Brick Group sales rise 27.6% in second quarter
Net income of C$6.2M reverses loss from a year ago
Michael Knell -- Furniture Today, August 10, 2010
EDMONTON, Alberta — Officials of the Brick Group Income Fund say their retail operations are in full recovery with gains in sales and earnings for the second quarter.
Corporate sales of C$326.3 were up 27.6% from the same quarter a year earlier, while net income was C$6.2 million or 5 cents per trust unit, reversing a loss of C$146.3 million or $2.70 per unit a year ago.
Consolidated revenue, including sales from 52 franchised stores, was up 28.2% for C$363.5 million.
The company also noted that the 2009 quarterly loss was driven in part by "purchase accounting adjustments" such as the impairment charges against goodwill. Without these, the adjusted second quarter 2009 loss was C$18.9 million.
Consolidated same-store sales were up 26.1%, a turnaround from the second quarter of 2009, when same-store sales fell 32.4%. June was the seventh consecutive month of same-store gains, the company said.
Like most Canadian income trusts, the Brick Group prefers to use EBITDA (earnings before interest, taxes, depreciation and amortization) as measure of financial performance. EBITDA was for the second quarter was C$16.3 million, compared with negative C$7.7 million a year ago.
"We're also seeing more people in the stores and our conversion rates are up," Brick President and CEO Bill Gregson told analysts in a conference call.
He also said that gross margin improved to 41.7% from 40.9% in the second quarter last year. This was attributed to from higher profitability in furniture sales, increased early payment discounts, increased revenue from product delivery and easing of credit markets, which reduced Brick Card retail financing fees.
The company also noted that it benefited from the appreciation of the Canadian dollar as most of the furniture it sells is acquired in U.S. dollars.
For the first time in quite a while, the company's retail segment - basically sales of product on the floor - outperformed the financial services segment. Retail sales rose 28.5% to C$305.2 million, while the financial services segment - which offers extended warranties and other services - had sales of C$21 million, up 16.2% year-over-year.
For the first six months, consolidated sales were up 20.5% to C$707.8 million, with consolidated same-store sales up 17.1%.
Net income was C$8.8 million or 7 cents per trust unit, a reversal of the net loss of C$175.7 million or $3.24 per unit. The adjusted first half 2009 loss was pegged at C$21.1 million.
Consolidated EBITDA for the first half was C$30.2 million, compared with negative C$10.8 million a year ago.
Total corporate sales were up 20.5% to C$707.8 million for the year-to-date, while franchise sales posted a gain of 25.3% of C$75.3 million.
Retail segment sales were up 20.4% to C$591.8 million while financial services saw gains of 14.5% to C$40.7 million.
"I am very pleased with the Brick Group's second quarter and year to date 2010 financial results," Gregson said in a statement. "Achieving the highest EBITDA result in the group's history for the first half of the year provides reinforcement that we have completed our recovery."
He said that for the remainder of 2010, management's focus will remain on organic growth through improved same-store sales and an enhanced customer service model, as well as investments in information systems, supply chain and cost control.
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