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Michael Knell

Leon's Furniture reports 6.7% profit decline in fourth quarter

TORONTO — A tough retail environment dragged down total revenues, earnings and same-store sales for Leon's Furniture in the fourth quarter and for the entire 2011 year. However, the company's 30-unit franchise network held its own, growing sales in final three months of the year.

Net income in the fourth quarter was C$19.9 million or 28 cents per share, a decrease of 6.7% per share from net income of C$21.4 million or 30 cents per share in the comparable period a year earlier.

Total revenues of C$255 million in the quarter were down 1.1% from the same period in 2010.

The full-line furniture and appliance retailer's 40 corporate stores had sales of C$193.8 million, down 2.1%, with same-store sales down 7.4%. However, franchise sales for the fourth quarter were C$61.2 million, a 2.2% gain from a year earlier.

For the full year, Leon's total revenues of C$879.6 million were down 3.1% from the C$907.5 million in 2010.

Corporate store sales for the year totalled C$682.8 million, down 3.8%, as same store sales fell 6.4%. Franchise sales for the year were C$196.7 million, off just 0.2% from 2010.

Net income was C$56.7 million or 81 cents per share compared to 2010 net income of C$63.3 million or 90 cents per share - a decrease of 10% on a per share basis.

"2011 proved to be another very challenging year where we saw a further weakening in our economy, a shrinking market and a very competitive retail environment," Terry Leon, president and CEO of the publicly held and family-managed retailer, said in a statement.

Despite this environment, Leon's continued with its long-term expansion and renovation program. It opened four new corporate stores in the second half of 2011 in Guelph and Mississauga, Ontario, Rosemère, Quebec, and Regina, Saskatchewan. In the fourth quarter, it also opened new franchise locations in Bathurst, New Brunswick, and Drummondville, Quebec.

Leon's also said renovations are under way at two Ontario corporate stores - Sudbury and Sault Ste. Marie - as well as at the Simcoe, Ontario franchise.

In the opening weeks of 2012, renovations were completed at the Trenton, Ontario, franchise and the Kentville franchise completed the construction of new and larger replacement store in Coldbrook, Nova Scotia. Construction also has begun on a new facility to replace the franchise store in St. John, New Brunswick.

Leon's also announced it has secured sites for four new corporate stores in Orangeville and Brantford, Ontario; Sherbrooke, Quebec; and Rocky View County, which is just north of Calgary, Alberta. Openings are planned for late this year and in 2013.

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