LFL reports earnings uptick as revenue advances slowly
TORONTO – Leon’s Furniture Limited (LFL), parent to this country’s two largest full-line furniture, mattress and appliance retailers, reported a solid uptick in earnings although top line revenue advanced at a much slower pace for both the fourth quarter and entire 2018 fiscal year.
System-wide revenue for the three months ending 31 December was $726.5 million, a slight 0.5% gain over the $723.3 million for the same period in 2017. Same store sales were off 0.1%.
Corporate store sales were $601.7 million, up 0.8% from the $596.9 million for the fourth quarter of 2017.
Meanwhile, sales by its 100 franchise stores were off 1.2% to $124.9 million, compared to $126.4 million for the comparable period.
Net income was $38.8 million or 51 cents per share, compared to $34.8 million or 46 cents per share – a gain of 10.9% on a per share basis.
For the year also ending 31 December 2018, total system-wide revenues were $2.68 billion, up 1.6% over the $2.64 billion for 2017. Same store sales were up a marginal 0.3% for the year.
Corporate store sales were $2.24 billion, up 1.2% from $2.21 billion while franchise store sales were $443.3 million, up 4.1% from the comparable year’s $425.9 million.
Net income was $111.0 million or $1.45 per share, compared to $96.6 million or $1.32 per share – up 9.8% on a per share basis.
“Despite some weakness in consumer spending across the country, the ongoing execution of our strategy and the combined effort of our entire team led to both record sales and adjusted earnings during 2018,” LFL president and chief executive officer Edward Leon said in a statement.
“This year, we will be pushing forward in an even more concerted way in an attempt to prudently grow market share in all categories, through innovative marketing programs and strong promotional campaigns,” he continued.
LFL doesn’t report sales for its operating segments, which include Leon’s, The Brick, Appliance Canada and furniture.ca. Over the year, LFL closed two Brick Outlet stores as well as one Brick corporate, one Brick franchise store and one Brick Mattress store. These were offset with the opening of three Brick Mattress stores and one new Appliance Canada banner store.
At the end of 2018, LFL operated a total of 303 stores across the country, a net loss of one outlet over 2017.
Although 2019 may not be as robust for retailers, Leon said he remains confident in LFL’s ability to grow all segments of its business.
“Despite the uncertainty over certain key economic indicators, we believe that the overall economy remains relatively strong, as we were still able to increase sales and profitability in 2018. Although it is difficult to gauge future consumer confidence and what impact it may have on retail, we remain confident 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,” he continued, adding, “We remain focused on our commitment to continuously invest in digital innovation that will drive more customers to both our online e-commerce properties and our 303 physical locations across Canada.”