Sleep Country Enters its 30th Anniversary Year with Positive Revenue Growth
TORONTO, May 7, 2024 /CNW/ - Sleep Country Canada Holdings Inc. ("Sleep Country" or the "Company") (TSX: ZZZ) released its financial results today for its first quarter ended March 31, 2024.
All financial results are reported in Canadian dollars unless otherwise stated.
- Revenues increased by $3.2 million or 1.6% to $209.7 million in Q1 2024 from $206.5 million in Q1 2023;
- Same Store Sales ("SSS")1 decreased by 1.6% in Q1 2024 from Q1 2023;
- Revenues attributed to eCommerce increased to 24.5% in Q1 2024 from 22.3% in Q1 2023;
- Gross profit increased by $2.1 million to $72.9 million in Q1 2024 from $70.8 million in Q1 2023;
- Gross profit margin increased to 34.8% in Q1 2024 from 34.3% in Q1 2023;
- Operating EBITDA1 decreased by $3.0 million to $38.4 million in Q1 2024 from $41.4 million in Q1 2023;
- Operating EBITDA1 margin decreased to 18.3% in Q1 2024 from 20.0% in Q1 2023;
- Net income attributable to the Company decreased by $2.6 million to $8.7 million in Q1 2024 from $11.3 million in Q1 2023;
- Adjusted net income attributable to the Company1 decreased by $3.6 million to $9.6 million in Q1 2024 from $13.2 million in Q1 2023;
- Diluted earnings per share ("EPS") decreased by $0.06 or to $0.26 in Q1 2024 from $0.32 in Q1 2023;
- Diluted adjusted EPS1 decreased by $0.09 to $0.28 in Q1 2024 from $0.37 in Q1 2023;
- Subsequent to quarter-end, on May 7, 2024, the Board declared a dividend of $0.237 per share payable on May 30, 2024 to shareholders of record at the close of business on May 23, 2024. The dividend was designated as an "eligible dividend" for Canadian tax purposes; and
- Subsequent to quarter-end, the Company completed its acquisition of the remaining 32% of the outstanding common shares of Hush Blankets Inc.
- Launched a partnership with veritree to help mitigate climate change by planting a tree for every delivery completed through the Company's green glove delivery program;
- Generated over 100 million impressions on the "Hour Back Pledge" to acknowledge the potential setback to Canadians' health and well-being resulting from the loss of one hour of sleep from Daylight Saving Time; and
- Donated $100,000 to the Canadian Mental Health Association ("CMHA") advocating for the adoption of healthy sleeping habits by all Canadians.
"This quarter's shopping patterns remained volatile as consumers continue to navigate these uncertain times. Despite this pressure, we saw Revenues increase by 1.6% and delivered an improvement in our gross margin by 50 basis points year over year as we continue to source our merchandise more efficiently," said Stewart Schaefer, President and CEO of Sleep Country.
"As Sleep Country enters its 30th year, we are more bullish than ever before about the future of our sleep ecosystem which has been transformed over the last few years. With our evolved business model, we are better positioned today than at any other point in our history to drive strong performance for years to come," said Schaefer.
"As we invest in all our brands and teams, our focus is continuing to drive innovative ways to grow our share of business, by servicing and exceeding our customers' expectations through our multi-channel approach. Fiscal 2024 will see the evolution of our acquired digital brands as we roll out more of our brick-and-mortar locations while also introducing new innovative merchandise into a tactile environment," said Schaefer.
"We are invigorated like we were in our early days, 30 years ago, to serve a broader customer segmentation with multiple ways to shop enabling Canadians to get their best nights' sleep. No matter what our customers' sleep needs are, our channel agnostic approach with our broad portfolio of the world's most popular brands like Tempur-Pedic, Sealy, Casper, Endy, Kingsdown and so many more, will serve up and delight more Canadians than ever before," concluded Schaefer.
