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The 2019 CFS market wrap

17 June 2019
Community, Events

TORONTO – Normally, I’m the voice of HGO’s wrap-up of that year’s Canadian Furniture Show, but due to circumstances beyond my control (the development of some unexpected health problems), Marie-Eve Boucher and her colleague, Tony Melis, stepped up to fill the void.

Their report can be scene here.

Tony Melis and Marie-Eve Boucher are seen here on the mezzanine of Toronto’s International Centre, providing this year’s market wrap.Boucher is the events and communications director for both CFS and the Quebec Furniture Manufacturers Association while Melis serves as director of the CFS.

In the report, Melis notes that “attendance has been fantastic, we’re very encouraged by the latest registration numbers that we’ve received in the last couple days. The floor is hopping. If your buying or selling or just want to take in the latest trends, this is the place to be.”

Meanwhile, Boucher enthused about the Trend Showcase, built by the Toronto-based interior designer Linda Mazur and that showcased the best of what CFS exhibitors had to offer. “Linda and her team chose the best products, most beautiful products, and set it up in a great showcase with rooms built around the furniture,” she said. “It was absolutely great and the place to find out what people are going to want in the next few years.”

One of the highlights of 2019 – and one that’s shaping up to be repeated in 2020 – was the international pavilions and exhibitors seen on the floor at the International Centre. “We’re getting people from Spain, Belgium and more Turkish delegations,” Boucher said. “They want to come to Canada to open the North American market and this is a great place for them to do that.”

The 2020 edition of the Canadian Furniture Show will be held at the International Centre here from 16 to 18 January – returning to its historic place as the first furniture trade show of the year.

“2020 is shaping up to be a great year,” Tony Melis enthuses.

Oh, by the way, I’m back in the office now. My life has changed a little. But then, developing congestive heart failure will do that to you. Don’t worry, I’m not going anywhere – retirement is still two or three years off, so I’ll be back with next year’s market wrap-up.

Related Story: Innovation steals the CFS spotlight

GoEasy’s beating heart

17 June 2019

The lease-to-own business has changed radically over the past decade or so. Forty years ago, most couples starting out in life thought nothing of renting their first television. After all, in those days these electronic devises were expensive in relation to the family income. But in many ways, they aren’t all that different from traditional retailers and are subject to same economic forces.

When we profiled David Ingram, then president and chief executive officer of Easyhome back in 2011, he stressed they were, indeed, retailers. “We see ourselves as retailers because we do all of the things that retailers do,” he told us back then. “How we fund the sale is what makes us different.”

It should be noted he’s now executive chairman of GoEasy, the corporate parent fashioned in 2015 to house both Easyhome and Easyfinancial, the short-term consumer loan specialist launched in 2006.

Easyhome operated some 164 stores across the country at the end of 2018. While the store count has fallen over the past few years, it’s now stable. Since the financial crisis of 2008, Easyfinancial has been the company’s star performer. It’s grown exponentially over the past few years and has captured the attention – and the adoration – of Bay Street analysts. In 2018, Easyfinancial accounted for 72.8% of GoEasy’s total revenue. That’s $368.3 million of $506.2 million. The year prior, it accounted for 65.8% total revenue.

Easyfinancial’s loan portfolio is expected to break through the $1 billion barrier sometime in the next 18 months or so. In fact, when reading GoEasy’s quarterly and annual reports – it’s one of the four publicly-held furniture retailers in this country (the others being Leon’s Furniture Limited; Sleep Country Canada Holdings; and, BMTC Group) – one could easily come to the conclusion Easyfinancial is the only part of the company that matters.

But senior management says that’s not true. Easyhome remains the beating heart of the company and the foundation on which everything else is built.

It’s true Easyhome hasn’t fared as well in recent years even though it remains this country’s largest big-ticket leasing merchant. Until last year, when sales recorded a modest uptick, they had fallen in each of the past five years from $158.3 million in 2014 to $137.7 million in 2018.

Easyhome has also seen its store count drop from 192 in 2014 (the year after the company exited the merchandise leasing market in the United States) to 165 last year, made up of 134 corporate stores and 34 franchise locations across the country. It’s monthly potential lease revenue also fell in 2018 – to $9.1 million, down 3.6% from $9.5 million the year before.

There’s only one way to go
Steven Poole, GoEasy senior vice president of operations and merchandising, firmly believes Easyhome has bottomed out – or, as he put it, stabilised. But more importantly, he waxes enthusiastically about its future.

“My sole responsibility is Easyhome – to make sure Easyhome continues to thrive,” he told Home Goods Online in an interview. “And we’re coming off our best year in about ten years. And in the fourth quarter, our same store sales were up 7%.”

Click read for the rest of our report on the HGO Merchandiser…

Casper expands Canadian ops

17 June 2019
Mattresses, Retail

NEW YORK – Online mattress merchant Casper has made several aggressive moves to strengthen its position in the Canadian market in recent weeks with the opening of a new Canadian headquarters, announcing the addition of two new brick-and-mortar stores as well as that it has started to manufacture at least some of its product in this country.

These moves follow the addition of Dani Reiss, president and chief executive officer of Canada Goose to the company’s board of directors.

“Around the world, Canadian-made products are recognised and trusted for their superior quality and performance,” said Reiss. “As a lifelong advocate for Canadian manufacturing, I am thrilled that Casper will now be producing products in Canada.”

Casper is expected to open new brick-and-mortar stores in Calgary and Vancouver in the not-too-distant future.In a statement, Casper said both the Casper and Essential mattresses are now being made in Canada and are being shipped across all provinces and territories. However, the company didn’t say where they were being made.

