Canadian retailer Leon’s Furniture Limited reported declines in revenues and income in the third quarter of 2022, citing a consumer push toward promotional-level products as budgets get tighter.
Even though those metrics were negative, the Toronto-based company, which reports earnings in Canadian dollars, produced a 13% increase in earnings per share in the three months ending in September. 30.
“Despite a difficult macroeconomic and consumer environment, our team persisted in executing during the third quarter, resulting in strong profitability for shareholders. While revenue was down slightly from a record Q3 last year, a strategic decision to preserve margins in the quarter translated into a 173 basis point increase in gross margins compared to the same period last year,” noted LFL’s president and chief executive officer, Mike Walsh. “The company’s $200 million substantial issuer bid that closed earlier this year, a commitment to balancing promotion with profitability, and an unwavering culture of efficiency all contributed to an increase in adjusted diluted EPS of 13% from Q3 of last year.”
LFL’s revenue for the quarter was $662.2 million, down from $683.2 million in the third quarter of 2021. Comparing the current quarter to the same period last year, revenue dropped $21.0 million or 3.1%.
Adjusted net income for the quarter was $59.2 million, down $1.4 million or 2.3% from the $60.6 million recorded in the same period last year. A $9.9 million or 20% increase in adjusted net income was recorded from the third quarter of 2020.
In comparison to the current quarter, the adjusted diluted earnings per share for the third quarter of 2021 increased by 10 cents per share, or 13%, to 77 cents per share.
LFL reported net income for the year as of the first nine months of 2022 at $136.2 million, which is a 9.62% decrease from $150.7 at the same point in 2021.
Walsh predicted that consumers’ preferences for lower-priced goods might persist in the future, but he thinks LFL is well-positioned to benefit.
“Moving toward year-end, we expect the market to get more promotional as inflationary pressures on discretionary income continue to impact consumer spending,” he said. “Our Q3 results offer additional proof that LFL’s size and coast-to-coast integration gave us access to a number of levers to lessen the effect on the bottom line. With inventory starting to move more freely, we’ll keep providing our customers with a wide range of products across categories and price points, whenever and however they want to shop.”
Recently, LFL announced that The Brick, one of its subsidiaries, would build a 500,000-square-foot distribution center and headquarters in Edmonton. Walsh called that move a “a large step toward enhanced efficiencies and customer service in the region.”
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