Second quarter sales, earnings fall for Sleep Country
TORONTO – The COVID-19 pandemic severely impacted second quarter sales and earnings for Sleep Country Canada Holdings (SCC), the parent company to this country’s largest mattress retailer reported last week. All its 276 stores were closed for 54% of the 13 weeks comprising the period, although investments in its digital roadmap at least partially offset the drop in sales.
The publicly held retailer said revenues for the three months ending 30 June 2020 were $114.9 million, down 31% from $166.6 million for the same period of 2019.
Mattress sales were set at $90.1 million, down 32.6% from $133.7 million for the comparable period. Accessory sales fell 24.6% to $24.8 million from $32.9 million.
The company said the drop in instore sales was partially offset by “strong triple digit growth” in e-commerce, although specific dollar figures were not revealed. Analysts believe e-commerce accounted for, on average, 8.5% of ‘normalised sales’ in the second quarter, up from an estimated 5% for the same period last year.
All of SCC’s brick-and-mortar stores, which operated under the Dormez-vous? banner in Quebec and Sleep Country across the rest of Canada, were re-opened by mid-June.
The net loss for the second quarter was $500,000 or one cent per share, reversing the comparable period’s net earnings of $12.2 million of 33 cents per share. Adjusted net income was $5.0 million or 14 cents per share compared to $12.5 million or 34 cents per share last year – a 58.8% drop on a per share basis.
For the first six months of the year, also ending 30 June 2020, revenue was $266.5 million, down 15.6% from $315.9 million for the first half of 2019.
Mattress sales were pegged at $212.6 million, off 16% from the comparable period’s $252.4 million. Accessory sales were down 14.3% at $54.4 million, from $63.5 million.
The stores were closed for 33% of the first half.
Net income for the first half was $6.1 million or 12 cents per share, down 77.8% on a per share basis from last year’s $27.6 million or 54 cents per share.
Adjusted net income was $11.3 million or 31 cents per share, down from $21.2 million or 57 cents per share – a drop of 45.6% on a per share basis.
"Our second quarter results showcase our strategic vision and demonstrate the value and benefit of our ongoing investments in digital platforms and strategic partnerships. Enhanced digital capabilities by Sleep Country and Dormez-Vous?, our 2018 acquisition of Endy, Canada’s largest and most profitable online mattress retailer, and value-add partnerships with Walmart, Simba and Malouf all reinforce our ability to best serve the sleep needs of Canadians any way they choose to shop,” SCC chief executive officer Dave Friesema said in a statement.
“These investments enabled our business to rapidly pivot and serve our existing and growing customer base online, while retaining leading market share through recent economic turmoil,” he added.
“Despite the closure of our entire physical store network for much of the quarter, our channel agnostic strategy and superior brand trust kept us top of mind with Canadians. Our second quarter highlighted the power of our digital infrastructure, which delivered explosive triple-digit e-commerce growth and strong results in this environment. As we navigate through this crisis, we remain confident that our business is best-in-class and poised for continued growth and market share expansion,” he continued.
During the pandemic, Friesema noted the company took several measures to preserve liquidity and ensure business continuity including an expanded senior secured credit facility, reduced executive and board compensation while suspending both the current ‘normal course issue bid’ and the dividend paid on common shares.
“While the Canadian retail landscape remains uncertain in the near-term, our business' positive momentum, differentiated omnichannel infrastructure, financial flexibility and exceptional employees position us well to continue to drive profitable growth and deliver shareholder value well into the future,” he added.
Related Story: Sleep Country opens in Windsor, adds two units in GTA
Related Story: Sleep Country sets reopen plan