BMTC earnings up as sales dip
Michael Knell -- Furniture Today, November 5, 2011
MONTREAL - BMTC Group, Quebec's largest full-line furniture and appliance retailer, has reported sales for the second quarter fell 7% but net earnings climbed 30%.
Revenue was C$194.1 million, down from the C$207.8 million generated during the same period in 2010. Net earnings were C$21.5 million or 43 Canadian cents per share, compared with C$17 million or 33 cents per share - a 30% jump on a per share basis.
BMTC said its ongoing share repurchase plan added one cent per share to earnings. The retailer also noted that its method of costing the options offered to senior executives increased earnings per share by two cents during the second quarter, compared with a decrease of six cents for the 2010 period.
In a practice not mirrored by many other public companies, BMTC costs options as either an expense or revenue in its net earnings calculation. An increase in the company's share price incurs an expense, with a decrease incurs revenue.
Revenue for the first half totaled C$357.3 million, down 9% from the comparable period in 2010, while net earnings were C$24.3 million or 48 cents per share compared with C$20.8 million or 40 cents a year earlier - a 17% increase on a per share basis.
The publicly held merchant said it held cash and securities valued at C$115.4 million at the end of June, down C$23.2 million from Dec. 30. BMTC also reported it paid out C$21.1 million in cash, in lieu of shares, to an unnamed senior executive during the first half.
A renovation project aimed at upgrading the appliance departments at its Brault & Martineau stores was completed during the first half while construction of a new Ameublesment Tanguay store in Lévis, Quebec, was started in May. This store is expected to open in December.
In a note to shareholders, Yves Des Groseillers, BMTC's chairman, president and CEO, said he doesn't see any significant rebound coming to Quebec's retail market in the near future.
"The second (half) of 2010 was rather disappointing, eliminating the increase obtained during the first (half)," Des Groseillers said. "The weakness recorded at the end of 2010 intensified during the first and second quarter of 2011. The tightening of credit as well as the increase of the Quebec sales tax did not favor domestic and household consumption during the first and second quarter of 2011."
However, he also stressed that the company has the resources to survive the current economic downturn.
"Management feels that the company's financial position provides the company with a competitive advantage, particularly in difficult market conditions," he reassured shareholders. "It permits the company to continue its aggressive marketing campaigns, allowing it to remain a leading participant in its market, while continuing to offer a superior financial performance."
As of June 30, BMTC operated 32 stores in Quebec under the Brault & Martineau and Ameublesment Tanguay banners.
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