Leon’s sees 1% revenue gain

Mar 1, 2016

TORONTO – Although growth in sales and earnings was slight or flat, Leon’s Furniture continued to solidify its position as this country’s largest full-line furniture retailer in the fourth quarter and full 2015 year.

Total system revenue for the three months ending December 31, 2015, was $670.3 million, a gain of 1.6% over the $660.1 million for the comparable period of 2014.

Corporate store sales were $560.2 million, up 1.2% from the $552.1 million for the comparable period as same store sales advanced 1.6% in the fourth quarter.

Meanwhile, sales by its 103-unit franchise network totalled $110.1 million for the period, up 1.9% from $108.1 million for the prior year.

Net earnings were $30.1 million or 42 cents per diluted share, compared to $29.9 million or 42 cents per diluted share – flat on a per share basis.

“Q4 marked a strong end to the year for Leon’s, with effective promotions driving solid same store sales growth in spite of a weaker economic backdrop,” said Edward Leon, president and chief operating officer of the publicly-held and family-managed retailer.

For the year that also ended on December 31, 2015, total system revenue was $2.41 billion, edging forward 1.0% from the $2.38 billion for 2014.

Corporate store revenues were $2.03 billion, up 1.2% from the $2.01 billion for the prior year. Same store sales grew 1.2% for the year, building on the 0.4% for 2014 and reversing the 1.6% slide suffered in 2013 – the same year in which Leon’s took control of its then rival and now subsidiary, The Brick.

Franchise network sales totalled $375.8 million for the year, moving ahead a slight 0.3% from the prior year’s $374.8 million.

Net income for the year was $101.4 million or 97 cents per diluted share, compared to $103.1 million or 96 cents per diluted share for 2014.

The company also noted gross margins were down slightly over the course of the year, thanks mainly to the declining value of the Canadian dollar versus its U.S. counterpart – the primary currency used to buy furniture from outside Canada.

However, Edward Leon indicated this could be a much improved year for the merchant.

“2016 is an important year for the company,” he said. “We expect continued growth from both our main banners this year and have just signed a deal that will introduce the Leon’s banner to the key British Columbia market. These initiatives, combined with our strong market presence and the incremental synergies we expect to continue to generate this year, position us to drive value for shareholders.”

Late last week, Leon’s agreed to assume the leases of eight Sears Home stores, including four in the Greater Vancouver area, from Sears Canada. The transfer, which also covers three stores in the Toronto area and another in New Brunswick, is expected to close by July 1.

The company said it will spend about $4 million renovating the stores and will open them under the Leon’s banner by the end of September.

At the end of 2015, Leon’s Furniture operated a total of 301 stores across Canada under six banners, including: Leon’s, The Brick, The Brick Mattress Store, United Furniture Warehouse (UFW), The Brick Clearance Centre, and Appliance Canada, the Toronto-based white goods specialist which focuses on the builder, developer and home rental businesses.