LFL reports declining sales and earnings for the third quarter

21 November 2022 Michael J. Knell

TORONTO – Leon’s Furniture Limited (LFL) has reported sales and earnings for the third quarter of 2022 fell when compared to the same period last year, but when compared to the third quarter of 2019, not long before the onset of the COVID-19 pandemic, they were up 12.4%.

Total system-wide sales for the three months ending September 30, 2022, were $801.0 million, down 3.0% from the $825.5 million for the 2021 period but up 12.4% from the $712.5 million for the pre-pandemic third quarter of 2019.

Corporate store sales came in at $662.2 million, off 3.1% from the corresponding period’s $683.2 million. Same store sales fell 3.5%.

“Despite the prior year’s quarter being a record for the company in terms of revenue, the current quarter compares favorably to the company’s historical results before the COVID pandemic began in the early part of the 2020 fiscal year,” LFL president and chief executive officer Mike Walsh said in his report to shareholders. “The company is continuing to show increases across all product categories for the three months ended September 30, 2022, when compared to pre-pandemic results.”

Compared to the pre-pandemic quarter ended September 30, 2019, of $601.3 million, corporate store sales increased 10.1%.

This chart grafts the same store sales from Leon’s Furniture Limited’s corporate stores from the first quarter of 2019 to the third quarter of 2022. Outside observers noted that like other major brick-and-mortar retailers, LFL’s e-commerce platforms also took a hit during the third quarter, according for an estimated 10.9% of sales, roughly $72.2 million. For the comparable period, e-commerce accounted for an estimated 20% of sales or $136.6 million – a year-over-year decline of 47% – which they noted was partially offset by in-store sales growth as consumer shopping habits continued to normalize following pandemic gyrations.

Sales by LFL 103-unit franchise network saw a 2.5% dip to $138.8 million, compared to $142.3 million the year before. (Pre-pandemic sales totaled $111.2 million.)

Net earnings were $61.3 million or 87 cents per diluted share, compared to $63.8 million or 77 cents per diluted share – a 13.0% uptick on a per share basis.

Total system-wide sales for the nine months also ended September 30, 2022, were $2.25 billion, up 0.5% from the comparable period’s $2.24 billion.

Corporate store sales were $1.86 billion, up 0.7% from the prior year’s $1.84 billion as same store sales gained 0.5%.

Franchise network sales were off 0.5% at $392.1 million when compared to last year’s $394.2 million.

Net earning for the nine months were $136.2 or $1.94 per diluted share, compared to $1.87 per diluted share – a 3.7% increase on a per share basis.

Mike Walsh “Moving toward year-end, we expect the market to get more promotional as inflationary pressures on discretionary income continue to impact consumer spending,” Walsh told shareholders. “Our results through Q3 provide further evidence that LFL’s scale and coast-to-coast integration put several levers at our disposal to mitigate the impact on the bottom line. With inventory beginning to flow more freely, we will continue to offer our customers a wide breadth of product across categories and price points, however and whenever they want to shop.

“While the next several months are likely to be challenging across the retail landscape, LFL is better positioned than ever to deliver results for our customers and shareholders,” he added.

At the end of September, Leon’s Furniture Limited 202 corporate stores as well as 103 franchise stores under five different banners including Leon’s, The Brick, The Brick Mattress Store, Brick Outlet and Appliance Canada. It also operates five web sites: leons.ca, thebrick.com, furniture.ca, midnorthern.com and appliancecanada.com.