Sleep Country Q4 sales jump 18.4%

Feb 29, 2016

TORONTO – Sleep Country Canada ended its first fiscal year as a reconstituted public company on a high note with double digit increases in revenue, same store sales, gross profit and adjusted net income. Indeed, its performance would rank it has one of the fastest growing retailers in the country, regardless of its product category.

For the three months ending December 31, 2015, revenues were $119.1 million, up 18.4% from $100.6 million for the same period in 2014.

This was driven by same store sales growth (SSSG) of 12.9% — on top of the 10.2% SSSG reported for fourth quarter of the prior year.

The company also reported mattress sales increased 15.6% to $93.7 million while accessory revenue increased 29.8% to $25.4 million.

Adjusted net income for the period was $8.5 million or 23 cents a share, compared to $7.2 million or 19 cents per share for the same period of 2014 – an uptick of 19.4% on a per share basis.

For the year that also ended December 31, 2015, revenues were $456.2 million, a gain of 15.2% over the $396.1 million for the 2014 year.

The Sleep Country Canada store in Oshawa, Ontario. Sleep Country Canada’s senior management attributed the uptick to an 11.3% jump in same store sales. It was reflected the contributions from the 13 new stores opened in 2015 and four net new stores opened in 2014. At least ten others were renovated under the refurbishment program the mattress specialist announced earlier in the year.

Mattress sales increased 13.1% in 2015 to $365.6 million while accessory sales gained 24.2% to $90.6 million.

Based on commodity sales through to the end of the third quarter of 2015, Sleep Country is believed to account for about 21% of all mattress sales in Canada – making it the single largest merchant in the category.

Adjusted net income for the year was $39.3 million or $1.05 per share, compared to $25.3 million or 67 cents per cents in 2014 – an increase of 55.5% on a per share.

However, the company recorded a net loss of $51.7 million or $1.90 per share for the year, compared to a loss of $17.1 million or $1.52 per share. The loss was caused by non-cash transactions and other non-recurring items related to wind down of the corporate structure that existed prior to Sleep Country’s Initial Public Offering, which closed this past July.

Dave Friesema, chief executive officer, told analysts Sleep Country Canada continues to outperform the industry as a whole and will stick it is winning strategy going forward.

“Across all core measures, and in both reporting periods, our strategies performed as intended,” he said. “Same store sales grew at an industry-leading double digit pace, as did mattress sales. These key indicators tell the story of a very productive and profitable year.”

He also said the company’s senior executive team has a low-risk path to growth and expansion within its existing markets and is well positioned to continue to grow revenue, profitability and cash flows. It will achieve these goals by continuing to drive SSSG, adding stores in both new and existing markets and expanding its merchandising opportunities in accessories.

“We feel confident in our growth strategies, which have proven to be effective over the quarters in bringing more shoppers to our stores and converting them into valued Sleep Country customers,” said Friesema. “Accordingly, we will stay the course and focus on investing in marketing and sales training and good business execution so that we can deliver on our commitments to creating value as Canada’s leading retailer of mattresses.”