Slight uptick in sales marred by sharp earnings decline for BMTC in 2014
MONTREAL (25 February 2015) - BMTC Group, the largest full-line furniture retailer in Quebec and the third largest in Canada, enjoyed a solid uptick in sales for the fourth quarter, resulting in a modest increase for the year. But tough economic conditions in Quebec drove a subsequent downturn in net earnings.
For the three months ending December 31, 2014, BMTC revenues totalled $183.1 million, a 5.1% gain over the $174.2 million for the same period of 2013. Same store sales growth of 0.8%, reversing the decline of 4.2% a year ago.
Net earnings were $17.8 million or 40 cents per share compared for $26.6 million or 58 cents per share for the fourth quarter of 2013 - a 31.0% decline on a per share basis.
The company's ongoing share repurchase program accounted for a loss of two cents per share for the entire 2014 year.
For the year ending December 31, 2014, BMTC revenues were $701.3 million, a modest 1.0% improvement over the $694.6 million rung-up for the prior year.
Net earnings for the year were $48.6 million or $1.08 per share, compared to $57.2 million or $1.24 for the prior year - a downturn of 12.9% on a per share basis.
However, the company noted that total customer orders for the 2014 year were up 2.0% or $14.4 million at $722.4 million. Orders are counted as revenue until the product is delivered to the customer. BMTC also admitted the surge in order writing took place mostly during the fourth quarter.
In a note to shareholders, Yves Des Groseillers, BMTC's long serving chairman, president and chief executive officer, attributed to the downturn to an incredibly difficult economic environment in Quebec, the only Canadian province in which it operates.
"The Quebec economy remained under pressure throughout the year," he wrote. "During 2014, more than 100,000 jobs were lost in the province of Quebec alone. Also, the real estate sector has experienced an important slowdown. This weakness in our economy translates to a significant decrease in consumer spending in our business sector."
He said BMTC was able to maintain its leadership position in the Quebec market because of its solid management and financial position as well as its aggressive marketing campaigns.
"During the last quarter of 2014 the company saw its revenues increase substantially compared with the corresponding period of 2013," Des Groseillers said, adding, "Management believes that this trend in revenue growth will remain in 2015 due to the considerable decrease in gas prices and the additional decrease in interest rates. This should improve considerably consumer spending in 2015."
He also reported that during 2014, BMTC completed an upgrade of all its web sites and plans to implement a distinct e-commerce platform for each of its three banners throughout 2015. The company will also standardise its IT systems across all of its banners and align them with the new e-commerce strategies, a process that is expected to take about 18 months.
Over the past year, the company spent $3.5 million to upgrade and replace all of the external signs on all of its Brault & Martineau stores and is planning to remodel each store's furniture and electronics departments.
"The strategy behind this remodeling is to offer our clients a unique experience in our store that will help allow us to differentiate ourselves from electronic commerce," Des Groseillers said.
The company added two units to its high-impact Economax banners last year - one in LaSalle and the other in the Joliette suburbs of Montreal - the costs of which were also charged to the 2014 fiscal year.
This coming April, another Economax will be opened in Granby, Quebec while the BMTC has acquired land in Drummondville for another unit that is expected to open later in 2015. This banner will end the year with 11 stores, becoming BMTC's largest banner.
BMTC has also purchased a 200,000 square foot parcel of land in Trois-Rivières on which it intends to build a new Ameublements Tanguay store, although no start date for the project has been decided. It also closed Tanguay's electronics store in Place Laurier, a Quebec City shopping mall, when its lease expired.
In all, BMTC operates 36 stores under its three banners - which includes Brault & Martineau Sleep Gallery, which operates both in-store galleries and stand-alone stores.