TORONTO, July 28,
2022 /CNW/ - Sleep Country Canada Holdings Inc.
("Sleep Country" or the "Company") (TSX: ZZZ) today released its
financial results for the second quarter ended June 30, 2022. The Company delivered
impressive growth to reinforce its leading position as Canada's sleep partner.
All financial results are reported in Canadian dollars unless
otherwise stated.
Second Quarter Financial Highlights
- Revenues increased by $35.4
million or 18.4% to $227.6
million in Q2 2022 from $192.2
million in Q2 2021;
- Same Store Sales ("SSS")1 increased by 15.1%
in Q2 2022 from Q2 2021;
- eCommerce sales represented 18.1% of Revenues in Q2 2022;
- Gross profit margin increased by 140 basis points to 35.9% in
Q2 2022 from 34.5% in Q2 2021;
- Operating EBITDA1 increased by $9.5 million or 21.8% to $53.2 million in Q2 2022 from $43.7 million in Q2 2021;
- Operating EBITDA1 margin increased by 70 basis
points to 23.4% in Q2 2022 from 22.7% in Q2 2021;
- Net income attributable to the Company increased by
$5.7 million or 33.2% to $22.7 million in Q2 2022 from $17.0 million in Q2 2021;
- Adjusted net income attributable to the Company1
increased by $7.7 million or 42.7% to
$25.7 million in Q2 2022 from
$18.0 million in Q2 2021;
- Diluted earnings per share ("EPS") increased by
$0.15 or 32.6% to $0.61 in Q2 2022 from $0.46 in Q2 2021;
- Diluted adjusted EPS1 increased by $0.21 or 43.8% to $0.69 in Q2 2022 from $0.48 in Q2 2021;
- The TSX accepted an amendment to the Normal Course Issuer Bid
("NCIB") and approved an Automatic Share Purchase Plan
("ASPP") effective June 10,
2022. As at June 30, 2022, the
Company has purchased for cancellation 835,301 common shares for
total consideration of $22.0 million
against its NCIB; and
- Subsequent to quarter-end, on July 28,
2022, the Board declared a dividend of $0.215 per share payable on August 29, 2022 to shareholders of record at the
close of business on August 19, 2022.
The dividend was designated as an "eligible dividend" for Canadian
tax purposes.
Other Business Highlights
- Subsequent to quarter-end, the Company released its inaugural
Environmental, Social and Governance ("ESG") report on
July 18, 2022, highlighting its
commitment to being a purpose-driven, sustainable business;
- Subsequent to quarter-end, launched "All For Sleep App", the
Company's very own branded interactive sleep app;
- Opened a new store in Stittsville,
Ontario increasing the Company's store count to 287;
- Endy certified for 4th year in a row by Great Place
to Work ® Canada;
and
- Endy mattress and pillow endorsed by the Canadian Chiropractor
Association.
President & CEO Commentary and Outlook
"We are very proud to continue to deliver on our multi-year
strategy and build on our growth and momentum with another strong
quarter. The strength of our business -- our sleep ecosystem
with our multiple brands, expanded channels, innovative products,
and our relentless pursuit to create a frictionless customer
experience, powered by our best-in-class teams -- drove another
record performance for Q2.
In these turbulent and uncertain times, in spite of the backdrop
of weakening consumer sentiment, we remain positive and focused on
delivering on our long-term strategic plan, growing our shareholder
value while also remaining sensitive to the Canadian consumer and
price increases," said Stewart
Schaefer, President and CEO of Sleep Country.
"This quarter we continued to grow our physical retail network
with another store opening as we continue to see customers choosing
to return to our Bricks & Mortar, giving our customers even
more opportunities to discover, learn, try and purchase our
innovative sleep products with the help of our trusted Sleep
Experts."
"We continue to be driven by our vision and purpose and advance
our digital initiatives by partnering up with Haleo Sleep Clinics,
who helped us launch our very own interactive Sleep Country-branded
sleep app – All For Sleep – to empower Canadians to get the sleep
they need to function at their best. With evidence-based sleep
solutions and leading-edge expert support, the new app takes our
sleep expertise and customer experience to a whole new level."
"We were proud to release our first ESG report in July,
reinforcing our commitment to being a purpose-led, sustainable
business focused on helping people enhance their overall health and
wellbeing, driving positive social change and protecting the
planet."
"Looking ahead, we are well-positioned to manage through these
difficult economic conditions and support our customers through
challenging times, as we continue to differentiate ourselves as
Canada's leading sleep partner
with our offering of safe, high quality sustainable sleep
solutions," concluded Schaefer.
Summary of Second Quarter Financial Results
(C$ thousands unless
otherwise stated; other than store and
share
data)
|
Q2 2022
|
|
|
Q2 2021
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
227,575
|
|
|
$
|
192,175
|
|
|
|
18.4
|
%
|
SSS1
|
|
15.1
|
%
|
|
|
65.5
|
%
|
|
|
|
|
Gross profit margin
%
|
|
35.9
|
%
|
|
|
34.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores
opened
|
|
1
|
|
|
|
4
|
|
|
|
|
|
Stores
closed
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Stores
renovated/relocated
|
|
-
|
|
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
EBITDA1
|
$
|
53,242
|
|
|
$
|
43,706
|
|
|
|
21.8
|
%
|
Operating EBITDA margin
%1
|
|
23.4
|
%
|
|
|
22.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to the Company
|
$
|
22,665
|
|
|
$
|
17,019
|
|
|
|
33.2
|
%
|
Adjusted net income
attributable to the Company1
|
$
|
25,739
|
|
|
$
|
18,036
|
|
|
|
42.7
|
%
|
Basic EPS
|
$
|
0.61
|
|
|
$
|
0.46
|
|
|
|
32.6
|
%
|
Diluted EPS
|
$
|
0.61
|
|
|
$
|
0.46
|
|
|
|
32.6
|
%
|
Basic adjusted
EPS1
|
$
|
0.70
|
|
|
$
|
0.49
|
|
|
|
42.9
|
%
|
Diluted adjusted
EPS1
|
$
|
0.69
|
|
|
$
|
0.48
|
|
|
|
43.8
|
%
|
Notes:
|
1 See
the "Non-IFRS and Other Measures" section of this news
release.