(C$ thousands unless otherwise stated; other than store and share |
Q1 2024 |
Q1 2023 |
Change |
|||
Revenues |
$ |
209,715 |
$ |
206,495 |
1.6 % |
|
SSS(1) |
(1.6 %) |
(6.2 %) |
||||
Gross profit margin (%) |
34.8 % |
34.3 % |
||||
Stores opened |
4 |
2 |
||||
Stores closed |
- |
1 |
||||
Operating EBITDA(1) |
$ |
38,388 |
$ |
41,360 |
(7.2 %) |
|
Operating EBITDA margin (%)(1) |
18.3 % |
20.0 % |
||||
Net income attributable to the Company |
$ |
8,735 |
$ |
11,330 |
(22.9 %) |
|
Adjusted net income attributable to the Company(1) |
$ |
9,557 |
$ |
13,248 |
(27.9 %) |
|
Basic EPS |
$ |
0.26 |
$ |
0.33 |
(21.2 %) |
|
Diluted EPS |
$ |
0.26 |
$ |
0.32 |
(18.8 %) |
|
Basic adjusted EPS(1) |
$ |
0.28 |
$ |
0.38 |
(26.3 %) |
|
Diluted adjusted EPS(1) |
$ |
0.28 |
$ |
0.37 |
(24.3 %) |
Revenues increased by $3.2 million or 1.6% from $206.5 million in Q1 2023 to $209.7 million in Q1 2024 mainly due to incremental revenue earned from new stores, wrap stores opened in 2023, and Casper Canada acquired in April 2023. This increase was partially offset by a decrease in SSS1 by 1.6%.
Gross profit margin increased by 50 basis points from 34.3% for Q1 2023 to 34.8% for Q1 2024 mainly due to an increase in average unit selling prices coupled with lower product costs. This increase was partially offset by higher transportation costs, deleveraging of occupancy costs and depreciation expenses, in addition to higher sales and distribution compensation.
Total SG&A expenses increased by $4.7 million or 9.7% from $48.1 million in Q1 2023 to $52.8 million in Q1 2024 mainly due to an increase in media and advertising costs, compensation, telecommunication and information technology costs and mattresses recycling and donations expenses, partially offset by a decrease in professional fees.
Operating EBITDA1 was $38.4 million for Q1 2024, or 18.3% of Revenues, compared to $41.4 million for Q1 2023, or 20.0% of Revenues, representing a decrease of $3.0 million or 7.2% mainly due to an increase in SG&A expenses, which were also impacted by incremental spend incurred by Casper Canada acquired in April 2023, partially offset by an improved gross profit margin.
Finance related expenses increased by $1.8 million from $6.5 million in Q1 2023 to $8.3 million in Q1 2024 mainly due to higher interest expenses on the Company's lease obligations and its senior secured credit facility, impacted by the higher interest rates and debt levels and a higher unrealized loss on the Company's interest rate swap. These increases were partially offset by a decrease in accretion expense due to lower redemption liabilities related to the Hush acquisition and lower realized losses on the Company's share repurchases under the ASPP.
Other expenses (income) decreased by $1.1 million from expenses of $0.5 million in Q1 2023 to income of $0.6 million in Q1 2024. This change was mainly due to interest income earned on the convertible note receivable and realized gains on foreign exchange, partially offset by unrealized losses on the convertible note receivable and warrant, as well as unrealized losses on foreign exchange.
Income taxes decreased by $1.0 million from Q1 2023 to Q1 2024 mainly due to the decrease in net income before taxes of $3.3 million from $15.7 million in Q1 2023 to $12.4 million in Q1 2024. The Company's effective income tax rate decreased by 10 basis points from 27.9% in Q1 2023 to 27.8% in Q1 2024.
Net income attributable to the Company for Q1 2024 decreased by $2.6 million from $11.3 million ($0.33 per share) in Q1 2023 to $8.7 million ($0.26 per share) in Q1 2024.
Adjusted net income attributable to the Company1 for Q1 2024 decreased by $3.6 million from $13.2 million ($0.38 per share) in Q1 2023 to $9.6 million ($0.28 per share) in Q1 2024.
Note: |
1 See the "Non-IFRS and Other Measures" section of this news release |
Sleep Country's President and CEO, Stewart Schaefer, and CFO, Craig De Pratto, will host a conference call for analysts and investors on May 8, 2024 at 8:00 a.m. ET. The dial-in numbers for the conference call are 416-764-8659 or 888-664-6392. This conference call will be recorded and available for replay until May 15, 2024, 23:59 ET. To listen to the replay, please dial 416-764-8677 or 888-390-0541 and use passcode 047298#.
