The Brick reports 3Q growth spurt of 12.5%
By Michael J. Knell -- Furniture Today, January 27, 2008
Edmonton, Alberta — The Brick, Canada's largest full-line furniture, bedding, appliance and electronics retailer, saw third-quarter sales grow 12.5% as profits surged 46.6%.
"Our strong quarter was driven by more effectively executing against strong written sales," President and CEO Kim Yost told analysts in a conference call. "We have improved our supply chain, reduced inventories, improved our cash position, and narrowed our focus to driving sales and maximizing customer satisfaction."
The Brick Group Income Fund, parent of the chain, said consolidated sales in the quarter came to C$406 million, compared to C$360.8 million in last year's third quarter.
Leading the uptick was the fund's franchise division, whose sales jumped 34.9% in the quarter to C$30.9 million. Total corporate revenue grew 11% in the quarter to C$375.1 million, driven by same-store sales growth of 7.7% and a strong promotional calendar.
Net income was C$17.2 million, or 32 Canadian cents per trust unit, compared with C$11.7 million, or 22 cents per unit, in the third quarter of 2006.
Meanwhile, earnings before interest, taxes, depreciation and amortization climbed 22.2% to C$26.1 million. EBITDA is The Brick's preferred method of performance comparison.
In the nine months, consolidated revenues were C$1.12 billion, a 10.9% jump from C$1 billion in the comparable period last year. Corporate revenues totaled just over C$1 billion, a gain of 8.7% over last year, with same-store sales growth of 6.4%. The franchise division saw its top line advance 32% to $82 million.
Despite the sales gains, The Brick recorded a net loss of C$17.7 million, or 33 Canadian cents per trust unit, in the latest nine months, compared to net income of C$22.9 million, or 42 cents per unit, last year.
The loss was attributed to a provision for future income tax payments. The Canadian government has introduced changes to the tax code that, beginning in 2011, will align taxes paid by income trusts more closely to those paid by other publicly held corporations.
EBITDA in the nine months rose 16.2% to C$52.7 million.
At the end of the third quarter, the fund operated a total of 206 stores across the country, up from 196 at the end of September 2006, under four banners: The Brick, The Brick Superstore, The Brick Mattress Store and United Furniture. Of the total, 31 were franchise stores, five more than a year ago.
Yost told analysts that management is optimistic about the months ahead.
"Our fourth quarter typically has the highest sales volume of the year," he said. "We believe we are well positioned to continue to take advantage of our new infrastructure and optimize operational efficiencies to deliver strong results in the last quarter of 2007. We also are very bullish about our business in 2008."
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