Consumer loans give Easyhome 5.7% revenue gain
Michael Knell -- Furniture Today, September 3, 2012
MISSISSAUGA, Ontario - Its short-term consumer loans operation continued to drive Easyhome Ltd.'s performance in the second quarter, prompting Canada's largest furniture, mattress and major appliance leasing merchant to restructure its core business.
For the three months ended June 30, Easyhome reported revenue of C$48.9 million, a 5.7% increase from the same period a year ago. Net income decreased to C$2 million or 17 cents per share, from C$2.7 million or 23 cents per share a year earlier.
Easyhome said net income was affected by higher interest and income tax expenses as well as charges related to its restructuring effort.
Corporate same store sales grew 6.4%.
On a segmented basis, Easy financial consumer loan revenues increased 56% year-over-year to C$8.8 million as its loans receivable portfolio grew from C$35.3 million to C$55.8 million. Meanwhile, the company's leasing operations recorded revenues of C$39.7 million, down from C$40.3 million for the same period last year.
Franchise operations also recorded revenue improvements, to C$400,000 this year from C$300,000 in the second quarter of 2011.
During the second quarter, Easyhome closed 13 underperforming locations and transferred their active lease portfolios to nearby stores. Changes were also made to the leadership of the leasing operation, including the elimination of seven senior positions.
"We had a mixed performance for the quarter," David Ingram, Easyhome president and CEO, said in a note to shareholders. "Our Easyfinancial services business continued to deliver strong growth and strong results and our corporate expenditures for the second quarter of 2012 were reduced from the comparable period in the prior year. Our leasing business, however, reported lower revenues and lower earnings. The negative performance of this, our largest business unit, necessitated a restructuring of its network and operations, which was completed in the second quarter of 2012."
For the six months ended June 30, Easyhome recorded revenues of C$98.7 million, up 6.7% from the first half of 2011.
Net income, adjusted for unusual items, fell slightly to C$5 million or 42 cents per share, from C$5.1 million or 43 cents a year ago.
Easyhome also announced it is negotiating with lenders to increase its borrowing limit from the current C$40 million to C$65 million. The company said it believes this new financing, together with its improving cash flow from operations, will help it achieve its growth targets for the next 12 to 18 months.
As of June 30, Easyhome operated a total of 249 stores - including 204 corporately owned stores plus a network of 45 franchise locations - in both Canada and the United States, down from 261 units as of Dec. 31.