BMTC sales, earnings rise in 1Q
But profit gain stems mainly from falling stock price
Michael J. Knell -- Furniture Today, May 22, 2008
MONTREAL — Quebec’s largest full line furniture retailer enjoyed small gains in sales but substantial increases in earnings in the first quarter, although the profit gain was driven mostly by the company’s falling share price.
BMTC Group, operators of Brault & Martineau and Ameublesments Tanguay, said sales of C$181.7 million were up 1.8% from the comparable 2007 period. Meanwhile, net earnings were C$11.6 million or 37 Canadian cents per share, more than four times greater than the C$2.1 million or 6 cents per share posted a year earlier.
Most of the earnings gain — C$5.5 million — was attributed to change in the cost of options granted senior management. The changes were reflected as revenue because the price of BMTC’s stock declined. If they had risen, the options cost would be reflected as an expense.
Also contributing to the bottom line were gains from the sale of property in Ottawa and Rimouski, Quebec. Offsetting these gains were some losses in the company’s investment portfolio.
Excluding the effects of the options pricing and asset sales, the company said its net earnings in the first quarter would have decreased by C$1.6 million or 5 cents per share.
In his report to shareholders, BMTC Chairman, President and CEO Yves Des Groseillers said that while the company remains in a strong financial position, he doesn’t anticipate much growth in the coming months.
“Consumer spending has been increasingly under pressure in recent months,” he said, adding that tightening credit and the slowing real estate market will affect the company’s sales. “Finally, economic indicators suggest that demand for non-durable goods are declining, which also has a direct impact on demand for the company’s goods. Given all these factors, management is anticipating that it will be difficult to maintain sales in the quarters ahead.”
However, he said the company will continue its aggressive marketing campaign in the months to come “allowing it to remain a leading participant in its market, while continuing to offer a superior financial performance.”
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