BMTC sales, earnings slide
MONTREAL – Increasing debt levels, coupled with rising interest rates had a negative impact on consumer spending in Quebec, which was reflected in the fiscal third quarter sales and earnings for BMTC Group, this province’s largest retailer of furniture, mattresses and major appliances.
For the three months ending 31 October 2018, company revenues were $184.1 million, down 9.6% from the $203.8 million recorded for the three months ending 30 September 2017. Same store sales were up an extremely modest 0.3%.
BMTC shifted its fiscal year end from 31 December to 31 January at the beginning of 2018.
Net earnings for new fiscal third quarter were $11.6 million or 34 cents per share, compared to $17.5 million or 48 cents per share for the corresponding period ending 30 September 2017 – a drop of 29.2% on a per share basis.
The company noted no stock options were exercised during the quarter and, therefore, had no impact on earnings, although the results of the ongoing ‘normal course issuer bid’ contributing three cents per share to third quarter earnings.
For the nine months also ending 31 October 2018, revenues were $565.9 million – advancing a slight 0.2% from the $565.0 million for the nine months ending 30 September 2017. Same store sales growth was pegged at 2.5%.
Net earnings were $33.3 million or 95 cents per share, compared to $31.6 million or 86 cents per share – a 10.5% gain on a per share basis.
Once again, no share options were exercised during the first nine of the fiscal year and the share buy-back program added four cents per share to earnings. Earlier this year, BMTC sold is Brault & Martineau store in Repentigny for $9.0 million which resulted in an after-tax gain of $4.5 million that added 13 cents per share to earnings.
In her report to shareholders, Marie-Berthe Des Groseillers, BMTC president and chief executive officer noted the opening of the new St-Therese store has been delayed to May 2019. This unit is to serve as the new prototype for the Brault & Martineau banner. Should the new model be successful, BMTC will renovate existing stores and possibly build new ones later.
However, the market in Quebec seems to be cooling.
“The Quebec economy in 2017 has experienced the most important growth since the last recession in 2008. This trend was in line with the semester [first half] of 2018, although the third quarter showed an important decline,” Des Groseillers remarked, adding other factors also seem to be in the company’s favour, such as the low unemployment rate.
However, pay scales has not kept pace and 34% of Quebeckers live ‘pay-to-pay-cheque’ and because of their increasing debt burden, aren’t saving. “The continuing trend of interest rate increase during 2018 would certainly risk to further undermine this situation and would therefore have a negative impact on consumer spending. This reality seemed to have impacted the third quarter of 2018, with a decline in consumer spending, which was reflected in the company’s results as it only recorded a 0.3% increase in same store revenues for comparable periods,” she said.
“The retail sector is in complete transformation. The e-commerce and the client's shopping experience are at the heart of this transformation,” she continued, adding this is why BMTC is investing in a new store model.
At the end of its fiscal third quarter, BMTC operated a total 32 stores across Quebec under three banners: Brault & Martineau; Economax and Ameublements Tanguay.