LFL records new 3Q highs in both sales and earnings
TORONTO – Strengthening consumer use of its e-commerce platforms propelled Leon’s Furniture Limited (LFL), this country’s largest full-line furniture retailer, to record third quarter highs in both sales and earnings.
For the three months ending 30 September 2020, total system wide sales were $762.8 million, up 7% from the $712.6 million rung-up for the same period last year.
Corporate store sales were pegged at $630.8 million, up 4.9% from the prior period’s $601.4 million as same store sales advanced 4.5%.
Meanwhile, sales by LFL’s franchise network were up 18.7% at $132.0 million, compared to $111.2 million for the third quarter of 2019.
Although dollar amounts were not disclosed, the company said e-commerce sales grew 235% on a year-over-year basis during the third quarter. Most financial analysts who follow LFL’s stock estimate e-commerce accounted for about 10% of corporate sales for the period – roughly$63 million. Previous estimates put e-commerce at 5% of sales.
Net income for the period was $49.1 million or 60 cents per diluted share, compared to $33.2 million or 40 cents per diluted share – an uptick of 50.0% on a per share basis.
“In an environment that remains challenging for many retailers in Canada, Q3 was a record quarter across the board for LFL. The efforts of our dedicated team generated a same store sales increase of 4.5%, derived from creating an enhanced customer experience and increased value. Our consistent focus on operating efficiency and returns on advertising spend enabled us to leverage single-digit revenue growth into diluted earnings per share growth of 50% compared to Q3 of last year,” LFL chief executive officer Ed Leon said in a statement.
During the quarter, LFL opened two Leon’s banner stores – one in Calgary and the other in Kelowna, British Columbia – as well as a new full-line Brick store in Fredericton, New Brunswick which will be supported beginning early in 2021 with the opening of a state of the art distribution centre in Dartmouth, Nova Scotia.
“The financial results generated this quarter highlight the power of our long-term model of financial conservatism and value creation accompanied with a relentless pursuit of exceeding our customers’ needs; ensuring that they can shop where, when and how they want,” Leon continued, adding the strategic steps taken last year to strengthen the company’s e-commerce platforms have produced noticeable results.
For the nine months also ending 30 September 2020, total system-wide sales were $1.87 billion, down 5.4% from the $1.98 billion for the same period last year.
Corporate store sales were $1.55 billion, off 7.0% from last year’s $1.66 billion as same store sales fell 7.7%. LFL attributed the decline to the store closures ordered by provincial governments across the country as part of the effort to combat the COVID-19 pandemic during the months of April and May.
Sales by the franchise network gained 3.2% at $325.6 million, up from $315.4 million.
Net income for the first nine months was $110.0 million or $1.33 per diluted share, compared to $67.6 million or 82 cents per diluted – an uptick of 62.2% on a per share basis.
“In the short term, the duration and full financial effect of COVID-19 is unknown, as is the efficacy of government and central bank interventions to curb the spread of COVID-19 and stimulate the economy,” Ed Leon said. “On a longer-term basis, we still believe that the underlying Canadian economy remains relatively strong. Although it is difficult to gauge future consumer confidence and what impact it may have on retail, we remain cautiously optimistic that our sales and profitability will increase. Given the company’s strong and continuously improving financial position, our principal objective is to increase our market share and profitability.”
LFL operates five retail banners across the country including Leon’s, Appliance Canada, The Brick, The Brick Mattress Store and The Brick Outlet. At the end of September, it operated 305 stores in total, one more than at the beginning of the year. This includes 100 franchise stores, including 35 carrying the Leon’s banner and 65 under The Brick.
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