Brick Group reports strong gains in truncated first year
By Michael J. Knell -- Furniture Today, April 11, 2005
Edmonton, Alberta — The Brick Group Income Fund, parent of Canada's No. 1 furniture and bedding retailer, ended its first truncated fiscal year on a strong note, with sales and earnings driven by rising same-store sales, the push into Quebec, the acquisition of United Furniture Warehouse and aggressive strategies in all three retail banners.
For the truncated year, sales and revenues were C$619.2 million, up 37% from an estimated C$452 million in the period from July 20 to Dec. 31, 2003. Net earnings advanced 45% to C$37.3 million from an estimated C$25.7 million the prior year. Earning per trust unit were 69 Canadian cents for the 2004 period. There were no units issued the prior year.
In the shortened year, same-store sales for The Brick chain rose 6.5%, while UFW's same-store sales surged 19.1%.
In the fourth quarter, Oct. 1 to Dec. 31, 2004, sales and revenues were C$347 million, up 33.3% from the prior year's estimated C$260.3 million. Net earnings were C$21.6 million, a 29.2% advance from C$16.7 million. Earnings per trust unit were 40 Canadian cents.
The group went public as an income trust on July 20, 2004, and reported results for a truncated fiscal year ended Dec. 31. In an effort to demonstrate performance improvement, the company gave estimated comparables for the same periods of 2003. Results also were adjusted to remove the impact of the purchase price accounting method required under standard accounting procedures, although a complete reconciliation was published in its filings.
"The Brick Group Income Fund has done extremely well in the first six months as a public entity," President and CEO Kim Yost told analysts during a conference call. "These excellent results were driven by strong same-store sales, new openings, robust consumer spending, and the ongoing execution of our fiercely competitive and entrepreneurial retailing strategies."
All the group's retail banners — The Brick, United Furniture Warehouse and HomeShow Canada — turned in stellar performances, he said.
The Brick "achieved strong same-store sales nationally while continuing to gain significant momentum in Quebec, our newest market," Yost said. "We now have seven retail locations in Quebec, and sales have exceeded expectations and costs are coming into line, which supports our plan to open store number eight this spring."
UFW has been a contributor since its acquisition in March 2004, he said, adding, "Same-store sales have shown a double-digit improvement and we continue to realize advantages from leveraging our fund buying power and operational efficiencies."
Although January 2005 sales were below expectations, Yost expects all three banners to show improved performances as the year progresses.
"We expect strength in the Canadian economy will continue through 2005," he said. "While interest rates may move slightly higher, they remain near historic lows, providing ongoing stimulus for consumer spending. The higher value of the Canadian dollar on our imported goods allows us to leverage margin while at the same time drive incredible value for our customers.
"Management believes that the general Canadian economy in 2005 will be similar to that experienced in 2004, although the home furnishings sector is expected to slow from the exceptional gains seen in 2004."
