Leon's sales up 1.4% in quarter, but costs cut profits
Jay McIntosh -- Furniture Today, May 17, 2013
TORONTO — Leon's Furniture said total sales grew about 1.4% in the first quarter to C$203.6 million, a figure that included C$41.1 million in franchise sales and C$11.8 million from its new acquisition The Brick - which was part of Leon's for just the last four days of the quarter.
Earnings tumbled 36.9% to C$5.4 million, mainly due to lower store sales and added costs related to store openings and The Brick deal, management said in a statement.
"2013 is proving to be another challenging year where we continue to see a soft economy with no clear signs of any major turnaround," the company said. But the company said it was pleased to have completed the C$700 million Brick purchase on March 28, a transaction that created Canada's largest furniture, appliances and electronics dealer.
The company also said it had successful grand openings for three Leon's stores in the first quarter in Brantford and Orangeville, Ontario, and Sherbrooke, Quebec.
Same-store sales in the quarter were down 5.8% from 2012. Earnings per share were 8 cents, down from 12 cents a year earlier.
Leon's corporate store sales were up 3.2% in the quarter, to C$162.5 million. Franchise store sales declined 4.9% to C$41.1 million.
"We have been experiencing poor economic growth which began in 2009 and we don't see any signs of any significant improvement so far in 2013," management said. "As such, we anticipate that consumer discretionary spending will remain soft for the balance of 2013. However, having opened three new stores in 2013, coupled with the completion of The Brick purchase at the end of March 2013, we should see improved sales and profitability for the balance of the year."