BMTC books record Q1, cautions about tariff’s impact
MONTREAL – BMTC Group reported a record high sales and earnings for the first quarter of its new fiscal year and then cautioned shareholders its financial performance for balance of the year will be complicated by several factors, including the Canadian Border Services Agency’s (CBSA) recent decision to impost anti-dumping duties on imports of motion furniture and leather stationary upholstery from the People’s Republic of China.
For the three months ending April 30, 2021, the company had sales of $177.2 million, a 76% increase from the $100.4 million for the corresponding period last year.
BMTC Group shifted its fiscal year end from December 31 to January 31 in 2018. Its current fiscal year will end on January 31, 2022.
Net earnings for the period were $10.5 million or 31 cents per share, reversing the loss of $12.4 million or 36 cents per share recorded for the corresponding period a year ago.
“The company recorded one of the highest revenues in its history,” management told shareholders in its quarterly report. “This is partly due to improvements in marketing and strategic measures, our extensive store network and the strength of our digital platforms, which have enabled the company to increase its market share.
“On the other hand, management is aware that this increase is also partly due to the fact that it has benefited from a transfer of consumer spending related to the restrictions imposed by the various levels of government due to the COVID-19 pandemic, more precisely the restrictions related to travel, the closure of restaurants and all of entertainment in the cultural and sporting world.”
Earnings were bolstered by two external factors. The company’s current share re-purchase program added one cent per share while the Canadian Emergency Wage Subsidy added $1.2 million or four cents per share.
BMTC also announced that its Brault & Martineau store located on the boulevard Le Corbusier in the Montreal suburb of Laval will close in December 2021. The company has signed a partnership agreement that will see a real estate development firm construct several residential rental towers on the site. Construction is expected to begin next January.
Management noted the current store network should be able to cover this part of the city and should not have any negative impact on overall sales.
“The company is faced today with two major problems,” BMTC president and chief executive officer Marie-Berthe Des Groseillers said in her note to shareholders.
The first is the CBSA tariff on motion furniture and leather stationary upholstery imported from the PRC and Vietnam. She noted they were levied on May 5, 2021 “while not allowing any grace periods for orders in production or for products already in transit to Canada, which can take up to three or four months to reach out ports.
Des Groseillers noted most of these goods have already been sold to customers. “It is not possible for the company to add these new tariffs to the price tags of these products since it increases by more than four times the price initially paid by our customers. The company will therefore incur significant losses on the sale of these products in order to honor existing contracts with our customers.”
While the retailer was able to cancel some of the orders subject to the tariff with some of its suppliers, some of those had already been sold to a customer, producing the second problem. “If the company is unable to replace it with a similar product at a reasonable price, those sales will need to be canceled,” she said adding, “as a result, the company could be subject to a slew of customers cancelling orders.”
However, Des Groseillers acknowledged complaints about unfairly priced product from the PRC and Vietnam has been long simmering, but the tariff levels imposed were somewhat of a surprise.
“Everyone in the industry was expecting tariffs in the range of 10% to 20%, similar to what the U.S. recently implemented,” she said, not the 17% to 296% range the CBSA laid down. “The tariffs imposed so far are preliminary, which means they can be raised, lowered or removed altogether when the government finishes its investigation into the matter later this summer.”
At the end of April, the publicly held BMTC Group operated some 32 under three banners, all in Quebec including Brault & Martineau and Economax – in the Greater Montreal Area – and Ameublesments Tanguay, which is centred in Quebec City.
Related Story: Maurice Tanguay dies at 87