Sleep Country delivers revenue growth of
9.0% in Q4 2021 and record revenue growth of $162.5 million or 21.4% in 2021
TORONTO, March 3, 2022 /CNW/ - Sleep Country Canada
Holdings Inc. ("Sleep Country" or the "Company") (TSX: ZZZ) today
released financial results for the fourth quarter and year ended
December 31, 2021. Sleep
Country achieved strong revenue growth in Q4 and fiscal 2021 to
reinforce its position as Canada's
leading sleep retailer. Driven by its purpose to awaken
Canadians to the power of sleep, the Company continued to deliver
on its multi-year channel and product innovation
strategy.
All financial results are reported in Canadian dollars unless
otherwise stated.
Fourth quarter highlights
- Revenues increased by $22.3
million or 9.0% to $271.2
million in Q4 2021 from $248.9
million in Q4 2020;
- Revenues increased by $84.7
million or 45.4% to $271.2
million in Q4 2021 from $186.5
million in Q4 2019;
- Gross profit margin increased by 300 basis points to 36.0% in
Q4 2021 from 33.0% in Q4 2020;
- EBITDA1 increased by $4.5
million or 8.5% to $57.3
million in Q4 2021 from $52.8
million in Q4 2020;
- Same Store Sales (SSS)1 increased by 3.2% from Q4
2020 to Q4 2021;
- eCommerce sales represented 20.9% of revenues in Q4 2021;
- Net income attributable to the Company decreased by
$0.2 million or 0.5% to $26.4 million in Q4 2021 from $26.6 million in Q4 2020;
- Adjusted net income attributable to the Company1
increased by $3.6 million or 13.0% to
$31.0 million in Q4 2021 from
$27.4 million in Q4 2020;
- Diluted adjusted earnings per share1 increased by
$0.09 or 12.2% to $0.83 in Q4 2021 from $0.74 in Q4 2020;
- Basic earnings per share remained unchanged at $0.72 in Q4 2021 and Q4 2020;
- Opened 10 new pilot "Sleep Country/Dormez-vous Express" stores
in Walmart Supercentres in Ontario
and Quebec, expanding the
Company's existing partnership with Walmart Canada;
- Acquired 52% of the issued and outstanding common shares of
Hush Blankets Inc. ("Hush"), a direct-to-consumer sleep retailer,
for cash consideration of $23.3
million;
- Joined forces with Well.ca, Canada's leading health and wellness eCommerce
retailer, to promote sleep health;
- Announced $0.5 million investment
for a 25% ownership stake of Sleepout Inc. ("Sleepout"), a Canadian
direct-to-consumer start-up specializing in portable blackout
curtains for the bedroom;
- Amended its existing credit facility of $260.0 million to include an additional
$100.0 million accordion and extend
its maturity date to October 22,
2026;
- Subsequent to quarter-end, in January
2022, the Company announced the launch of the Sleep Country
Store on Loblaw marketplace, offering customers leading assortment
of sleep products across all Loblaw online grocery platforms;
and
- Subsequent to quarter-end, on February
8, 2022, the Board declared a dividend of $0.195 per share, payable on February 28, 2022 to shareholders of record at
the close of business on February 18,
2022. The dividend was designated as an "eligible dividend"
for Canadian tax purposes.
