SCC 3Q sales up 14%
TORONTO – Sleep Country Canada Holdings (SCC) continued to solidify its position atop this country’s mattress market, reporting upticks in revenue for both the third quarter and the opening nine months of 2019. But net income and earnings per share are down significantly, as the publicly held retailer continues to build its store network and up its advertising spend.
For the three months ending 30 September 2019, revenue was pegged at $210.0 million, up 14.2% from $183.9 million for the same period last year. Same store sales were up 0.5% year-over-year.
The uptick was attributed to the addition of 15 new stores over the trailing12 months as well as the inclusion of direct-to-consumer platform Endy, which SCC acquired in December 2018.
SCC said both mattress and accessory sales made strong gains in the third quarter. Mattress sales increased 14.0% from $146.2 million to $166.7 million. Meanwhile, accessories revenue increased by 14.9%, from $37.7 million to $43.3 million.
Operating EBITDA (earnings before income taxes, depreciation and amortisation) jumped 31.5% to $49.6 million – or 23.6% of revenue – from $37.7 million last year, which was 20.5% of revenue.
During the quarter, SCC opened four new stores, three under the Sleep Country banner and the fourth, a Dormez-vous outlet in Chicoutimi, Quebec. As part of its investment in Endy, the company said its advertising spend for the period was $17.9 million – substantially higher than the $11.5 million spent in the comparable period.
Net income for the period was $21.5 million or 58 cents per share, compared to $23.7 million or 64 cents per share – a decline of 9.4% on a per share basis.
For the nine months also ending 30 September 2019, revenues were $525.9 million, a 13.6% gain from the $462.9 million generated for the comparable period of 2018.
SCC attributed the gain to the Endy acquisition, the 15 new stores opened during those 12 months and the expansion of its accessory product assortment – all of which was partially offset by a 0.2% decrease in same store sales.
Mattress revenue increased by 13.2%, from $370.4 million to $419.1 million while accessories revenue increased by 15.4%, from $92.5 million to $106.8 million.
The net income for the year-to-date $41.4 million or $1.12 per share, compared to $46.3 million or $1.25 per share for the 2018 period – a decline of 10.4% on a per share basis. The drop was attributed to higher administrative and finance expenses, which was partially offset by higher gross profits and a decrease in income tax.
"As we celebrate our 25th year in business, I am pleased by our powerful track record of profitable growth and the results of our exciting omnichannel agenda,” SCC president and chief executive officer David Friesema said in a statement. “This quarter, our team drove strong financial performance as evidenced by 14.2% topline revenue expansion, while simultaneously making significant progress towards our strategic growth strategy.”
He also noted the potential of the Bloom pop-up shops currently operating at two Walmart locations in Ontario while reporting the company is set to launch its new cloud-based Oracle e-commerce platform.
“Our revamped websites will accelerate Sleep Country’s revenue growth by offering our extensive lineup of brand name mattresses and sleep accessories online, ensuring that existing and new customers can research and transact with us wherever, whenever and however they prefer,” he added.
At the end of September, SCC operated some 276 stores and 17 distribution centres across the country as well three retail banners including Dormez-Vous in Quebec, Sleep Country in the nine other provinces and Endy, the direct-to-consumer mattress merchant.