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Leon's 4Q sales up 11.2%; plans capital projects in '06

By Michael J. Knell -- Furniture Today, February 26, 2006

Toronto — Focusing on merchandising and marketing, while continuing to invest in expansion, helped boost the top and bottom lines in the fourth quarter and year at full-line furniture retailer Leon's.

Sales in the fourth quarter at the high-profile promotional chain were C$170.2 million, up 11.2% from the comparable period last year, as net income rose 15% to C$19.7 million, or C$1.04 per common share. For the year, sales rose 8.6% to C$547.7 million and net income increased 6.2% to C$49 million, or C$2.61 per common share.

Same-store sales at company-owned stores were up 4% in 2005 over 2004, and up 8.1% in the fourth quarter.

Sales at Leon's 27 franchise stores rose marginally in the fourth quarter to C$54.5 million, and for the year increased to C$173 million from C$165.2 million in 2004.

President and CEO Terry Leon attributed the improvements to simple hard work. "We have a plan and we are able to make it work because we have the right merchandise at the right time and the right people on the floor to service the customer," he said.

Leon's ended the year with 31 corporate stores; the 32nd opened in the Toronto suburb of Vaughn in January 2006. The company will embark on at least 10 capital projects — major renovations and new store construction — in 2006. "That's the largest number of projects we've undertaken in a single year," Leon said.

The retailer will fund the projects from cash holdings. At the end of 2005, it had cash, cash equivalents and marketable securities on hand valued at about C$95.7 million, down slightly from C$98.9 million at the end of 2004.

Speaking of deflation, Leon said, "Like everyone else, we've been selling more units to get to the same dollars, and that's something we'll continue to have to deal with, but we think deflation has stabilized. Prices aren't going down the way they were four years ago."

He cited rising energy and other costs as continuing challenges, but ones that won't upset Leon's merchandising and marketing game plans.

Meanwhile, Leon's board has increased the quarterly dividend from 20 to 25 Canadian cents per common share, payable April 6 to shareholders of record on March 3. The board also declared a special dividend of 50 Canadian cents per common share, payable May 5 to shareholders of record on April 7.

Leon's Furniture (a)
Earnings per share are fully diluted, and all figures in parentheses are losses or declines.
Quarter ended 12/31	2005	2004	Change
(a) In Canadian dollars. (b) Excludes franchise sales of C$54.5 million in the 2005 quarter, C$54.5 million in the 2004 quarter, C$173.0 million in the 2005 year and C$165.3 million in the 2004 year.
Sales (b)	$170,244,000	$153,080,000	11.2%
Operating income	71,832,000	65,805,000	9.2%
Net income	19,658,000	17,090,000	15.0%
Earnings per share	1.04	0.89	16.9%
Year ended 12/31	2005	2004	Change
Sales (b)	$547,744,000	$504,591,000	8.6%
Operating income	224,115,000	209,350,000	7.1%
Net income	48,964,000	46,104,000	6.2%
Earnings per share	2.61	2.41	8.3%

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Leon's 4Q sales up 8.3%

Feb 24, 2006

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