Rising sales of more-profitable merchandise led to this retailer’s earnings jump in the most-recent quarter.
Its new concept store, with advanced technology, should help further boost the chain’s sales from urban buyers. It should also help bolster dividend payments for investors. Today’s annual dividend rate yields a high 3.5%.
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LEON’S FURNITURE LTD., (Toronto symbol LNF; www.leons.ca), has steadily increased the number of stores under its Leon’s banner from 27 in 2003 to today’s 84.
In 2013, the company nearly quadrupled in size with its $700 million purchase of The Brick, its main rival. That chain now has 213 locations across Canada and still operates separately. Leon’s also has 5 Appliance Canada stores.
In the quarter ended June 30, 2019, Leon’s overall sales rose 2.6%, to a record $560.9 million from $546.7 million a year earlier. On a same-store basis, sales rose 1.9%.
Excluding one-time items, the company earned $28.7 million in the latest quarter, up 27.1% from $22.6 million. Earnings per share rose 21.4%, to a record $0.34 from $0.28, on more shares outstanding. The jump in profits was partly due to a shift in sales to more-profitable merchandise.
On August 8, 2019, the company launched a new concept store, in Coquitlam, B.C. Though typically known for its large-scale stores, the smaller 15,000-square-foot Leon’s location is aimed at letting customers browse a curated collection of trendy furniture and appliances. At the same time, technological features let customers shop the full product range.
Value Stocks: New technology modernizes the showroom
The “smart” showroom will include an 11-foot video wall that lets shoppers view any product from Leon’s in real size. Leon’s sales associates can also show customers a product in augmented reality (AR) alongside other pieces in the showroom, to help with room planning.
Checking out will also be more efficient with new mobile point-of-sale tablets. They’re voice activated to help speed up the completion of order/payment/delivery forms.
Leon’s has also migrated its online stores to the Shopify (Toronto symbol SHOP) platform. (Note—Shopify is a recommendation of Stock Pickers Digest, our newsletter that focuses on aggressive stocks). That consolidation is already generating additional e-commerce revenue.
The stock trades at just 13.2 times its projected 2019 earnings of $1.21 a share.
Growth by acquisition can be risky, especially with a deal as big as Leon’s purchase of the Brick. However, the addition has enhanced the company’s overall prospects.
Starting with the October 2018 payment, the company raised its quarterly payment by 16.7%. Investor now receive $0.14 a share, up from $0.12. The shares now yield a high 3.5%.
The company’s dividend has grown an average of 7.0% annually over the last 5 years.
This new deal, which expires at the end of 2028, will help Enbridge compete with the expanded Trans Mountain pipeline, which will transport crude oil from Alberta to Burnaby, B.C. The expanded line should begin operating in early 2024.
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August comment for Enbridge says the company will complete expansion of the Trans Mountain pipeline? I thought that was owned by Canadian government?
Thanks for spotting that! We’ve fixed it….
It should read:
$$$$$$$$$$$$
This new deal, which expires at the end of 2028, will help Enbridge compete with the expanded Trans Mountain pipeline, which will transport crude oil from Alberta to Burnaby, B.C. The expanded line should begin operating in early 2024.