipping business were highlights in the third quarter," commented North West President & CEO, Edward Kennedy. "Canadian stores had sluggish back to school sales and then were hurt by warm fall weather. We've seen a rebound as winter has settled in and spending has picked up, in part also due to the distribution of Indian Residential School Settlement payments."

Management's Discussion & Analysis

CONSOLIDATED RESULTS

Quarter

Third quarter consolidated sales increased 8.3% to $255.7 million compared to $236.1 million in 2006 and were up 10.2% excluding the foreign exchange impact of a stronger Canadian dollar. The quarter had 92 days of operations compared to 91 days last year as a result of changing the year end to January 31 and adopting a fixed calendar quarter end. On an equivalent 13-week basis, sales increased 7.2% and were up 4.7% on a same store basis excluding the foreign exchange impact. Food sales increased 7.5% and were up 5.4% on a same store basis excluding the foreign exchange impact. General merchandise sales improved by 10.7% as a result of new stores in Canada and strong sales growth in Alaska and were up 2.6% on a same store basis excluding the foreign exchange impact.

Cost of sales, selling and administrative expenses increased 8.4% to $228.3 million and increased 11 basis points as a percentage to sales compared to the third quarter of 2006. On an equivalent 13-week basis, expenses increased approximately 7.4% with new and non-comparable store expenses accounting for approximately 69% of the increase. Higher costs related to recruitment and retention of store employees in Canada, energy related cost pressures in our remote U.S. and Canadian stores and higher debt loss in our Canadian operations contributed to continued pressures on the expense side of our business.

Trading profit(1) or net earnings before interest, income taxes, depreciation and amortization (EBITDA) increased 7.2% to $27.5 million compared to $25.6 million in the third quarter last year. On an equivalent 13-week basis, trading profit increased 5.2% to $26.9 million and was 10.6% as a percentage of sales compared to 10.8% in the third quarter last year. Continued sales growth combined with gross profit rate improvements in our U.S. stores contributed to the trading profit dollar gain, offsetting higher expenses in the quarter. Income taxes decreased 75.1% to $663,000 due to lower income taxes in the Canadian operations resulting from the completion of the reorganization in the second quarter. The reorganization changes the flow of earnings from the limited partnership to the Fund such that the majority of the Canadian operations pre-tax earnings now flow to the Fund.

Net earnings increased $3.6 million or 24.6% to $18.5 million. Diluted earnings per unit improved to $0.39 compared to $0.31 last year.

(1) See Non GAAP Measures Section of Management's Discussion & Analysis

Year-to-Date

Year-to-date sales increased 9.4% to $746.5 million compared to last year and were up 10.3% excluding the foreign exchange impact of a stronger Canadian dollar. There are 273 days of operations year-to-date in 2007 and in 2006. Same store sales increased 5.2% and were up 6.0% excluding the foreign exchange impact. Food sales increased 9.3% and were up 7.0% on a same store basis excluding the foreign exchange with all banners contributing to the sales gains. General merchandise sales were up 9.8% as a result of new stores in Canada and Alaska and were up 3.2% on a same store basis excluding the foreign exchange impact.

Cost of sales, selling and administrative expenses increased 9.7% to $671.4 million and increased 24 basis points as a percentage to sales compared to last year. New and non-comparable store expenses accounted for approximately 55% of the increase.