Sleep Country Canada expects to add stores
By Michael J. Knell -- Furniture Today, April 7, 2008
Toronto — Sleep Country Canada will enter the Saskatchewan market in May with two stores and a distribution center in Regina and two stores in Saskatoon.
Company President Christine Magee said that once those stores are open, the only major region of the nation without Sleep Country units will be Atlantic Canada. But she and Stephen Gunn, chairman and CEO of Sleep Country Canada Income Fund, are not saying if there are plans to enter that territory anytime soon.
"Saskatchewan is the only geographic region between Vancouver Island and Montreal that we're not in," Gunn told analysts in a conference call to discuss the sleep shop chain's 2007 results.
In addition to entering Saskatchewan, the company plans to open 11 other "infill" stores this year in its existing markets — five in greater Montreal under the Dormez-Vous banner, two Sleep America units in the Phoenix area, and four under the Sleep Country Canada banner in other parts of Canada.
"It's a tough time for the retail mattress industry," Gunn said, telling analysts that Sleep Country's strong cash position gives it the flexibility need to take advantage of opportunities that come available. "We will open new stores where it makes very good sense for us, when we can find a location that will add new sales without cannibalizing the stores around us."
Sleep Country's performance in 2007 varied by region. "British Columbia and Alberta were quite buoyant," Gunn said. "Ontario, Quebec and Arizona were quite weak."
Given their natural resource-driven economies, the two westernmost provinces probably will stay healthy this year, he said, but it's a different story in other markets.
"We've been depressed for a least a year," Gunn said. "It's hard to be optimistic as we sit here today."
But he said that historically, such cycles have proven themselves finite, adding that the mattress industry, particularly in Canada, has been weak for about a year. "We're really looking forward to 2009 and 2010," he said.
In response to an analyst's question, Gunn said Sleep Country would acquire another mattress retailer if the conditions were right.
"We're out scouting the market right now," he said. But he cautioned that any potential target would have to have prime store locations. "If someone is distressed, it's often because they don't have strong real estate."
He also suggested that company is less likely to make a deal in the United States than in Canada. "The U.S. is more over-stored than Canada," he said. "For example, Chicago is not a market on our radar screen as we see it as particularly over-stored."
At the end of 2007, Sleep Country operated 195 stores — 127 under the Sleep Country Canada banner, 24 Dormez-Vous and 44 Sleep America stores. The 25th Dormez-Vous location opened a few weeks ago.
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