Annual highlights
- Revenues increased by $162.5
million or 21.4% to $920.2
million in 2021 from $757.7
million in 2020;
- Gross profit margin increased by 220 basis points to 34.5% in
2021 from 32.3% in 2020;
- EBITDA1 increased by $33.1
million or 19.9% to $199.5
million in 2021 from $166.4
million in 2020;
- Same Store Sales (SSS)1 increased by 18.3% from 2020 to
2021;
- eCommerce sales represented 23.5% of revenues in 2021;
- Net income attributable to the Company increased by
$25.3 million or 40.0% to
$88.6 million in 2021 from
$63.3 million in 2020;
- Adjusted net income attributable to the Company1 increased by
$26.7 million or 37.4% to
$98.3 million in 2021 from
$71.6 million in 2020;
- Diluted adjusted earnings per share1 increased by $0.70 or 36.1% to $2.64 in 2021 from 1.94 in 2020; and
- Basic earnings per share increased by $0.68 or 39.3% to $2.41 in 2021 from $1.73 in 2020;
CEO Commentary and Outlook
"We delivered strong performance in the fourth quarter, with
exceptional two-year stacked revenue growth of 45.4% driven by
increased consumer demand for our portfolio of products across our
brands and channels. We continued to build our sleep
ecosystem, expanded our product line-up and eCommerce platforms
with the acquisition of Hush and investment in Sleepout, and grew
our retail footprint with our exclusive Express stores in Walmart
Supercentres," said Stewart
Schaefer, CEO and President of Sleep Country.
"Despite the resurgence of COVID-19 later in the quarter and the
supply chain challenges associated with the pandemic, our
investments in distribution, inventory, digital and customer
experience, combined with outstanding execution by our
best-in-class team, enabled us to deliver to our customers wherever
they chose to shop."
"We continued to be guided by our purpose of awakening Canadians
to the power of sleep through our partnership with Well.ca to
promote sleep as an essential part of health and well-being, and
our support of community partners with donations that helped
hundreds of families in need get a better night's sleep. With World
Sleep Day just ahead, what better time to remind Canadians of the
importance of a good night's sleep."
"As we look forward to the year ahead, we are positioned better
than ever to continue to lead Canada's sleep space and differentiate our
brands with the best assortment of mattresses and sleep products
across the most relevant distribution channels in the country,"
concluded Schaefer.
Summary of Fourth Quarter Financial Results
(C$ thousands unless
otherwise stated; other than
store and share data)
|
Q4
2021
|
Q4
2020
|
%
Change
|
2021
|
2020
|
%
Change
|
Revenues
|
$271,158
|
$248,861
|
9.0%
|
$920,194
|
$757,699
|
21.4%
|
SSS1
|
3.2%
|
32.4%
|
|
18.3%
|
N/A2
|
|
Gross profit
margin %
|
36.0%
|
33.0%
|
|
34.5%
|
32.3%
|
|
Stores
opened3
|
-
|
2
|
|
6
|
6
|
|
Stores
closed
|
2
|
1
|
|
2
|
1
|
|
Stores
renovated/relocated
|
1
|
12
|
|
11
|
21
|
|
Operating
EBITDA1
|
$62,065
|
$53,848
|
15.3%
|
$210,889
|
$171,469
|
23.0%
|
Operating EBITDA
margin %1
|
22.9%
|
21.6%
|
|
22.9%
|
22.6%
|
|
Net Income
attributable to the Company
|
$26,433
|
$26,571
|
(0.5%)
|
$88,603
|
$63,307
|
40.0%
|
Adjusted Net
Income attributable to the
Company1
|
$30,977
|
$27,404
|
13.0%
|
$98,342
|
$71,593
|
37.4%
|
Earnings per share
– Basic
|
$0.72
|
$0.72
|
0.0%
|
$2.41
|
$1.73
|
39.3%
|
Adjusted Earnings
Per Share – Basic1
|
$0.84
|
$0.75
|
12.0%
|
$2.67
|
$1.95
|
36.9%
|
Adjusted Earnings
Per Share – Diluted1
|
$0.83
|
$0.74
|
12.2.%
|
$2.64
|
$1.94
|
36.1%
|
Notes:
|
1 See
the "Non-IFRS and Other Measures" section of this news
release.
|
2 The
temporary closure of the Company's retail stores in 2020 resulted
in the Company's retail stores being closed for an average of 19.8%
of its normal operating days (see "Non-IFRS and Other Measures").
As a result, the Company did not report 2020 SSS as it was not a
representative measure of the Company's performance.
|
3 This figure does not include the
ten pilot Sleep Country Express/Dormez-vous Express stores opened
in Q4 2021 in Walmart Canada licensee spaces.
|
Revenues increased by $22.3
million or 9.0% from $248.9
million in Q4 2020 to $271.2
million in Q4 2021. This increase was mainly driven by a
3.2% increase in SSS1, four net new stores opened in
2021 and post-acquisition revenue from Hush acquired on
October 22, 2021. In Q4 2021,
eCommerce sales represented 20.9% of Revenues.