“Casper’s continued investment in Canada helps accelerate our vision of becoming the world’s largest end-to-end sleep company,” Casper co-founder and chief executive officer Philip Krim said. “Expanding our operations in the region allows us to meet growing demand across the country and increases our ability to produce best-in-class products, bringing better sleep to more Canadians.”

The sleep company has also opened a Canadian headquarters in downtown Toronto to support its operations in this country.

“Over the past four years, we’ve seen tremendous growth in Canada and amassed a loyal customer community,” said Nicole Tapscott, Casper Canada’s vice president and general manager. ‘With our Canadian headquarters officially open and Canadian-made mattresses now shipping, we’re excited to deepen our local roots and commitment to the market.”

Casper has also opened two physical stores in Toronto – one downtown and the other in CF Sherway Gardens, one of the city’s largest shopping centres – and according to industry newsletter Retail Insider, it has plans to open addition store in Vancouver and Calgary in the not-to-distant future.

Currently under construction is a 2,200 square foot showroom in Calgary’s Chinook Centre, which is owned and operated by shopping mall giant Cadillac Fairview (CF).

Retail Insider said it will be located near the entrance to the mall’s Nordstrom anchor store and be surrounded by other power retailers such as Microsoft, jewelry retailers Birks and Tumi, a high-end leather goods purveyor.

“CF Chinook Centre is the leading shopping centre in southern Alberta in terms of overall sales-per-square-foot productivity and tenant mix and is anchored by Hudson’s Bay as well as Alberta’s only Saks Fifth Avenue and Nordstrom stores,” Insider said, adding, “As well, Louis Vuitton opened a standalone store in the centre last year and more big names are on the way.”

Although a firm date hasn’t been set, Insider also reported Casper will open its first Vancouver storefront – located at 2294 West Fourth Avenue in that city’s trendy and upscale Kitsilano area – in the near future.

Casper has also acknowledged it plans to open more stores in Ontario as well as in Quebec, where it experimented with a couple of pop-up stores last year.

Casper was founded in New York City in 2014 as a direct-to-consumer online retailer. It boasts a number of celebrity backers such as Leonardo DiCaprio, Tobey Maguire, Adam Levine and Ashton Kutcher. It recently announced the close of US$100 million in new funding that it will invest to fuel the company’s growth and said revenues for 2018 were over US$400 million. Canadian revenues were not disclosed.

In addition to its global e-commerce business, Casper owns and operates more than 20 sleep shops across North America, and its products are also available in Canada at Hudson’s Bay, Indigo, and EQ3.

BMTC declares 1Q loss

17 June 2019
By the Numbers, Retail

MONTREAL – Mounting household debt and a decline in household consumption throughout Quebec plagued its largest full-line furniture, mattress and major appliance retailer, publicly-held BMTC Group, in the first quarter of its current 2020 fiscal year.

For the three months ending 30 April 2019, the company said revenues were $149.7 million, down 7.7% from $162.2 million for corresponding period last year. Same store sales were also down 7.7% for the quarter.

The net loss for the quarter was $3.46 million or 10 cents per share, reversing net earnings of $4.8 million or 13 cents per share recorded for comparable period.

BMTC changed its fiscal year to 31 January effective in 2018.

The company noted its current share repurchase program earned one cent per share during the first quarter. There were no other extraordinary items impacting the bottom line.

In her note to shareholders, president and chief executive officer Marie-Berthe Des Groseillers noted the new Brault & Martineau store in the Montreal suburb of St-Therese open last week (12 June 2019). The store is the prototype for the planned redesign of the banner.

The old Brault & Martineau will be converted into an EconoMax outlet and is scheduled to open sometime this August.

Des Groseillers told shareholders the retailer is being bracketed by macro-economic factors. “The significant drop in Quebec household consumption due to socio-economic factors as well as the significant increase in their level of indebtedness over the past few years has impacted the company’s results as of January 31, 2019 and continued during the course of the first fiscal quarter of 2020.”

She also pointed out household debt in Quebec has reached $1.70 for every $1.00 in disposable income and one-third of all Quebeckers live paycheque-to-paycheque. “If this trend continues, the company could experience in the first fiscal semester (half) of 2020 a significant revenue decline,” she warned.

BMTC board election
In a related announcement, the company said that all members of its board of directors were re-elected at its recent annual general meeting.

In addition to Marie-Berthe Des Grossillers and long-time chairman Yves Des Groseillers, the board is comprised of:

  • Lucien Bouchard, former premier of Quebec and a partner in the Montreal law firm of  Davies Ward Phillips & Vineberg;
  • André Bérard, lead director;
  • Gabriel Castiglio, partner in the Montreal law firm of Fasken Martineau DuMoulin;
  • Charles Des Groseillers, vice president of A. Bélanger, an investment firm and a significant shareholder in BMTC that is controlled by the Des Groseillers family;
  • Anne-Marie Leclair; partner and vice president of strategy and innovation at LG2, a Montreal-based advertising and communications firm; and,
  • Tony Fionda, senior vice president of Remstar Capital, a private investment and consulting firm.

BMTC Group operates 32 stores in Quebec under the Ameublements Tanguay, Brault & Martineau and Economax banners.

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Home Goods and its accompanying newsletter - HGO This Week - covers the furniture, bedding, appliances, consumer electronics, accessories, lamps and lighting and floor coverings product sectors of the big ticket home goods market in Canada. HGO is also a forum for the dissemination of market research and hard-hitting articles on best practices for Canadian retailers.

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