TORONTO, May 4, 2022
/CNW/ - Sleep Country Canada Holdings Inc. ("Sleep Country" or the
"Company") (TSX: ZZZ) today released its financial results for the
first quarter ended March 31,
2022. Building on its record performance in fiscal 2021, the
Company achieved growth across all the key metrics of its business
and continues to lead Canada's
sleep industry with the most powerful sleep ecosystem in the
country.
All financial results are reported in Canadian dollars unless
otherwise stated.
First quarter highlights
- Revenues increased by $24.0
million or 13.1% to $207.0
million in Q1 2022 from $183.0
million in Q1 2021;
- Gross profit margin increased by 710 basis points to 34.6% in
Q1 2022 from 27.5% in Q1 2021;
- Operating EBITDA1 increased by $15.2 million or 48.5% to $46.7 million in Q1 2022 from $31.5 million in Q1 2021;
- Operating EBITDA margin1 increased by 540 basis
points to 22.6% in Q1 2022 from 17.2% in Q1 2021;
- Same Store Sales ("SSS")1 increased by 8.8%
in Q1 2022 from Q1 2021;
- eCommerce sales represented 20.8% of Revenues in Q1 2022;
- Net income attributable to the Company increased by
$9.7 million or 111.8% to
$18.4 million in Q1 2022 from
$8.7 million in Q1 2021;
- Adjusted net income attributable to the Company1
increased by $11.2 million or 116.2%
to $20.8 million in Q1 2022 from
$9.6 million in Q1 2021;
- Diluted earnings per share ("EPS") increased by
$0.26 or 113.0% to $0.49 in Q1 2022 from $0.23 in Q1 2021;
- Diluted adjusted EPS1 increased by $0.30 or 115.4% to $0.56 in Q1 2022 from $0.26 in Q1 2021;
- The TSX accepted the Notice of Intention to Make a Normal
Course Issuer Bid (NCIB) filed by the Company in Q1 2022 with the
option of purchasing shares commencing March
9, 2022. The Company purchased and cancelled 85,073 shares
for total consideration of $2.4
million against its NCIB in Q1 2022; and
- Subsequent to quarter-end, on May 4,
2022, the Board declared a dividend of $0.215 per share, an increase of 10%, payable on
May 30, 2022 to shareholders of
record at the close of business on May 20,
2022. The dividend was designated as an "eligible dividend"
for Canadian tax purposes.
Other business highlights
- Pledged sleep essentials valued over $250,000 to Global Aid Network to support
Ukrainians displaced by the war in Ukraine;
- Celebrated World Sleep Day by raising awareness on the
importance of sleep for wellbeing and made a $100,000 donation to the Canadian Mental Health
Association;
- Announced the launch of the Sleep Country and Dormez-vous
stores across all Loblaw online platforms;
- Endy won Best Workplaces for Women by Great Places to Work
2022; and
- Opened a new store in Thornhill,
Ontario to boost total store count to 286.
President & CEO Commentary and Outlook
"We are very proud to deliver the best Q1 in our company's
history, despite ongoing challenges due to COVID-19, challenging
supply chain logistics, volatile interest rates, inflation, the war
in Ukraine and a drop in consumer
confidence. Our strong performance reinforces the resilience
of our sleep ecosystem, our proactive measures and our
best-in-class team to provide a seamless customer experience across
all our brands and channels," said Stewart
Schaefer, President and CEO of Sleep Country.
"Building on our momentum in 2021, we continued to expand our
physical and digital touchpoints with another store opening and the
launch of Sleep Country and Dormez-vous stores on Loblaw
marketplace extending our reach to millions more customers every
week."
"We elevated our purpose with our World Sleep Day campaign,
raising awareness for the importance of sleep to our wellbeing with
a $100,000 donation to the Canadian
Mental Health Association, and a powerful brand activation that was
our most successful performance campaign since Boxing Week."
"We extended our support to Ukrainian families displaced by this
tragic war who are in dire need, with a pledge of over $250,000 worth of sleep essentials."
"Looking ahead, we are well positioned and diversified in our
blend of merchandise and channel agnostic approach to weather the
changing economic climate and continue to lead Canada's sleep space with our frictionless
digital experience, multiple distribution channels, powerful
partnerships and the most innovative and relevant sleep brands in
the country," concluded Schaefer.
