Sleep Country Canada sales inch up, but profit falls 17.6%
By Michael J. Knell -- Furniture Today, May 25, 2008
Toronto — Weak market conditions in Canada and Arizona eroded first-quarter earnings for Sleep Country Canada Income Fund, although sales ticked up modestly.
Sales rose 2.3% from the same period a year earlier to C$81.7 million. Business at the two Canadian banners — Sleep Country Canada and Dormez-vous — grew 4.9%. Sales at its Phoenix-based Sleep America chain increased 0.6% in U.S. dollars, but declined in Canadian dollars because of the continuing rise in that currency's value.
Net earnings fell 17.6% to C$4 million or 28 cents per trust unit.
Earnings before interest, taxes, depreciation and amortization also declined in the first quarter. The fund's preferred barometer of performance, EBITDA was C$5.7 million, compared with C$7.5 million for the same period last year.
"We have been operating in unusually tough times in the retail mattress industry for the last year and this trend continued in the first quarter of 2008," Stephen Gunn, chairman and CEO of the income fund, said in a statement. "Based on discussions with suppliers and others in the industry, industry demand declined in North America in the first quarter."
Sleep Country spokesperson Christine Magee said Dormez-vous was continuing to add stores and increase market share in the Montreal area. She said Sleep Country also plans to expand in Saskatchewan this month with four stores and a distribution center.
"We also recently expanded and enhanced our pillow program to enrich our product offering, improve our customers' sleep experience and maximize our sales per customer. Our balance sheet remains strong and we continue to be well positioned for the future," she said.
At the end of the first quarter, the fund operated 133 Sleep Country stores from British Columbia to Ontario, 25 Dormez-vous stores in Quebec and 44 Sleep America stores in Arizona.
| Sleep Country Canada (a) | |||
|---|---|---|---|
| Owns Dormez-Vous and Sleep America | |||
| All figures in parentheses are losses or declines. | |||
| Quarter ended 3/31 | 2008 | 2007 | Change |
| (a) In Canadian dollars. (b) Based on 14 million units, including trust units outstanding and Class A shares that are considered units for the purpose of computing basic earnings per unit. |
|||
| Sales | C$81,673,000 | C$79,864,000 | 2.3% |
| Operating income | 5,741,000 | 7,521,000 | (23.7%) |
| Net income | 3,963,000 | 4,808,000 | (17.6%) |
| Earnings per unit (b) | 0.28 | 0.34 | (17.6%) |
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