Brick's first-quarter profit jumps 318% on small sales gain

Michael J. Knell -- Furniture Today, May 11, 2012

EDMONTON, Alberta — The Brick reported that its net income for the first quarter grew a rocket-fueled 318%, which was primarily attributed to a shift in its sales mix from appliances and consumer electronics to the higher-margin furniture and mattress categories.

Brick Group said its "total system" or consolidated revenue in the quarter was C$337.9 million, a gain of 1.8% from the same period in 2011, as same-store sales advanced 2.2%.

However, sales by its 168 corporate stores were up just 0.8% to C$295.8 million with same-store sales up 1.9%.

As has been the case for the past few years, the Brick's 62-unit franchise network was its star performer as first quarter sales leaped 9.2% to C$42.1 million. Same store sales rose 3.8%.

Net income was C$4.7 million or 4 cents per share, a 318% gain from the C$1.1 million or 1 cent per share earned in the first quarter of 2011.

The Brick noted that gross margin increased 80 basis points in the first quarter to 45.2% as sales by its retail segment - product on the floor - increased 1.4% to C$276.1 million.

Meanwhile, sales by its financial service segment - everything from financing to extended warranties and other added-value services - fell 6.7% to C$19.7 million.

"We are pleased with our first quarter financial results," Vi Konkle, president and CEO, said in a statement. "In addition to solid sales performance, the Brick team delivered strong gross margin results resulting in an increase of C$3.4 million or 2.6% over 2011. Similar to 2011 results, our product mix has been a significant contributor to our margin performance, shifting sales towards our higher-margin mattress and furniture categories."

During the first quarter, the Brick acquired Pacific Wholesale Appliance, a Vancouver-based distributor selling white goods to builders and developers in the lower mainland of British Columbia.

It also converted its corporate stores in Camrose, Alberta and Terrace, British Columbia, to franchise stores, and closed one corporate store and one Brick Mattress outlet.

Over the next nine months, the Brick intends to close two additional corporate stores as well as four units operating under the United Furniture Warehouse banner. It will also open nine new franchise units.

At the end of 2012, the Brick is anticipating a store count of 233 including 71 franchise stores. This past Dec. 31, the company operated 232 stores including 60 franchises.