Leon's attributes 53% earnings uptick to The Brick acquisition
Michael J. Knell -- Furniture Today, August 26, 2013
TORONTO - In the wake of its acquisition of The Brick in March, Leon's Furniture said its sales for the second quarter had essentially tripled over the same period of 2012 while earnings were up by 53%.
Leon's reported system-wide sales of C$573.4 million in the latest quarter, up 176% from C$207.7 million a year earlier. Sales include those of The Brick since the acquisition closed on March 28.
As a standalone company, The Brick reported system-wide sales of C$364.6 million for the second quarter of 2012.
In the latest period, sales by Leon's 209 corporate stores were C$480.5 million. In a statement, the company said that "same-store sales, including The Brick banners, were basically flat compared to the prior year."
Sales by the 32 Leon's banner franchise stores were C$45.3 million, compared with C$44.9 million for the second quarter of last year.
Sales by The Brick's 69 franchise stores were C$47.5 million, a year-over-year uptick of 11.6%, which was attributed to opening of five new franchise locations since the second quarter of 2012.
Net income for the 2013 quarter was C$14.4 million or 20 cents per share, up 53% from the C$9 million or 13 cents per share for the comparable period.
Leon's also said its gross margin for the second quarter was 43.4%, up from the 40.8%, and attributed to the acquisition of The Brick.
For the first half of this year, Leon's total system-wide sales were C$776.9 million, up from C$408.4 million a year earlier. Franchise sales totalled C$133.9 million, compared with C$88.8 million for the opening six months of 2012.
Net income was C$19.9 million or 28 cents per share, up from last year's C$17.6 million or 25 cents per share.
"This year is again proving to be a challenging one where we continue to see a soft economy with no clear signs of any major turnaround," Terry Leon, president and CEO of Leon's, said in a statement.
He also again stressed that Leon's and The Brick will continue to operate separately, although the process of integrating the "best practices of each for the benefit of both" has already begun.
During the second quarter, the company opened a 50,000-square-foot Leon's store in Sherbrooke, Quebec, and secured land for a new store in Rocky View County, Alberta, just north of Calgary.
"Overall we are very pleased with the significant increase in sales and solid profit growth we have experienced with the purchase of The Brick at the end of the first quarter 2013," Leon said, adding, "Even though we continue to see poor economic growth which began in 2009 and we do not see any signs of any significant improvement so far in 2013, we expect to see improved sales and profits for the balance of the year."