SCC reports Q2 sales gain
TORONTO – Sleep Country Canada (SCC) reported double digit growth in sales and net earnings for both the second quarter and the first half of 2017. This almost rocket-fueled pace was attributed mainly to strong same strong sales growth in tandem with the addition of nine new stores to the company’s network across the country over the prior 12 months.
For the three months ending June 30, 2017, total revenues were $133.0 million, up 10.7% from $120.2 million for the second quarter of 2016. Same store sales increased by 7.5%, building on SSS uptick of 12.6% for the comparable period.
The company also reported mattress revenue increased by 12.6% during the quarter to $106.4 million – compared to $94.5 million for the prior period. Meanwhile, accessories revenue gained 3.9%, rising from $25.7% million to $26.7 million.
Net income was $11.2 million or 30 cents per share, compared to $9.7 million or 26 cents per share representing an increase of 15.8%. The increase was attributed to an uptick in EBITDA (earnings before interest, taxes, depreciation and amortisation) and lower finance related expenses which were partially offset by a higher income tax expense.
In his remarks, SCC president and chief executive officer David Friesema noted the company launched is new corporate web site and e-commerce platform during the quarter. The e-commerce platform features its Bloom mattress-in-a-box; Ploom pillows; a collapsible box spring; and, a full line-up of accessories.
While senior management doesn’t expect the e-commerce initiative to make a significant impact on top line performance in the near future, “they are really happy with the results so far,” Friesema told analysts, noting that since the Bloom video was posted in early June it has been viewed 1.8 million times while the number of transactions have growing weekly.
The site has also been driving traffic into the stores, he said.
During the quarter, SCC also relocated two of its distribution centres into one centralised location in Richmond, British Columba while relocating and enlarging its distribution centre in Calgary.
For the six months that also ended June 30, 2017, total revenues were $257.3 million, a 13.1% increase from the $227.5 million recorded for the first half of 2016. Same store sales were up 9.5% and a total of nine new stores were added to the network over the prior 12 months.
Mattress revenue was $204.6 million, up 14.3% from $179.0 million for the comparable period last year. Accessory revenue increased by 8.7% from $48.5 million to $52.8 million.
The net income for the first half was $21.5 million or 57 cents per share, a gain of 26.4% over the $17.0 million or 45 cents per share for last year’s comparable period.
SCC also noted that, historically, the first half of the year accounts for 43% of its annual revenue.
Friesema said senior management believes the company “is well-positioned to continue to grow revenue, profitability and cash flows” over the balance of the year, which will host a number of initiatives including:
- The opening of an additional four stores, including one opened in July;
- Growing SSS by continued investment in advertising and sales training;
- Renovating another 10 stores to its enhanced design;
- Ramping up the e-commerce platform and testing a few new product lines to be offered exclusively online;
- Relocating the Toronto distribution centre in the fourth quarter; and,
- Expand merchandising opportunities in accessories.