Sleep Country is Canada's leading specialty sleep retailer with a purpose to transform lives by awakening Canadians to the power of sleep. Sleep Country operates under the retail banners Sleep Country, Dormez-vous, Endy, Silk & Snow, Hush, and most recently acquired, Casper Canada. The Company has omnichannel and eCommerce operations, including 305 corporate-owned stores and 19 warehouses across Canada. Recognized as one of Canada's Most Admired Corporate Cultures by Waterstone Human Capital, Sleep Country is committed to building a company culture of inclusion and diversity where differences are embraced and valued. The Company actively invests in its sleep ecosystem, innovative products, world-class customer experience, communities and its people. For more information about Sleep Country, please visit ir.sleepcountry.ca.
This news release refers to certain measures that are not recognized under IFRS® Accounting Standards and do not have a standardized meaning prescribed by IFRS Accounting Standards, including Same Store Sales or SSS, EBITDA, Operating EBITDA, Operating EBITDA margin, Adjusted net income attributable to the Company, Basic adjusted EPS and Diluted adjusted EPS. For more information on these Non-IFRS and other measures refer to "Non-IFRS and Other Measures" in the Company's MD&A for Q1 2024, which is available on SEDAR+ at sedarplus.ca.
(C$ thousands unless otherwise stated) |
Q1 2024 |
Q1 2023 |
||
Reconciliation of net income attributable to the Company |
||||
Net income attributable to the Company |
$ |
8,735 |
$ |
11,330 |
Add impact of the following: |
||||
Non-controlling interests |
204 |
(37) |
||
Other expenses (income) |
(568) |
540 |
||
Finance related expenses |
8,324 |
6,469 |
||
Income taxes |
3,436 |
4,368 |
||
Depreciation and amortization |
17,698 |
16,998 |
||
EBITDA |
37,829 |
39,668 |
||
Adjustments: |
||||
Acquisition costs |
- |
559 |
||
Share-based compensation |
559 |
1,133 |
||
Total adjustments |
$ |
559 |
$ |
1,692 |
Operating EBITDA |
$ |
38,388 |
$ |
41,360 |
Operating EBITDA margin (%) |
18.3 % |
20.0 % |
||
Reconciliation of net income attributable to the Company |
||||
Net income attributable to the Company |
$ |
8,735 |
$ |
11,330 |
Adjustments: |
||||
Acquisition costs |
- |
559 |
||
Share-based compensation |
559 |
1,133 |
||
Accretion expense |
367 |
596 |
||
Tax impact of all adjustments |
(104) |
(370) |
||
Total adjustments |
$ |
822 |
$ |
1,918 |
Adjusted net income attributable to the Company |
$ |
9,557 |
$ |
13,248 |
Certain information in this news release contains forward-looking information and forward-looking statements, which reflect the current view of management with respect to the Company's objectives, plans, goals, strategies, outlook, results of operations, financial and operating performance, prospects and opportunities. Wherever used, the words "may", "will", "anticipate", "intend", "estimate", "expect", "plan", "believe" and similar expressions, identify forward-looking information and forward-looking statements. Forward-looking information and forward-looking statements should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the times at which, such events, performance or results will be achieved. All the information in this news release, containing forward-looking information or forward-looking statements, is qualified by these cautionary statements.
Forward-looking information and forward-looking statements are based on information available to management at the time they are made, underlying estimates, opinions and assumptions made by management and management's current good faith belief with respect to future strategies, prospects, events, performance and results, and are subject to inherent risks and uncertainties surrounding future expectations generally. Such risks and uncertainties include, but are not limited to, those described in the Company's MD&A for Q1 2024 under the sections "Risk Factors" and those described in the Company's 2023 annual information form (the "AIF") filed on March 6, 2024, both of which can be accessed under the Company's profile on SEDAR+ at sedarplus.ca. Additional risks and uncertainties not presently known to the Company or that the Company currently believes to be less significant may also adversely affect the Company.
The Company cautions that the list of risk factors and uncertainties described in the MD&A for Q1 2024 and the AIF are not exhaustive and that should certain risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual strategies, prospects, events, performance and results may vary significantly from those expected. There can be no assurance that the actual strategies, prospects, results, performance, events or activities anticipated by the Company will be realized or even if substantially realized, that they will have the expected consequences to, or effects on, the Company. Readers are urged to consider the risks, uncertainties, and assumptions carefully in evaluating the forward-looking information and forward-looking statements and are cautioned not to place undue reliance on such information and statements. The Company does not undertake to update any such forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
SOURCE Sleep Country Canada Holdings Inc. Investor Relations
Craig De Pratto, Chief Financial Officer, [email protected]
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