Gross profit increased by $15.5
million from $82.2 million in
Q4 2020 to $97.7 million in Q4 2021.
Gross profit margin increased by 300 basis points from 33.0% for Q4
2020 to 36.0% for Q4 2021 primarily due to an increase in average
unit selling prices, and the leveraging of occupancy and
depreciation expenses. These decreases were partially offset by
higher transport and delivery and sales salaries.
Total G&A expenses increased by $12.6
million or 28.9% from $43.7
million in Q4 2020 to $56.3
million in Q4 2021. This change was mainly driven by an
increase in media and advertising, compensation, professional fees,
telecommunication and information technology and depreciation
expenses.
Finance related expenses decreased by $0.5 million from $4.8
million in Q4 2020 to $4.3
million in Q4 2021. This change was mainly due to an
unrealized gain of $0.6 million on
the Company's interest swap as at December
31, 2021. This unrealized gain was partially offset by
an increase in interest expense on the Company's lease
liabilities.
Operating EBITDA1 was $62.1 million for Q4 2021, or 22.9% of revenue,
compared to $53.8 million for Q4
2020, or 21.6% of revenue, representing an increase of $8.3 million or 15.3% mainly due to strong
revenue growth in Q4 2021 combined with an improved gross profit
margin and partially offset by an increase in G&A expenses.
Income taxes increased by $3.3
million from Q4 2020 to Q4 2021. The change is driven
by the increase in net income before taxes by $3.6 million from $33.6
million in Q4 2020 to $37.2
million in Q4 2021 as well an increase in the Company's
effective income tax rate by 7.0% from 21.0% in Q4 2020 to 28.0% in
Q4 2021. The change in Company's effective tax rate from Q4
2020 to Q4 2021 was due to the change in the Company's position in
Q4 2020 on the deductibility of its LTIP expenses which resulted in
a lower effective tax rate in Q4 2020.
Net income attributable to the Company for Q4 2021 decreased by
$0.2 million from $26.6 million ($0.72 per share) in Q4 2020 to $26.4 million ($0.72 per share) in Q4 2021.
Adjusted net income attributable to the
Company1 for Q4 2021 increased by $3.6 million from $27.4
million ($0.75 per share) in
Q4 2020 to $31.0 million
($0.84 per share) in Q4 2021.
Summary of Annual Financial Results
Revenues increased by $162.5
million or 21.4% from $757.7
million in 2020 to $920.2
million in 2021. This increase was mainly driven by an 18.3%
increase in SSS1, net four new stores opened in fiscal
2021 and post-acquisition revenue from Hush acquired on
October 22, 2021. In 2021, eCommerce
sales were 23.5% of revenues.
Gross profit increased by $72.5
million from $244.5 million in
2020 to $317.0 million in 2021. Gross
profit margin increased by 220 basis points from 32.3% in 2020 to
34.5% in 2021 primarily due to an increase in average unit selling
prices and the leveraging of occupancy and depreciation expenses.
These decreases were partially offset by higher delivery costs, in
addition to higher compensation costs that were favourably impacted
by wage subsidies under the CEWS program in 2020.
Total G&A increased by $43.3
million or 32.1% from $134.9
million in 2020 to $178.2
million in 2021. This change was mainly driven by an
increase in media and advertising expenses and compensation
expenses that were favourably impacted by wage subsidies under the
CEWS program in 2020, in addition to professional fees,
telecommunication and information technology, occupancy and
depreciation expenses.
Finance related expenses decreased by $8.6 million from $25.4
million in 2020 to $16.8
million in 2021. This change was mainly due to a
$2.2M decrease in the Company's
interest expense on its senior secured credit facility and a
$4.3 million adjustment in Q2 2020 on
Endy's contingent consideration liability, in addition to the
$3.2 million periodic accretion
expense related to the Endy acquisition in 2020. The contingent
consideration liability was subsequently paid in full in March
2021. These decreases were partially offset by increases in
the revolver commitment fees and interest expense on the Company's
lease liabilities.
