BMTC revenue falls in Q2
MONTREAL – BMTC Group, the largest home goods retailer in Quebec, attributed the decline in sales and earnings for both the second quarter and first half of its current fiscal year to tightening economic conditions in its home province.
Revenue for the three months ending 31 July 2019 were $214.4 million, down 2.2% from the $219.6 million rung-up for the corresponding period last year.
Net earnings for the period were $13.5 million or 39 cents per share, down from $16.9 million or 48 cents per share – a decline of 18.7% on a per share basis.
BMTC changed its fiscal year end to 31 January in 2018.
Revenue for the six months also ending 31 July 2019 were $364.0 million, down 4.7% from $381.8 million generated in the first half of its last fiscal year.
Net earnings for the period were $10.0 million or 29 cents per share, down from $21.7 million or 61 cents per share – a 52.7% decline on a per share basis.
In her report to shareholders, president and chief executive officer Marie-Berthe Des Groseillers noted the new prototype Brault & Martineau store opened in the Montreal suburb of St-Therese on 12 June. If successful, its design elements are expected to be incorporated into the next generation of the chain’s stores, the vast majority of which are located in an around the Greater Montreal Area.
The old St-Therese location will re-open under the company’s EconoMax banner sometime during October 2019.
Des Groseillers also noted consumer spending in Quebec fell significantly throughout the second half of 2018 and continued into this year. “Since the beginning of 2019, all retail sales sectors are down,” she said. “The results for the first semester of 2019 have not yet experienced the expected rebound and retail sales continue to record significant declines.
“According to the majority of analysts, the risk of a recession is particularly high,” she continued, “and for 2019 they have announced a significant slowing down of the economy due to uncertainty about the continued rise in interest rates, the slowdown in the real estate market due to tightening mortgage financing rules, labour shortages, the estimated 3.5% increase in the average grocery basket and a level of inflation that remains at 2.4% despite a slowdown in wage growth.”
The only bright spot, Des Groseillers said is unemployment in Quebec is at its lowest level in 40 years and job creation has remained strong. However, that is in danger of changing.
“The employment rate in all of Quebec is close to 75%, which is a rate higher than the Canadian average,” she said. “On the other hand, despite a full-employment economy in Quebec, more than a third of Quebecers live from one paycheck to the next due to record highs in household debt levels. Quebecers are more indebted than ever. The debt ratio of Quebec households is now close to 170%, a rate similar to what was recorded in the United States before the 2008 financial crisis.
“In other words, for every dollar of disposable household income, Quebecers owe $ 1.70 in the credit market,” she continued. “For the last six years, the average debt of Quebec consumers, excluding mortgages, has increased by 73%.”
These factors, she believes, negatively impacted the company’s performance for both the 2019 fiscal year as well as the first half its current year.
The publicly held BMTC Group operates 32 stores in Quebec under the three banners: Ameublements Tanguay, Brault & Martineau and Economax.