LFL sees Q1 sales, earning decline
TORONTO – In what may be a reflection of tightening supply chains coupled with the re-opening of other parts of the economy, Leon’s Furniture Limited (LFL), this country’s largest full-line furniture retailer, reported a downturn in both sales and earnings for the first quarter of 2022.
For the three months ending March 31, 2022, the company said system-wide sales were $662.9 million, down 4.9% from the $697.1 million for the same period last year.
Corporate store sales totaled $547.2 million, down 4.2% from $571.1 million sold in the first quarter of 2021. Same store sales fell 4.5%. But when compared to the first quarter of 2020, same store sales climbed 11.9%.
Meanwhile, sales by LFL’s franchise network declined 8.2% to $115.7 million from the comparable period’s $126.0 million.
In its report to shareholders, the company attributed the decrease to a reduction in furniture sales which was partly offset by increases in all other product categories, with delivered mattress sales being up significantly in the quarter.
Management also noted the comparable 2021 period set a new company record in terms of revenue mainly because of an uptick in demand spurred by the various ‘stay at home’ orders issued by provincial governments to fight the COVID-19 pandemic.
“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 said to shareholders, noting when compared to the first quarter of both 2019 and 2020, revenue for 2022 increased by 8.9% and 10.2% respectively.
In a sign suggesting customers are returning to in-store shopping, LFL noted e-commerce accounted for 15% of sales in the first quarter, down from 21.6% of sales for the same period last year. That’s a year-over-year sales decline of approximately 55%.
Net income was $24.8 million or 36 cents per diluted share compared to $40.9 million or 51 cents per diluted share recorded – a drop of 29.4% on a per share basis. When compared to the first quarter of 2020, net income increased by 81.0%, or $11.1 million.
“Supply chain and consumer inflationary pressures are likely to persist through 2022, and we expect the retail landscape to remain challenging as a result,” LFL president and chief executive officer Mike Walsh said.
“Today, the company is better positioned than ever to continue gaining share in a fragmented sector where smaller players are likely to feel a disproportionate amount of the current market pressures,” he continued, adding, “LFL’s national omnichannel retail and distribution platform provides an enduring competitive advantage. The company has the ability to source product in bulk and manage inventory flow. The preferred retail financing arrangement will ensure we are able to offer our best rates to customers. This is a business with tremendous earning power, backed by a rock-solid balance sheet and 4.8 million square feet of owned real estate.”