LFL Q2 sales up 2.7%
TORONTO – Leon’s Furniture Limited (LFL), this country’s largest full-line furniture, mattress and major appliance retailer, has reported upticks in sales and earnings for both the second quarter and the first half of its 2019 fiscal year. Both corporate and franchise networks grew as did the store count.
For the three months ending 30 June 2019, total system-wide sales were $667.6 million, up 2.7% from $650.0 million for the second quarter of 2018.
Corporate store sales and revenue for the period was $560.9 million, an uptick of 2.6% from the $546.7 million recorded for the comparable period last. Same store sales gained 1.9%.
Sales by its 98-unit franchise network totaled $106.8 million, advancing 3.4% from $103.3 million last year.
Adjusted net income was set at $25.0 million or 32 cents per share for the second quarter, compared to $24.0 million or 30 cents per share last year – a gain of 6.7% on a per share basis.
“During the second quarter, the efforts of our associates across the country drove record top and bottom-line performance in a challenging retail environment,” LFL president and chief executive officer Edward Leon said in a statement. “Targeted investments in innovative marketing campaigns during the quarter generated positive same store sales, revenue growth across all product categories and strong returns in the form of gross margin expansion.
“Revenue in our e-commerce retail channel continues to grow at a double-digit pace supported by our strategic investment in technology and personnel. We see this pace continuing on a sustained basis,” he continued.
He also noted Leon’s opened its first smart store in Coquitlam, British Columbia – and 85th location under the century-old banner – at the end of the first half. “We are generating strong early sales and efficiency results from this new store concept,” he observed. “We anticipate leveraging the best practices from this location to drive a multi-year program across the rest of our national retail network in our relentless pursuit of growth in shareholder value.”
For the six months also ending 30 June 2019, LFL system-wide sales were $1.26 billion which was a 1.1% advance from the $1.25 billion rung-up for the first half of 2018. Based on the latest retail store sales data from Statistics Canada, this gives LFL an overall national market share of 22.3% – down slightly from 23.1% last year.
Corporate store sales totaled $1.06 billion, up 1.3% from $1.05 billion as same store sales edged up by only 0.5% for the first half of 2019.
Meanwhile, franchise network sales were $204.2 million, up 0.3% from last year’s $203.7 million.
Adjusted net income was $34.4 million or 44 cents per share, compared to $38.5 million or 45 cents per share – a decline of 2.2% on a per share basis.
During the first six months of 2019, LFL opened four corporate stores: one under the Leon’s banner; two under The Brick; and one Brick Mattress Store. It also closed one Brick corporate store, giving the publicly held retailer a total of 206 corporate stores across the country, a net gain of one unit since the beginning of the year. The company is expecting to open a new Brick corporate store in the West Edmonton Mall sometime in September.
It also closed three franchise locations: two under the Leon’s banner and one under The Brick while opening one Brick franchise. The network now has 98 units, down two for the year-to-date.
Although he admits there is some uncertainty in the overall Canadian economy, CEO Edward Leon said he remains confident LFL will continue to gain ground over the second half of the year.
“Despite the uncertainty over certain key economic indicators, we believe that the overall economy remains relatively strong. Although it is difficult to gauge future consumer confidence and what impact it may have on retail, we remain confident that our sales and profitability will increase,” he said.
“Given the company’s strong financial position, our principal objective is to increase market share and profitability. We remain focused on our commitment to continuously invest in digital innovation that will drive more customers to both our online e-commerce presence and our 304 physical locations across Canada,” he continued.
At the end of June, LFL operated a total of 304 stores across the country under five banners, including: Leon’s; Appliance Canada; The Brick; The Brick Mattress Store; and, Brick Outlet.
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