Operating EBITDA1 was $210.9 million for 2021, or 22.9% of revenue,
compared to $171.5 million for 2020,
or 22.6% of revenue, representing an increase of $39.4 million or 23.0% mainly to strong revenue
growth in 2021 combined with an improved gross profit margin and
partially offset by an increase in G&A expenses.
Income taxes increased by $12.2
million from 2020 to 2021. The change is driven by the
increase in net income before taxes by $37.8
million from $84.0 million in
2020 to $121.8 million in 2021 as
well an increase in the Company's effective income tax rate by 2.3%
from 24.6% in 2020 to 27.0% in 2021. The change in Company's
effective tax rate from 2020 to 2021 was due to the change in the
Company's position in 2020 on the deductibility of its LTIP
expenses which resulted in a lower effective tax rate in 2020.
Net Income attributable to the Company for 2021 increased by
$25.3 million from $63.3 million ($1.73 per share) in 2020 to $88.6 million ($2.41 per share) in 2021.
Adjusted Net Income attributable to the
Company1 for 2021 increased by $26.7 million from $71.6
million ($1.95 per share) in
2020 to $98.3 million ($2.67 per share) in 2021.
Conference Call
Sleep Country CEO and President, Stewart
Schaefer, and CFO, Craig De
Pratto, will host a conference call for analysts and
investors on March 4, 2022 at
8:00 a.m. ET. The dial-in numbers for
the conference call are 888-664-6392 or 416-764-8659. This
conference call will be recorded and available for replay until
March 11, 2022. To listen to the
replay, please dial 416-764-8677 or 888-390-0541 and use passcode
459451#.
About Sleep Country
Sleep Country is Canada's
leading omnichannel specialty sleep retailer with a national retail
store network and multiple robust eCommerce platforms.
The Company has 286 corporate-owned stores and 20
corporately-run warehouses across Canada and operates under retail banners:
"Sleep Country Canada", with omnichannel operations in Canada excluding Québec;
"Dormez-vous" with omnichannel operations in Québec;
"Endy", Canada's leading
direct-to-consumer online sleep solutions retailer; and recently
acquired Hush Blankets Inc., one of Canada's fastest-growing digital
retailers. Sleep Country is a
purpose-led organization dedicated to transforming lives
by awakening Canadians to the power of sleep, and is committed
to building a company culture of inclusion and diversity where
differences are embraced and valued. The Company meaningfully
and positively supports its environment and the communities
where it operates through its comprehensive mattress and foundation
recycling program that keeps mattresses out of landfills, as well
as its bed donation program that contributes new and gently used
mattresses and foundations to Canadian charities to help families
and children in need get a good night's sleep.
For more information about the Company visit
www.sleepcountryir.ca.
Non-IFRS and Other Measures
This news release refers to certain measures that are not
recognized under IFRS and do not have a standardized meaning
prescribed by IFRS, including "Same Store Sales" or "SSS",
"EBITDA", "Operating EBITDA", "Operating EBITDA margin", "Adjusted
Net Income attributable to the Company", "Adjusted Earnings Per
Share - Basic" and "Adjusted Earnings Per Share - Diluted". For
more information on these Non-IFRS and other measures as well as a
reconciliation to the most comparable IFRS measure, refer to
"Non-IFRS and Other Measures" in the Company's MD&A for Q4 2021
which is available on SEDAR at www.sedar.com.
Forward-Looking Information
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 of 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 Q4 2021
MD&A under the sections "Risk Factors" and "COVID-19 Business
Update", the impact of the novel coronavirus ("COVID-19") pandemic
and those described in the Company's 2021 annual information form
(the "AIF") filed on March 3, 2022. A
copy of the AIF can be accessed under the Company's profile on
SEDAR at www.sedar.com. 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.
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