Easyhome 4Q sales up 15.3%
By Michael J. Knell -- Furniture Today, March 11, 2007
Edmonton, Alberta — Easyhome, Canada's largest home furnishings rent-to-own merchant, continued on its steep growth curve in the fourth quarter with revenue up 15.3% and earnings jumping 45.5%.
Same-store sales grew 5.7% in the quarter, as the company posted earnings of C$2.5 million on revenue of C$31.9 million.
"We have now seen 21 consecutive quarters of comparable (store) revenue growth," David Ingram, president and CEO, told analysts in a conference call.
For the full year, revenue was up 16% from the previous year to C$119.6 million. Net income was up 58.2% to C$9 million. However, when adjusting for one-time charges — a C$400,000 provision for future income tax in 2006, and a $1.9 million charge in 2005 for settlement of a class action lawsuit — adjusted net income was up 23.7%.
Same-store sales growth for the year was 5.4%.
Easyhome opened 28 new stores last year — 10 in the fourth quarter — and three financial services kiosks.
Ingram told analysts that Easyhome had about 64,000 active customer accounts at the end of 2006, up from 57,000 a year earlier, and that the average monthly lease payment per customer was C$394, an increase of 16.2% over 2005. The company's potential monthly lease revenue increased to C$9.5 million in 2006, a 15.3% improvement over 2005.
In units, furniture accounted for 29% of Easyhome's volume, with 7% from appliances and 26% from computers. The balance came from electronics — particularly large screen, flat-panel televisions, whose popularity has surged as they have become more affordable.
Ingram also attributed a significant portion of Easyhome's growth to its new "Store of the Future" format, which the company believes provides a better shopping environment. The 38 stores that have been converted to the new format outperformed older stores by an average of 13% during the year. By the end of 2007, 82 units will have been converted.
The financial services business — essentially a check cashing or payday loan operation — is outperforming expectations, and Ingram said it will be expanded significantly in the coming months.
Easyhome also will expand its franchise network this year and is recruiting its first-ever director of franchise operations.
"Although we will slow our pace of expansion somewhat in 2007 to focus on recruiting the best staff for our new stores, we expect to add another record number of stores in 2008 in line with our long-term strategy of 15% growth annually," Ingram said. "We are confident that we have the financial muscle needed to open up new territories and bring new products and services to our customers."
He told analysts that Easyhome will open between 21 and 24 stores this year, and is targeting revenue growth of 15% and 18% with same-store growth of about 5% to 7%.
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