E-commerce drives 3Q sales, earnings for Sleep Country
TORONTO – Propelled by a triple digit increase in e-commerce across all three of its banners, Sleep Country Canada Holdings (SCC) reported record high sales and earnings for the third quarter of 2020, although its year-to-date performance continues to be negatively impacted by the ongoing COVID-19 pandemic.
In its filing to the Ontario Securities Commission, SCC said revenue for the three months ending 30 September 2020 was $242.4 million, up 15.4% from the $210.0 million rung-up for the corresponding period of 2019.
Growth was driven by a 14.5% increase in sale store sales, far outpacing the 0.5% for the third quarter last year.
During the quarter, SCC opened four new stores, two in the Greater Toronto Area and two others in Windsor, Ontario. It ended the period with 280 stores, having started the year with 275.
SCC said e-commerce accounted for 18.1% of its third quarter revenues – approximately $44 million. While it said this was a triple digit increase from a year ago, comparative data was not provided. SCC’s e-commerce activities are led by Endy.com, this country’s largest online mattress retailer. It also operates virtual stores for both its Sleep Country and Dormez-Vous banners. It also sells through Walmart Canada’s online platform.
After the acquisition of Endy in December 2018, most financial industry observers estimated SCC’s e-commerce activities contributed 8.5% of revenue, that’s roughly $17.9 million for the corresponding third quarter of 2019.
This time out, SCC did not report sales by product category. Since its return to the public equity market in 2015, this country’s largest retail sleep specialist has reported mattress and accessory sales separately, with the former usually accounting for about 80% of revenue as customer acceptance of the latter grew.
Adjusted net income was $33.4 million or 91 cents per share, compared to $22.4 million or 60 cents per share a year earlier – a 51.7% gain on a per share basis.
“This period was the most successful third quarter in our history with record revenue, net income and EPS (earnings per share). These tremendous results are a direct outcome of our advanced omnichannel infrastructure and reaffirm that our strategy to best serve Canadians’ sleep needs, across all channels, is powerfully resonating with consumers,” SCC chief executive officer Dave Friesema said in a statement.
He added SCC management is optimistic about the return from its ongoing investments in its digital platforms as well as burgeoning same store sales in its brick-and-mortar network.
“With 18.1% of the quarter’s revenue driven through our digital platforms, it is clearer than ever that our seamless omnichannel experience is what Canadians want,” he said adding partnerships with international sleep brands such as Malouf and Purple Innovation are strengthening SCC’s overall growth strategy.
For the nine months that also ended 30 September 2020, revenue was $508.8 million, down 3.2% from the $525.9 million rung-up for the corresponding 2019 period.
The decline was attributed mainly to the temporary closure of the company’s retail stores imposed by provincial governments across the country as part of the effort to stem the spread of COVID-19. Stores were closed for about 22% of their normal operating days during the first nine months of the year.
This was partially offset by e-commerce activities, which accounted for 22% of revenue for the year-to-date – roughly $112 million.
Adjusted net income for the period was $44.6 million or $1.22 per share, up from $43.5 million or $1.17 per share – an increase of 4.3% on a per share basis.
“Despite the uncertainty resulting from the pandemic, new and loyal customers continue to choose our family of brands as trusted destinations for superior experience, knowledgeable service and quality sleep solutions,” Friesema said. “Looking ahead, our omnichannel infrastructure, financial flexibility, stable supply chain and dedicated employees will enable us to continue executing our strategy with excellence and agility. We remain committed to expanding our market share, delivering profitable growth and building value for our customers, employees, communities and shareholders.”
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