LFL Reports 2Q Sales Uptick

While sales by its various e-commerce platforms appear to have fallen, overall system sales and earnings climbed for both the second quarter and first half of the year for Leon’s Furniture Limited (LFL), this country’s largest full-line furniture, mattress and appliance retailer.

For the three months ending June 30, 2022, total system sales were $784.6 million, up 9.8% from the $714.4 million rung-up for the same period last year.

Corporate store sales were $647.0 million, advancing 9.9% from $588.5 million. Same store sales were up 10.0% for the quarter.

“The increase was driven by a strong performance in all key product categories, with mattress sales being up significantly in the quarter,” LFL management said in its report to shareholders. “Furthermore, the company is continuing to show increases across all product categories for the three months ended June 30, 2022, when compared to pre-pandemic results. Comparing to the pre-pandemic quarter ended June 30, 2019, revenue has increased $86.1 million or 15.4%.”

The company said e-commerce accounted for approximately 12% of revenue for the period – roughly $77.6 million. Estimates put LFL’s e-commerce sales at 22% of revenue or $129.5 million for the comparable 2021 period – a 40.0% drop. Most observers attribute the decline to the consumer’s desire to get back into the store, particularly for big-ticket goods such as furniture. Sleep Country Canada Holdings reported a similar slip in e-commerce activity coupled with a significant advance in in-store sales.

Sales by LFL’s 102-unit strong franchise network were $137.6 million for the second quarter, up 9.3% from $125.9 million.

Net income in the quarter totaled $50.1 million or 70 cents per diluted share, compared to $46.0 or 58 cents per diluted share last year – up 20.7% on a per share basis.

Total system sales for the six months ending June 30, 2022, were $1.45 billion, up 2.6% from last year’s $1.41 billion.

Corporate store sales rang-in at $1.19 billion, up 3.0% from $1.16 billion as same store sales climbed 2.9%, which management attributed to strong consumer demand for appliances and mattresses.

The franchise network contributed sales of $253.3 million, up a scant 0.6% from last year’s $251.9 million.

Net earnings for the first half of 2022 were $74.9 million or $1.07 per diluted share, compared to $86.9 million or $1.10 per diluted share – a drop of 2.7% on a per share basis.

Looking ahead, LFL president and chief executive officer Mike Walsh said the company’s priorities are to effectively manage costs with investing in the digital innovation needed to drive customers to both its e-commerce platforms and brick-and-mortar stores.

“On a long-term basis, we believe that the underlying Canadian economy remains relatively strong,” he said, adding, “Although it is difficult to gauge future consumer confidence and what impact it may have on retail, we remain cautiously optimistic that our sales and profitability will increase.”

At the end of June 2022, LFL operated some 304 stores across the country – essentially unchanged since last year – under the following banners: Leon’s, The Brick, The Brick Mattress Store, Brick Outlet and Appliance Canada. It also operated five e-commerce platforms including leons.ca, thebrick.com, furniture.ca, midnorthern.com and appliancecanada.com.

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