The Brick Group reports same store sales growth of 4.8% in the second quarter of 2007 and results in line with management's expectations



    /NOT FOR DISTRIBUTION THROUGH U.S. NEWS WIRE SERVICES OR DISSEMINATION IN
    THE U.S/

    EDMONTON, Aug. 10 /CNW/ - (TSX:BRK.UN) - The Brick Group Income Fund (the
"Brick Group") today announced its financial results for the second quarter of
2007. The Brick Group's first quarter results and Management's Discussion and
Analysis ("MD&A") can be found on the Brick Group's website at
www.thebrickgroup.ca.
    2007 second quarter same store sales grew by 4.8%, representing the sixth
straight quarter of positive same store sales growth for the Brick Group.
Total sales and operating revenues grew 7.3% for the second quarter over the
same period last year bringing our total consolidated sales and operating
revenues to just over $335.9 million. Second quarter consolidated EBITDA is in
line with management's expectations at $15.9M versus $16.4M in the prior year.
    "We have turned the corner in managing key revenue and cost line items
including delivery expenses by focusing on our fundamentals," said Kim Yost,
President and Chief Executive Officer. "With seasonally higher sales in the
second half of the year and continued focus on cost management, we believe
that we are very well positioned to drive increased profits for the Brick
Group."
    Second quarter consolidated net loss of $37.5 million was driven by a
one-time charge for future income tax expense of $44.4 million. This charge
relates to the "Tax Fairness Plan", announced on October 31, 2006 by the
Government of Canada (Department of Finance), which became substantively
enacted during the quarter.
    "This charge for future income tax expense does not have any impact on
our operating decisions, our credit facilities or financial covenants, the
carrying values of our assets, our cash flows, our ability to generate cash
flow, or our ability to make distributions to our unitholders," said Kim Yost,
President and Chief Executive Officer. "Management was required to record this
charge in order to be in compliance with GAAP".
    The impact of the adjustment for future income taxes is discussed further
in the Brick Group's MD&A.
    The following are some key highlights, compared to the same period last
year:

    
    -------------------------------------------------------------------------
                                       For the three months ended June 30
                                   ------------------------------------------
    (000's of $ except %,                               $ Increase % Increase
     and store amounts)                2007       2006  (Decrease) (Decrease)
    -------------------------------------------------------------------------
    Retail Segment -
     Sales and operating revenue   $324,301   $304,668  $   19,633       6.4%
    Financial Services Segment -
     Sales and operating revenue     11,600      8,455       3,145      37.2%
                                   --------------------
    Consolidated - Sales and
     operating revenue              335,901    313,123      22,778       7.3%
    Franchise Sales                  25,139     20,161       4,978      24.7%
                                   --------------------
    Consolidated and Franchise
     Sales and operating revenue    361,040    333,284      27,756       8.3%
                                   --------------------
                                   --------------------
      Same Store Sales
       (corporate stores)              4.8%       4.1%

      Same Store Sales
       (corporate and franchise
       stores)                         4.4%       3.9%

    Retail Segment - EBITDA           9,301     11,441      (2,140)    -18.7%
    Financial Services
     Segment - EBITDA                 6,558      5,000       1,558      31.2%
                                   --------------------
    Consolidated - EBITDA            15,859     16,441        (582)     -3.5%
                                   --------------------
                                   --------------------

    Retail Segment - Net (loss)
     income                         (44,343)     3,600     (47,943)  -1331.8%
    Financial Services Segment -
     Net income                       6,801      5,780       1,022      17.7%
                                   --------------------
    Consolidated - Net (Loss)
     income                         (37,542)     9,380     (46,922)   -500.2%
                                   --------------------
                                   --------------------

      EBITDA - Adjusted              18,843     19,371        (528)     -2.7%


      Payout Ratio for the three
       month period ended June 30    110.5%      97.4%

      Payout Ratio for the twelve
       month period ended June 30     99.9%      92.7%

    Stores at period end                203        192
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                        For the six months ended June 30
                                   ------------------------------------------
    (000's of $ except %,                               $ Increase % Increase
     and store amounts)                2007       2006  (Decrease) (Decrease)
    -------------------------------------------------------------------------
    Retail Segment -
     Sales and operating revenue   $640,223   $594,198  $   46,025       7.7%
    Financial Services Segment -
     Sales and operating revenue     23,118     16,656       6,462      38.8%
                                   --------------------
    Consolidated - Sales and
     operating revenue              663,341    610,854      52,487       8.6%

    Franchise Sales                  51,092     39,238      11,854      30.2%
                                   --------------------
    Consolidated and Franchise
     Sales and operating revenue    714,433    650,092      64,341       9.9%
                                   --------------------
                                   --------------------
      Same Store Sales
       (corporate stores)              5.7%       7.9%

