SCC reports robust Q1 growth
TORONTO -While Canada’s economy has been slowing overall in recent months, one of the country’s best-known mattress retailers is reporting positive growth in the first quarter of 2019.
In a recently released financial statement, Sleep Country Canada announced that the company experienced 10.4 per cent revenue expansion from the beginning of the year until March 31, 2019, while “continuing to invest in accelerated growth strategies.”
The company, which purchased popular online mattress retailer Endy in late 2018, says that continued increase in market share and recent investments strengthen its position as a leading omnichannel retailer and solidify its long-term, profitable growth.
As far as financial highlights go, Sleep Country reports revenue increased 10.4 per cent to $149.3 million from $135.3 million in the first quarter of 2019--the first full quarter with Endy. Mattress revenue increased 9.6 per cent to $118.7 million from $108.3 million; accessories revenue grew by 13.6 per cent to $30.7 million from $27 million; gross profit increased 24.7 per cent to $42.4 million from $34 million and gross profit margin expanded to 28.4 per cent from 25.1 per cent.
Sleep Country says its operating earnings before interest, taxes, depreciation, and amortization increased 52.6 per cent to $29.5 million (19.7 per cent of revenue), from $19.3 million (14.3 per cent of revenue).
At the store level, the news is a little different. Sleep Country says same store sales decreased by 3.4 per cent, on top of 5.1 per cent growth. The major retailer opened a new store in recent months and renovated 13 others.
Expanding its connections with well-known companies further, Sleep Country launched a partnership with Walmart.ca to offer the full Bloom collection. Capitalizing on the gradual consumer shift to e-commerce, the company also launched the Simba Hybrid mattress online while continuing to roll the product out in stores.
Some 2018 highlights include increasing dividends by 5.4 per cent to $0.195 per share per quarter; the opening of the three new stores (including the first interior mall store for Dormez-vous?) and introducing crib mattresses to its offerings.
The company also announced the retirement of co-chair Stephen K. Gunn.
"We're excited about the significant investments we continue to make to increase our growth in multiple channels and grow our customer base, taking greater market share. Those investments include: the acquisition of Endy, partnerships with Simba and Walmart, advertising spend and brand evolution to 'All for Sleep', increasing our accessories offering, and a new cloud-based Oracle eCommerce platform and ERP, all of which support our long-term, profitable growth strategy and reinforce our position as Canada's premier omnichannel sleep retailer," said Dave Friesema, Chief Executive Officer, Sleep Country Canada.
"While reported same store sales were softer than expected in January and February, not surprising given the weather, they improved in March. Our conversion rate was strong and we believe we took market share in both the mattress and accessories categories. This includes posting the strongest opening quarter for bedding accessories in Sleep Country's history. Our rapidly growing online presence, 269 strategically located stores, 16 distribution centres and established white glove delivery service collectively put us in a unique position to best serve today's omnichannel customer."
Friesema said the company also experienced double-digit accessories growth as a result of an expanded assortment of innovative bedding essentials and an investment in targeted advertising. He says the brand’s new stores continue to exceed expectations, demonstrating that Sleep Country’s real estate strategy is effective in driving results.