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BMTC sales, earnings slide

11 December 2018
By the Numbers, Retail

MONTREAL – Increasing debt levels, coupled with rising interest rates had a negative impact on consumer spending in Quebec, which was reflected in the fiscal third quarter sales and earnings for BMTC Group, this province’s largest retailer of furniture, mattresses and major appliances.

For the three months ending 31 October 2018, company revenues were $184.1 million, down 9.6% from the $203.8 million recorded for the three months ending 30 September 2017. Same store sales were up an extremely modest 0.3%.

BMTC shifted its fiscal year end from 31 December to 31 January at the beginning of 2018.

Net earnings for new fiscal third quarter were $11.6 million or 34 cents per share, compared to $17.5 million or 48 cents per share for the corresponding period ending 30 September 2017 – a drop of 29.2% on a per share basis.

The company noted no stock options were exercised during the quarter and, therefore, had no impact on earnings, although the results of the ongoing ‘normal course issuer bid’ contributing three cents per share to third quarter earnings.

For the nine months also ending 31 October 2018, revenues were $565.9 million – advancing a slight 0.2% from the $565.0 million for the nine months ending 30 September 2017. Same store sales growth was pegged at 2.5%.

Net earnings were $33.3 million or 95 cents per share, compared to $31.6 million or 86 cents per share – a 10.5% gain on a per share basis.

Once again, no share options were exercised during the first nine of the fiscal year and the share buy-back program added four cents per share to earnings. Earlier this year, BMTC sold is Brault & Martineau store in Repentigny for $9.0 million which resulted in an after-tax gain of $4.5 million that added 13 cents per share to earnings.

In her report to shareholders, Marie-Berthe Des Groseillers, BMTC president and chief executive officer noted the opening of the new St-Therese store has been delayed to May 2019. This unit is to serve as the new prototype for the Brault & Martineau banner. Should the new model be successful, BMTC will renovate existing stores and possibly build new ones later.

However, the market in Quebec seems to be cooling.

“The Quebec economy in 2017 has experienced the most important growth since the last recession in 2008. This trend was in line with the semester [first half] of 2018, although the third quarter showed an important decline,” Des Groseillers remarked, adding other factors also seem to be in the company’s favour, such as the low unemployment rate.

However, pay scales has not kept pace and 34% of Quebeckers live ‘pay-to-pay-cheque’ and because of their increasing debt burden, aren’t saving. “The continuing trend of interest rate increase during 2018 would certainly risk to further undermine this situation and would therefore have a negative impact on consumer spending. This reality seemed to have impacted the third quarter of 2018, with a decline in consumer spending, which was reflected in the company’s results as it only recorded a 0.3% increase in same store revenues for comparable periods,” she said.

“The retail sector is in complete transformation. The e-commerce and the client's shopping experience are at the heart of this transformation,” she continued, adding this is why BMTC is investing in a new store model.

At the end of its fiscal third quarter, BMTC operated a total 32 stores across Quebec under three banners: Brault & Martineau; Economax and Ameublements Tanguay.

SCC closes Endy purchase

7 December 2018
By the Numbers, Retail

TORONTO – Sleep Country Canada Holdings (SCC), parent to this country’s largest specialty mattress retailer, has closed its previously announced acquisition of e-commerce purveyor Endy Sleep, saying the deal brings together two Canadian leaders in sleep and positions both to better serve Canadian customers coast-to-coast, online and in-store.

SCC acquired all of Endy’s assets for $88.7 million – $63.7 million in cash at closing, with up to an additional $25 million in early 2021 should certain growth and profitability targets be achieved in 2020.

“This is an exciting day for all of us at Sleep Country and Endy,” SCC chief executive officer Dave Friesema said in a statement. “We truly feel that our organisations complement each other perfectly in our entrepreneurial spirit, approach to sleep, operations, culture and dedication to customers. We look forward to a bright future alongside Endy.”

“Today's announcement marks a major milestone for Endy, as we begin this new chapter as part of the Sleep Country family and continue on our mission to change the way Canadians sleep,” Endy’s co-founder and chairman Rajen Ruparell added. “We are thrilled to have a partner that is truly best-in-class as we strive to provide Canadians with a better night's sleep, and a more convenient way to buy a mattress.”

Moving forward, SCC two’s banners – Sleep Country Canada and Dormez-Vous – will continue to operate separately from Endy. All existing employees will remain with both companies. The only structural change will be that general oversight of the Endy business will be provided by a board comprised of the SCC’s senior management and Endy. This group will be chaired by Ruparell.

Endy’s other co-founder, Mike Gettis, will continue to serve as its CEO.

As of 30 November 2018, SCC operated 264 stores and 16 distribution centres across the country.

Related Story: Sleep Country buys Endy
Related Story: Sleep Country’s smart move

Macdonald’s celebrates 65

3 December 2018
Appliances, Furniture, Mattresses, Retail

MEAFORD, Ontario – What is today known as Macdonald’s BrandSource here started life 65 years ago as a retail hardware store, but it wasn’t long before brothers Charlie and John Macdonald realised their fortunes were to be found in the furniture and major appliance business.

The company, which is now managed by Charlie’s son Greg, held a four-day celebration this past summer that included bar-be-ques, music and antique cars.

Charlie Macdonald (left) is seen here with his son, Greg, the second-generation president of Macdonald’s BrandSource in front’s of the store’s story wall, erected to celebrate their 65th anniversary.When they first started, the Macdonald brothers organised sales in the local arena as it was few facilities available at the time to properly display big ticket home goods.

The moved into their current location in 1979 – a 42,000 square foot building on the highway, which also serves as this small Ontario community’s main road.