      Same Store Sales
       (corporate and franchise        5.5%       7.9%
       stores)

    Retail Segment - EBITDA          13,843     16,143      (2,300)    -14.2%
    Financial Services
     Segment - EBITDA                12,783     10,010       2,773      27.7%
                                   --------------------
    Consolidated - EBITDA            26,626     26,153         473       1.8%
                                   --------------------
                                   --------------------

    Retail Segment - Net (loss)
     income                         (48,451)       483     (48,934)  -10,127%
    Financial Services Segment -
     Net income                      13,641     11,111       2,531      22.8%
                                   --------------------
    Consolidated - Net (Loss)
     income                         (34,810)    11,594     (46,403)   -400.2%
                                   --------------------
                                   --------------------

      EBITDA - Adjusted              32,009     32,061         (52)     -0.2%


      Payout Ratio for the three
       month period ended June 30

      Payout Ratio for the twelve
       month period ended June 30

    Stores at period end                203        192
    -------------------------------------------------------------------------
    

    Overview

    Management is pleased to report the sixth straight quarter of positive
same store sales growth. 2007 second quarter results were in line with
management's expectations, following strong first quarter results that
exceeded management's expectations. During the second quarter, we made
significant gains on managing key revenue and expense line items, including
costs associated with delivery expense. The payout ratio for the rolling
twelve months ended June 30, 2007 is 99.9%, which is higher than the June 30,
2006 rolling twelve month ratio of 92.7%, but it is in line with expectations.
With seasonally higher sales in the latter half of the year and the benefit of
our continued focus on cost management, we believe we are well positioned for
the remainder of 2007.
    During the quarter, the Brick Group recorded future income tax expense
and an increase to its long-term future income tax liability of $44.4 million.
This charge relates to the "Tax Fairness Plan", announced on October 31, 2006
by the Department of Finance (Canada), which was enacted during the quarter.
This charge for future income tax expense does not have any impact on our
operating decisions, our credit facilities or financial covenants, the
carrying values of our assets, our cash flows, our ability to generate cash
flow, or our ability to make distributions to our unitholders. Management was
required to record this charge in order to be in compliance with GAAP.

    Distributable Cash and Payout Ratio

    Through the end of June 2007, and for the 35th consecutive month since
becoming an income fund, we have continued to meet all of our distribution
commitments. This represents just over $200 million distributed to our
unitholders.
    Our distributable cash payout ratio for the twelve month period ended
June 30, 2007 was 99.9%. Management anticipates an improvement in the payout
ratio as we progress through the balance of this year, and leverage the impact
of our 2006 infrastructure build out and improved cost management against our
typically seasonally higher sales.
    Under our alternative view of distributable cash, the payout ratio for
the twelve month period ended June 30, 2007 was 100.3%.

    Sales and Operating Revenue

    In the second quarter, consolidated sales and operating revenue, as
reported in the unaudited interim consolidated financial statements of The
Brick Group Income Fund for the three months ended June 30, 2007, increased by
$22.8 million to $335.9 million. This represents a 7.3% increase.
    Consolidated and franchise sales and operating revenue was
$361.0 million, including $25.1 million of franchise sales, compared to
$333.3 million, including $20.2 million of franchise sales, in the same
quarter last year. This represents an 8.3% increase.

    Same Store Sales

    For the quarter, which marked our sixth consecutive quarter of positive
same store sales growth, corporate stores same store sales growth was 4.8%
compared to 4.1% in 2006. Same store sales growth for corporate stores
together with franchise stores was 4.4% compared to 3.9% in 2006.

    Franchise Sales

    Compared to the same quarter a year ago, sales at franchise stores
increased by 24.7% to $25.1 million. We began the quarter with 26 franchise
stores and ended with 29, while in 2006, we began the quarter with 21 and
ended with 22.

    Written Premiums

    The amount of warranty and insurance premiums written by the financial
services segment in the second quarter of 2007 were $17.6 million compared to
$15.7 million in the second quarter of 2006, reflecting an increase of 11.9%.

    Consolidated EBITDA and Adjusted EBITDA

    Second quarter consolidated EBITDA decreased 3.5% or $0.6 million from
2006. The two main drivers of the decrease in EBITDA were a reduced gross
margin percentage, due to an increased mix of appliance and electronic sales
in the second quarter of 2007, and higher infrastructure costs in 2007 as a
result of the expansion of our distribution centres which occurred throughout
fiscal 2006.
    The quarter included a gain on disposal of a redundant real estate asset
of $1.8 million. The impact of this gain on year over year comparability was
not significant, as the second quarter of 2006 included a $1.5 million
recovery related to a limited recourse liability.
    Adjusted EBITDA for the second quarter of 2007 was $18.8 million, a
decrease of 2.7% or $0.5 million from 2006.

