Easyhome revenues rise 7.7% but profit declines
Michael Knell -- Furniture Today, January 2, 2012
MISSISSAUGA, Ontario - Money was Easyhome's most important commodity in the third quarter as its Easyfinancial consumer loans business unit continued to drive the furniture and appliance leasing merchant's top line growth.
The company reported revenue of C$46.6 million in the quarter, up 7.7% from the comparable period last year. Net income was C$1.9 million or 16 cents per share, a decrease of 22.4% from C$2.4 million or 23 cents per share a year ago.
The company said the sales uptick was "driven primarily by the expansion of the Easy-financial services business and the related growth of its consumer loans receivable portfolio." The segment's revenues doubled from a year earlier, to C$6.4 million, as it loans receivable portfolio more than doubled to C$42.7 million.
Meanwhile, its core merchandise leasing business was comparatively flat with revenues of C$39.8 million, although franchise royalties jumped from C$100,000 to C$300,000.
During the third quarter, Easyhome invested heavily in advertising and other promotional activities that were designed to retain customers and increase the number of lease agreements, management said. This campaign reduced earnings by 8 cents per share, but officials said the lease agreements signed will generate C$1.3 million in additional quarterly revenue.
"We experienced mixed results for the quarter," Easy-home President and CEO David Ingram told analysts. "We are disappointed with the earnings per share, which were affected by the ... advertising and promotional activities and our increased corporate and administrative costs. However, we are pleased with our commercial results, which were strong as the leasing business had its highest potential monthly lease revenue growth of any third quarter in recent history, driven by an 18% increase in the number of leased units delivered."
For the nine months ending Sept. 30, Easyhome recorded revenues of C$139 million, up 7.7% from the 2010 pace. Net income declined about 6.7% to C$7 million or 59 cents per share, from C$7.5 million or 61 cents per share a year earlier.
Ingram said Easyhome will add no more than two corporate stores in 2012 while bringing another five to 10 franchise stores online. It also plans to open between 15 and 20 Easy-financial kiosks.
"We believe that uncertain economic conditions will continue into the New Year," Ingram said. "As a result, we will continue to be cautious as it relates to the opening of new stores and Easyfinancial Services locations."
The company said if all those new locations materialize, it expects total revenue growth of 10% to 15% next year.
At the end of the third quarter, Easyhome operated 261 stores in Canada and the United States, including 43 franchised or licensed locations. It also operated 77 Easyfinancial kiosks within existing Easyhome stores, two standalone Easyfinancial locations and one national loan office.