BMTC Groups Ends Fiscal Year on Low Note

Revenue for BMTC Group, parent company to Quebec’s largest publicly traded full-line furniture retailer, fell 19.4 per cent during its most recent fiscal year, which management attributed to shrinking the store count in an increasingly challenged economic environment.

For the three months ending Jan. 31, 2024, BMTC recorded revenues of $134.7 million, down 8.9 per cent or $13.1 million year-over-year. Same store sales declined six per cent during the quarter, although management noted there was an overall improvement in store traffic across all points of sales.

Net earnings totalled $14.5 million or 44 cents per share, compared to $11.9 million or 36 cents per share over the same time period — up 22.2 per cent on a per share basis.

For the fiscal year ending Jan. 31, 2024, BMTC revenues totalled $578.9 million, a decrease of 19.4 per cent from the prior year’s $718 million. Same store sales fell 17 per cent.

In her report to shareholders, BMTC president and CEO Marie-Berthe Des Groseillers said the sales decline resulted from several factors, including the closure of five brick-and-mortar outlets when the decision was made last May to drop the Brault & Martineau and EconoMax banners and convert the remaining 25 stores to the Tanguay banner.

She also noted the retailer experienced a 20 per cent drop in financed sales compared to the previous year due to the increase in interest rates and the tightening of available credit to consumers.

Net earnings for the fiscal year totalled $47.4 million or $1.44 per share, compared to $40.8 million or $1.23 per share the year prior — a 17.1 per cent increase on a per share basis.

The Expansion of Tanguay
At the end of its fiscal year, BMTC operated a total of 25 stores across Quebec — 20 under the Ameublements Tanguay banner and five Tanguay L’ Entrepôt outlets, which offer clearance items as well as new entry-level product.

The closure of five stores was made in conjunction with the migration to a single IT system across the company and the re-organization of its operational and commercial structure.

“All these changes over the past few months have made it possible to create significant synergies, thus creating expanded and diversified teams allowing the success of this deployment,” Des Groseillers told her shareholders.

She also noted the renovations needed to convert formerly Brault & Martineau and EconoMax stores to the Tanguay store plan are now largely complete and came in substantially under budget at $20 million. Some $15.5 million will be charged against the recently ended 2024 fiscal year, with the balance accruing to this fiscal year.

Looking Ahead
BMTC’s management told shareholders the company will continue to focus on developing online sales through the improvement of its digital platforms and live chat initiatives as it believes e-commerce will be vital to its efforts to increase market share.

Management also admitted it is difficult to predict the future level of consumer spending as last year’s results demonstrate a significant slowdown in the Quebec economy.

“This downward economic trend is the result of high inflation and interest rates,” said Des Groseillers. “This economic slowdown has not affected all provinces and sectors in the same way. Real estate and financed products have been the most affected sectors and are expected to continue to bear the brunt of this economic situation.”

She also noted while statistics published this past January show construction projects in Quebec fell 40 per cent in 2023, in reality, they returned to the historical average of the past 50 years.

This same phenomenon accounts for the company’s better than average sales and earnings during 2021 and 2022 fiscal years when BMTC benefitted from a transfer of consumer spending thanks to restrictions imposed by governments to combat the pandemic.

Management also believes BMTC revenues and earnings will be impacted because Quebec consumers will spend less over the coming months for a variety of reasons. For example, the average mortgage payment in Quebec jumped 19 per cent in 2023, and 40 per cent of Quebec mortgage holders renewed their loans at a higher rate.

“Therefore, we should not expect the situation to improve until we see the policy interest rate decrease,” said Des Groseillers.

BMTC also noted Quebec companies saw their profits decline by an average of 20 per cent in 2023, which is partly explained by the drop in consumer purchasing power due to the increase in household debt and inflation in the price of essential goods.

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