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Brick 4Q sales up 0.1%; net income drops 16.7%

By Michael J. Knell -- Furniture Today, April 2, 2006

Edmonton, Alberta — Major Canadian retailer The Brick Group Income Fund reported sales of C$347.4 million in the fourth quarter, up 0.1% from the same period a year earlier, while net income declined 16.7% to C$18 million, or 33 Canadian cents per trust unit.

Earnings before interest, taxes, depreciation and amortization came to C$24.8 million for the quarter, or 7.1% of sales, compared with C$26.4 million, or 7.6% of sales, for the last quarter of 2004.

For the fiscal year, revenue was up 4.2% to C$1.2 billion, while net income fell 9.7% to C$51.2 million, or 94 cents per trust unit. EBITDA for the year was C$75.9 million, or 6.2% of sales, compared with C$79.6 million, or 6.7% of sales, in 2004.

At the end of 2005, the group operated 194 corporate and franchise stores under four banners: The Brick, United Furniture Warehouse, HomeShow Canada and Sleep Better Mattress Stores.

Describing 2005 as "a year of many accomplishments," President and CEO Kim Yost noted the company expanded in Quebec with its eighth store (Marche Central), rolled out its third HomeShow location and launched the Sleep Better mattress chain, with 11 stores in greater Toronto.

Earlier this year, Yost said HomeShow Canada and Sleep Better would be re-bannered as The Brick Superstore and The Brick Mattress Store, respectively, leveraging greater consumer recognition of The Brick brand. The 24 UFW stores in markets without a Brick store will be re-bannered as The Brick and repositioned as well.

"We believe the re-bannering benefits will begin to increase sales, reduce advertising and operating costs and increase profitability in 2006," Yost told analysts in a conference call, predicting net incremental EBITDA of about C$4 million this year.

While their sales aren't included in the group's revenues, Yost said The Brick's franchise stores had same-store sales growth of 5.8% in 2005, with total sales by the franchise division jumping 50% year over year, and units increasing from 15 at the end of 2004 to 20 at the end of 2005.

The re-bannerings and the conversion of 22 UFW stores to The Brick should produce bottom-line results in the near future, Yost said.

This year, the group will add two Brick stores in metro Montreal and one in Deerfoot, Alberta, and build an additional 13 Brick Mattress stores in greater Toronto. Six new Brick franchise stores are expected, and as many as three UFW franchises could be rolled out.

Yost said the total store count should be about 212 at the end of 2006.

"Given what we've been doing, we are expecting to see stronger top-line results (in 2006) while accelerating the returns we were anticipating last year," he said.

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Brick sales rise 0.1%, earnings decline 16.7% in 4Q

Mar 30, 2006

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