    Consolidated Net Loss

    Second quarter consolidated net loss of $37.5 million was driven by a
one-time charge for future income tax expense of $44.4 million. This charge
relates to the "Tax Fairness Plan", announced on October 31, 2006 by the
Department of Finance (Canada), which was enacted during the quarter.
Management was required to record this charge in order to be in compliance
with GAAP.
    Of the $44.4 million future income tax liability, $35.3 million is
associated with Brand and Goodwill. Provided that the Fund remains within the
Normal Growth Limits, the future income tax liabilities associated with Brand
and Goodwill would only be realized upon the taxable disposition of these
assets on or after January 1, 2011. The amount of tax payable could, however,
differ from the amount of the future income tax liability associated with
these assets and would be impacted by the structure of any transaction.
    This charge for future income tax expense does not have any impact on our
operating decisions, our credit facilities or financial covenants, the
carrying values of our assets, our cash flows, our ability to generate cash
flow, or our ability to make distributions to our unitholders.
    The impact of the adjustment for future income taxes is discussed further
in the Brick Group's MD&A under the heading, "Consolidated Operating and
Financial Results". Future income taxes are also discussed in the Brick
Group's MD&A under the heading "Risk Factors".

    Operations

    During the second quarter, we opened 1 Brick Mattress Store in Calgary,
Alberta, closed a Brick store in Brandon, Manitoba, and rebannered a United
Furniture store to a Brick store in Camrose, Alberta. As well, we opened Brick
franchise stores in Pembroke, Ontario, Brandon, Manitoba, and Stettler,
Alberta.

    WEBCAST AND CONFERENCE CALL
    ---------------------------

    The Brick will host an investor conference call at 2 p.m. eastern time
(12 noon Alberta time) on Monday, August 13, 2007. To access the call, please
call either (416) 644-3417 or (800) 732-9303 five minutes prior. For a
listen-only version of the conference, log on to
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1948540.

    Replay Audience Dial-in Number & Codes:

    From: Monday, August 13, 2007, 2:00 P.M. (MT)
    To: Monday, August 20, 2007, 11:59 P.M. (MT)
    Access Number: 416-640-1917/passcode 21242063 followed by the number
    sign.

    About the Brick Group

    The Brick Group is one of Canada's largest volume retailers of household
furniture, mattresses, appliances and home electronics, operating under four
banners: The Brick, United Furniture Warehouse, The Brick Superstore, and The
Brick Mattress Store. In addition, through its corporate sales division, the
Brick Group services the subdivision, condominium, and high-rise builder
market. The Brick Group's retail operations are located in British Columbia,
Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, Nova
Scotia and the Yukon Territory.

    Notice to Readers

    References to GAAP in this press release refer to accounting principles
generally accepted in Canada.
    Certain forward-looking statements are made in this news release, within
the meaning of applicable securities laws. These statements reflect the Brick
Group's current expectations and are based on information currently available
to management. The words "may", "will", "should", "believe", "expect, "plan",
"anticipate", "intend", "estimate", "predict", "potential", "continue", or the
negative of these terms, identify forward-looking matters. These statements
speak only as of the date of this press release. The actual results could
differ materially from those anticipated in these forward-looking statements.
    Reliance should not be placed on forward-looking statements because they
involve known and unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the Brick Group to
differ materially from anticipated future results, performance or achievement
expressed or implied by such forward-looking statements. Factors that could
cause actual results to differ materially from those set forth in the
forward-looking statements include, but are not limited to, fluctuations in
interest rates and currency values, changes in economic and political
conditions, legislative and regulatory developments, legal developments, the
level of competition in the Brick Group's markets, the occurrence of weather
related and other natural catastrophes, the ability to attract and retain key
personnel, the ability to complete and integrate acquisitions, changes in tax
laws, and those risks and uncertainties detailed in the Brick Group's
Management's Discussion and Analysis.
    The preceding list is not an exhaustive list of possible factors. These
and other factors should be considered carefully and readers are cautioned not
to place undue reliance on these forward-looking statements. The Brick Group
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, other than as required by applicable law.





For further information:

For further information: Kim Yost, President and CEO, The Brick Group,
(780) 930-6300, investor@thebrickgroup.ca; Mike Borys, Executive Vice
President and CFO, The Brick Group, (780) 930-6300, investor@thebrickgroup.ca


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