When asked, Charlie Macdonald – a well known member of the Saskatoon-based Mega Group – said he was most proud of their reputation for taking care of the customer. At 87, he still spends time each week in the store, greeting his customers. “I just can’t believe it; we knew how to work, and we still do,” was his response when a local newspaper asked him how he felt about the store’s 65th anniversary.

In a statement, Don Burnett, banner director for BrandSource Home Furnishings, noted the Macdonald family are “tremendous stewards of their community, supporting the families and youth of Meaford in various programs at the community centre. In addition, the family is well known for its support of the Meaford Hospital Foundation.”

In a prominent place within the store there’s a display wall detailing the Macdonald’s history, including the original articles of incorporation and seal and certificate along with images from their archives.

Charlie’s son, Greg, is now president of this growing business, assisted by his son Tommy and grandson Hunter.

The Golden Town Cruisers showcased a collection of vintage cars in front of Macdonald’s BrandSource as part of the retailer’s 65th anniversary celebration, which also including food, music and a trip down memory land.These days, Macdonald BrandSource sells their products and services to a mix of clientele from permanent residents to those who have seasonal retreats in the southern Georgian Bay area. Being just over an hour from the largest market in the country – the Greater Toronto Area – gives them additional growth opportunities.

“To organise our 65th celebration we determined to ensure there were events that involved the entire family. This is something that extends from our family to the families of our customers,” Greg Macdonald said. The four-day event included a local DJ with space in the parking lot for folks gather, listen to the music and enjoy food from the BBQ. At various times there were over 450 people in the store.

One highlight was a visit from the Golden Town Cruisers, who showcased a collection of cars from the 1930s.

Greg Macdonald made a point of noting a major part of their success has come from the relationships they have developed with their vendor partners. “Being part of the MacDonald’s family is very important to us here at Springwall,” said Jack Szendry, sales manager of Springwall Sleep Products.

During his four years as president, Greg Macdonald has spearheaded several changes to the single-unit independent retailer including expanding the brand assortment in his appliance department, which now features names like KitchenAid, Wolf, Sub Zero, Whirlpool, Maytag, Fisher& Paykell, Electrolux, Frigidaire Professional, GE, Bosch, and Bertazzoni. He also added an outdoor cooking shop, where the show Napoleon Grills, Big Green Egg and other product lines.

Another recent addition is the sleep shop, which features assortments from Beautyrest, Springwall and Tempur-Pedic.

He has also added several galleries to the furniture department, from La-Z-Boy, England Upholstery, Palliser and Signature Design by Ashley. In addition, they have expanded their upholstery assortment from Canadian producers such as Décor Rest, Superstyle and its sister company, Trend-Line.

The marketing plan for the anniversary event included both traditional and digital media. MacDonald’s was featured on local radio and developed a special flyer as part of the event package. The plan also included targeted e-mails; Facebook marketing; the distribution of 75,000 direct mailers plus $20,000 in product give-a-ways.

Greg Macdonald gave much of the credit for the plan’s development to the support received from Mega Group. “Without the assistance of Don Burnett through the past four years and the digital transformation from Mega BrandSource we just couldn’t have made this happen,” he said, adding, “We achieved sales far higher than our expectations; in just four days we achieved the same sales results as in a normal month and, even more importantly not only did we strengthen our ties with our customers, we also developed relationships with new consumers in the market through our social media efforts.”

Samsung tops WOW survey

3 December 2018
Retail

TORONTO – The Samsung Experience gave the highest ranked customer experience to those walking through its doors in 2018, according to the annual WOW study conducted by research and polling firm Leger. The study measures performance in 16 dimensions of the in-store customer experience, considering their relative significance in areas such as product quality, price competitiveness, employee courtesy and store atmosphere, among other factors.

This year’s online survey covered more than 160 retailers across Ontario and received responses from more than 15,000 consumers living in Canada’s largest retail market. It was conducted between mid-September and mid-October. At least 400 recent customers from each retailer – who were divided into some 18 categories – in the study were interviewed.

The Samsung Experience store led this year’s WOW survey for furniture and electronics stores in Ontario, according to the report published by Leger. Seen here is the entrance to the electronic and appliance specialist’s newest Toronto location in the Eaton Centre downtown. The index is a number between 0 and 100. At 95.1, the retailer with the highest score overall was M&M Meat Shops.

Samsung scored 82.3 in the Furniture, Kitchen, Decoration and Electronics category just ahead of the 82.0 scored by the Microsoft Store.

Ranked in the fifth position with an index of 72.7 was Sleep Country Canada, which was a tie with Crate & Barrel. Next on the list in seventh place with an index score of 71.1 was IKEA Canada.

Right behind IKEA was Bowring, whose index of 71.0 wasn’t enough to stave off the bankruptcy proceedings its parent company initiated a few weeks ago.

Rounding out the home goods list was Stokes, the kitchen, table and giftware specialist; Staples; and, two home furnishings specialists that sell a fair amount of occasional and accent furniture: Bed, Bath & Beyond and HomeSense.

For the first time, Leger added a digital component to the study, asking consumers to rank retailers according to their online experience. Some 10,000 Canadians were asked about their experiences on some 116 transitional sites.

To introduce its results, the company said 83% of respondents had made at least one purchase via a retailer’s web page or mobile app over the past year.

In something of a surprise, Wayfair was ranked at 50 out of 116 with an index of 76.2 – it was the only ‘pure play’ e-commerce furniture and furnishings retailer included in the survey.

Other furniture and mattress powerhouses on the list included Costco Canada at number 17 with an index of 82.8; Hudson’s Bay at 25 and 80.4; IKEA Canada at 39 with an index of 78.6; and, The Brick, whose index of 65.7 placed them at 101.

For more information, check out Leger’s web site at leger360.com.

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