SCC sees double digit growth
TORONTO – Sleep Country Canada (SCC) continued to fortify its position as this country’s leading mattress and bedding retail power posting double-digit upticks to both sales and earnings during the first quarter of 2017.
For the three months ending March 31, 2017, revenue totalled $124.3 million, a 15.8% gain from the $107.3 million for the same period in 2016. Same store sales advanced 11.9%, slightly higher than the 11.7% for the comparable period.
Growth was fairly evenly distributed between the company’s mattress and accessory segments. Mattress sales were up 16.2% to $98.2 million for the first quarter – compared to $84.5 million.
Meanwhile, accessory sales were $26.1 million, jumping 14.3% from $22.8 million.
During the first quarter, the company opened two new fill-in stores – one in each of Ontario and Quebec – and renovated another 14 to the store design concept first introduced in late 2014. Some 79 SCC stores have been built or converted to the concept to date.
Net income for the period was $10.3 million or 27 cents per share compared to $7.3 million or 19 cents per share – a gain of 42.1% on a per share basis.
“We are pleased to deliver a strong performance with significant year-over-year growth,” SCC chief executive officer David Friesema said in a statement, noting the period was the company’s 15th consecutive quarter of sales store sales growth. “We continue to focus on growth through driving more traffic into our stores, an exceptional in-store experience, new store openings in select markets, increasing our accessory revenue and renovating select stores to our enhanced store design. Our strong Q1 result demonstrates that our strategy continues to work…”
Looking out to the rest of the year, SCC management has laid out several key initiatives including opening as many as nine addition stores; growing its investment in advertising and sales training; and, renovating as many 16 stores to the enhanced design.
Earlier this month, the company opened its new Calgary distribution centre and plans to relocate and expand three others over the coming months at a cost of about $8 million. The two in Vancouver will be consolidated when the new facility opens at the beginning for the third quarter of 2017. The Toronto distribution centre will be relocated at the beginning of this year’s fourth quarter.
While this project will create a drag on EBITDA (earnings before interest, taxes, depreciation and amortisation) of about $1 million, management believes their completion “will improve efficiency and grow distribution capacity for the long term."
SCC also brought its long awaited e-commerce platform online earlier this month and noted its drag on EBITDA this year could be as great as $1.5 million.
“Management believes, longer term, it will become a greater opportunity to expand Sleep Country’s reach to a broader mix of customers with a larger product offering,” the company told shareholders. “This platform is designed to provide convenience to the customers in existing markets and introduces the ability to shop Sleep Country’s brand in the markets where Sleep Country’s stores are not conveniently located.”
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