Summary of First Quarter Financial Results
(C$ thousands unless
otherwise stated; other than store and share data)
|
Q1
2022
|
Q1
2021
|
%
Change
|
Revenues
|
$207,028
|
$183,020
|
13.1%
|
SSS1
|
8.8%
|
19.6%
|
|
Gross profit margin
%
|
34.6%
|
27.5%
|
|
Stores
opened
|
1
|
2
|
|
Stores
closed
|
-
|
-
|
|
Stores
renovated/relocated
|
-
|
5
|
|
Operating
EBITDA1
|
$46,714
|
$31,457
|
48.5%
|
Operating EBITDA
margin1 %
|
22.6%
|
17.2%
|
|
Net Income
attributable to the Company
|
$18,413
|
$8,692
|
111.8%
|
Adjusted Net Income
attributable to the Company1
|
$20,800
|
$9,621
|
116.2%
|
Basic
EPS
|
$0.50
|
$0.24
|
108.3%
|
Basic adjusted
EPS1
|
$0.56
|
$0.26
|
115.4%
|
Diluted adjusted
EPS1
|
$0.56
|
$0.26
|
115.4%
|
|
Notes:
|
1 See
the "Non-IFRS and Other Measures" section of this news
release.
|
|
Revenues increased by $24.0
million or 13.1% from $183.0
million in Q1 2021 to $207.0
million in Q1 2022 mainly driven by an 8.8% increase in SSS,
the opening of three net new stores since Q1 2021 and revenue
earned from Hush acquired in Q4 2021.
Gross profit margin increased by 710 basis points from 27.5% for
Q1 2021 to 34.6% for Q1 2022 due to an increase in average unit
selling prices, lower product, inventory adjustment, delivery and
COVID-19 PPE costs and a leveraging of occupancy and depreciation
expenses. In addition to the aforementioned, Q1 2021 was impacted
by higher wage costs as a result of the Company's stores remaining
open for curbside pick-up during the temporary store closures in
the period. These changes were offset by higher salaries and
sales commission costs due to the shift of revenue earned from its
eCommerce platforms to its retail stores.
Total G&A expenses increased by $9.0
million or 26.6% from $34.1
million in Q1 2021 to $43.1
million in Q1 2022. 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 $1.0 million from $4.0
million in Q1 2021 to $3.0
million in Q1 2022 mainly due to an unrealized gain of
$1.2 million on the Company's
interest swap as at March 31,
2022.
Operating EBITDA1 was $46.7 million for Q1 2022, or 22.6% of Revenues,
compared to $31.5 million for Q1
2021, or 17.2% of Revenue, representing an increase of $15.2 million or 48.5% mainly due to strong
revenue growth in Q1 2022 combined with an improved gross profit
margin and partially offset by an increase in G&A expenses.
Income taxes increased by $3.8
million from Q1 2021 to Q1 2022. The change is driven
by the increase in net income before taxes by $13.6 million from $11.8
million in Q1 2021 to $25.4
million in Q1 2022 as well an increase in the Company's
effective income tax rate by 0.7% from 26.5% in Q1 2021 to 27.2% in
Q1 2022.
Net income attributable to the Company for Q1 2022 increased by
$9.7 million from $8.7 million ($0.24
per share) in Q1 2021 to $18.4
million ($0.50 per share) in
Q1 2022.
Adjusted net income attributable to the Company1 for
Q1 2022 increased by $11.2 million
from $9.6 million ($0.26 per share) in Q1 2021 to $20.8 million ($0.56 per share) in Q1 2022.
Conference Call
Sleep Country's President and CEO, Stewart Schaefer, and CFO, Craig De Pratto, will host a conference call for
analysts and investors on May 5, 2022
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 12, 2022. To listen to the
replay, please dial 416-764-8677 or 888-390-0541 and use passcode
199065#.
About Sleep Country
Sleep Country is Canada's
leading specialty sleep retailer with a national retail store
network and multiple robust eCommerce platforms. The
Company has 286 corporate-owned stores and 20 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 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", "Basic Adjusted EPS" and
"Diluted Adjusted EPS". 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 Q1 2022 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 below under the
sections "Risk Factors" 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