Leon’s Sees Same-store Sales, Revenue Rise in Q4 2023

Unlike its competitors, Leon’s Furniture Ltd. (LFL) saw an uptick in revenue and improvement in both net income and earnings per share in the fourth quarter of 2023. Further, for the first time in more than a year, this country’s largest full-line furniture, mattress and major appliance retailer declared gains in one other key measure: same-store sales.

The publicly held merchant said system-wide sales totalled $836.5 million in Q4, up four per cent from $804.4 million for the same period in 2022.

Corporate store sales were $686.9 million, an increase of 3.9 per cent from $661.2 million. Same-store sales gained 3.6 per cent, reversing the comparable period’s slide of one per cent.

“The improvement was driven by strong growth in the furniture and appliance categories, which were supported by strong inventory positions and effective promotions,” management said in their report to shareholders.

Industry observers noted LFL was a likely beneficiary from the November 2023 declaration of bankruptcy by Lastman’s Bad Boy.

Sales from LFL’s 101-unit strong franchise network totalled $149.6 million in Q4, advancing 4.5 per cent from the previous period’s $143.3 million.

According to the monthly retail trade survey published by Statistics Canada, total sales for all location-based furniture stores fell 6.2 per cent to $3.73 billion during the fourth quarter of 2023. LFL’s overall sales improvement expanded its market share for Q4 to 22.4 per cent from the previous year’s 20.2 per cent.

LFL also said net income for the period was $48.9 million or 68 cents per diluted share, compared to $44.6 million or 65 cents per diluted share in 2022 — a 4.6 per cent gain on a per share basis.

Total system-wide sales for the full year were $2.97 billion, down a slight 0.2 per cent from the prior year’s $3.05 billion.

Corporate store sales for the year came in at $2.45 billion, off 0.2 per cent from $2.52 billion in 2022, as same store sales declined 2.6 per cent.

“This is driven by macro-economic factors that led to a decrease in consumer demand in the first half of the year, offset by a return to growth in the second half of the year,” management reported to shareholders. “Despite the cautious consumer sentiment, the mattress product category grew year-over-year partly as a result of our partnership with Resident, the largest direct-to-consumer mattress company in North America.”

LFL franchise sales totalled $516.7 million for 2023, a 1.8 per cent decline from the previous year’s $535.3 million.

Net income was $138.9 million or $2.02 per diluted share, compared to $179.4 million or $2.64 per diluted share in 2022 — a slight fall of 0.8 per cent on a per share basis.

“Our team delivered record revenues in the fourth quarter and solid bottom line growth compared to Q4 (2022),” LFL president and CEO Mike Walsh said in a statement. “Our strong inventory position combined with our promotional strategy drove higher customer traffic, higher average basket and improved gross margins. The retail results were complemented with strong growth from our high margin warranty and insurance businesses as we continue to improve attachment rates on retail transactions.”

“The results of this quarter demonstrate that our trusted brands, scale and value proposition are resonating in the marketplace despite persisting macro-economic challenges,” he continued. “We enter 2024 with continued sales momentum, low cost and in-stock inventory and a rock-solid balance sheet to support our growth.”

At the end of 2023, LFL operated 303 brick-and-mortar stores across the country under five different banners, including Leon’s, Appliance Canada, The Brick, The Brick Mattress Store and The Brick Outlet, as well as six e-commerce sites: leons.ca, thebrick.com, furniture.ca, midnorthern.com, transglobalservice.com and applicancecanada.com.

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