BMTC reports 2Q boom
MONTREAL – BMTC Group, the largest full-line furniture retailer in Quebec, has reported dramatic upticks in sales and earnings for both the second quarter and first half of its current fiscal year, which it attributed mainly to heightened consumer demand driven by lockdown measures taken to dampen the spread of the COVID-19 pandemic in this country’s second largest province and market.
The publicly held operator of Brault & Martineau, EconoMax and Ameublements Tanguay reported last week revenue for the three months ending July 31, 2021 were $231.6 million, compared to the $176.0 million recorded for the corresponding 2020 period, a 31.6% increase.
The company didn’t provide same store sales, but it should be noted its store count hasn’t varied much in recent years.
BMTC’s fiscal year now ends on January 31, unlike the two other major publicly held Canadian furniture retailers – Leon’s Furniture Limited (LFL) and Sleep Country Canada Holdings – whose fiscal years mirror the calendar year.
However, in its note to shareholders, BMTC’s senior management pointed out most of its 32 brick-and-mortar stores were closed for much of the prior fiscal year’s first half. “Management believes that the results for the corresponding period of 2020 are not representative of the normal course results of the company,” its report said, adding results for the current fiscal year are much more in keeping with those incurred for the same periods in 2018 and 2019.
Net earnings for its fiscal second quarter were $28.7 million or 85 cents per share, up from the comparable period’s $19.6 million or 57 cents per share – that’s a 49.1% jump on a per share basis.
For the first half of the current fiscal year, which also ended July 31, 2021, BMTC revenues totaled $408.8 million, up 48% from the $276.4 million rung-up during the same period last year.
Net earnings for the six months ending July 31, 2021, amounted to $39.2 million or $1.16 per share, compared to last year’s $7.2 million or 21 cents per share – a rocket-fueled 450% advance on a per share basis.
The company said its share repurchase program contributed one cent per share in basic earnings while the funds it received from the Canadian Emergency Wage Subsidy (CEWS) added four cents per share.
In its report to shareholders, BMTC’s senior management said the company continues to focus on its online activities, which have increased substantially since the pandemic’s onset, although it didn’t provide any colour or details.
While noting the second quarter produced some of the highest revenues in its history, “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 COVID-19 pandemic, more precisely the restrictions related to travel, the closure of restaurants and all forms of entertainment in the cultural and sporting world.”
BMTC also noted it is grappling with supply chain issues. “Many of the company’s suppliers, who have also been affected by the consequences of COVID-19, are unable to honour and deliver placed orders,” it told shareholders. “This problem seems widespread in our industry and is not unique to the company. Therefore, it is possible that this could have a negative impact on future results because orders on hand may not be able to be delivered due to this shortcoming.”
It also facing two immediate problems. First is the anti-dumping tariff imposed by the Canada Border Services Agency (CBSA) on imports of motion furniture and leather stationary upholstery from the People’s Republic of China and the Socialist Republic of Vietnam at the beginning of May without any grace period for orders in production or already in transit to Canadian retailers.
“The majority of these products in production as well as those in transit to Canada have already been sold to our 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.” BMTC told shareholders. “The company will therefore incur significant losses on the sale of these products in order to honor existing contracts with our customers.”
Management also noted while it was able to cancel some of the unreceived orders, it now has to replace them with similar product at a reasonable price or risk customers cancelling this business.
“Complaints about unfairly priced Chinese and Vietnamese-made products have been a long simmering issue in the furniture business,” the company said, admitting it was expecting the tariff levied to be in the 20% range, similar to those imposed on similar products by the United States and its difficult to predict these measures will have on BMTC’s revenue in the coming months.