|
Revenues increased by $35.4
million or 18.4% from $192.2
million in Q2 2021 to $227.6
million in Q2 2022 mainly driven by a 15.1% increase in
SSS1 and incremental revenue earned from Hush
acquired in Q4 2021.
Gross profit margin increased by 140 basis points from 34.5% for
Q2 2021 to 35.9% for Q2 2022 due to an increase in average unit
selling prices, higher terms discounts and leveraging of
occupancy and depreciation expenses. These changes were offset by
higher product and transport expenses in addition to higher sales
commission costs due to the shift of revenue earned from its
eCommerce platforms to its retail stores and lower bonuses paid in
Q2 2021.
Total G&A expenses increased by $6.6
million or 17.1% from $39.1
million in Q2 2021 to $45.7
million in Q2 2022. This change was mainly driven by an
increase in media and advertising, credit card and finance charges,
compensation and depreciation expenses.
Finance related expenses increased by $0.7 million from $4.6
million in Q2 2021 to $5.3
million in Q2 2022 mainly due to an increase in accretion
expense for the redemption liabilities related to the Hush
acquisition in Q4 2021.
Operating EBITDA1 was $53.2 million for Q2 2022, or 23.4% of Revenues,
compared to $43.7 million for Q2
2021, or 22.7% of Revenues, representing an increase of
$9.5 million or 21.8% mainly due to
strong revenue growth in Q2 2022 combined with an improved gross
profit margin and partially offset by an increase in G&A
expenses.
Income taxes increased by $3.0
million from Q2 2021 to Q2 2022. The change is driven by the
increase in net income before taxes of $8.4
million from $22.9 million in
Q2 2021 to $31.3 million in Q2 2022,
as well as, an increase in the Company's effective income tax rate
by 280 basis points from 25.6% in Q2 2021 to 28.4% in Q2 2022.
Net income attributable to the Company for Q2 2022 increased by
$5.7 million from $17.0 million ($0.46 per share) in Q2 2021 to $22.7 million ($0.61 per share) in Q2 2022.
Adjusted net income attributable to the
Company1 for Q2 2022 increased by $7.7 million from $18.0
million ($0.49 per share) in
Q2 2021 to $25.7 million
($0.70 per share) in Q2 2022.
Summary of Year-to-date Financial Results
Revenues increased by $59.4
million or 15.8% from $375.2
million in YTD 2021 to $434.6
million in YTD 2022. This increase was mainly driven by a
12.0% increase in SSS1 and incremental revenue
earned from Hush acquired in Q4 2021.
Gross profit margin increased by 420 basis points from 31.1% for
YTD 2021 to 35.3% for YTD 2022 due to an increase in average unit
selling prices, delivery and COVID-19 PPE costs and leveraging of
occupancy and depreciation expenses. In addition to the
aforementioned, YTD 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 product, transport, salaries and
bonuses expenses in addition to higher sales commission costs due
to the shift of revenue earned from its eCommerce platforms to its
retail stores.
Total G&A expenses increased by $15.8
million or 21.5% from $73.1
million in YTD 2021 to $88.9
million in YTD 2022. This change was mainly driven by an
increase in media and advertising, compensation, credit card and
finance charges, professional fees, telecommunication and
information technology and depreciation expenses.
Finance related expenses decreased by $0.3 million from $8.6
million in YTD 2021 to $8.3
million in YTD 2022 mainly due to an unrealized gain on the
Company's interest rate swap as at June 30,
2022, partially offset by an increase in accretion
expense for the redemption liabilities related to the Hush
acquisition in Q4 2021.
Operating EBITDA1 was $100.0 million for YTD 2022, or 23.0% of
Revenues, compared to $75.2 million
for YTD 2021, or 20.0% of Revenues, representing an increase of
$24.8 million or 33.0% mainly due to
strong revenue growth in YTD 2022 combined with an improved gross
profit margin and partially offset by an increase in G&A
expenses.
Income taxes increased by $6.8
million from YTD 2021 to YTD 2022. The change is driven by
the increase in net income before taxes of $22.0 million from $34.7
million in YTD 2021 to $56.7
million in YTD 2022 as well as an increase in the Company's
effective income tax rate by 200 basis points from 25.9% in YTD
2021 to 27.9% in YTD 2022.
Net Income attributable to the Company for YTD 2022 increased by
$15.4 million from $25.7 million ($0.70 per share) in YTD 2021 to $41.1 million ($1.11 per share) in YTD 2022.
Adjusted net Income attributable to the
Company1 for YTD 2022 increased by $18.8 million from $27.7
million ($0.75 per share) in
YTD 2021 to $46.5 million
($1.26 per share) in YTD 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 July 29,
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 August 5, 2022. To
listen to the replay, please dial 416-764-8677 or 888-390-0541 and
use passcode 643405#.
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
287 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 recently acquired "Hush", 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 Q2 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