For the three months ended September 30, 2010, Leon's announced that sales were $228,921,000 including $49,421,000 of franchise sales ($236,674,000 including $49,243,000 franchise sales in 2009), a decrease of 3.3% from the third quarter 2009. Net income was $18,081,000, 26¢ per common share ($15,643,000, 22¢ per common share in 2009), an increase of 18.2% per common share. The third quarter 2010 includes an after tax gain of $1,050,000 on sale of property (1.5¢ per common share).
For the nine months ended September 30, 2010, total Leon's sales were $642,317,000 including $137,242,000 of franchise sales ($641,805,000 including $136,611,000 of franchise sales in 2009), an increase of 0.1% and net income was $41,924,000, 60¢ per common share ($32,834,000, 46¢ per common share in 2009), an increase of 30.4% per common share.
Selected Comments:
"Although our sales were lower in the third quarter 2010 compared to the prior year, we are pleased with the continued growth in profitability this year. We thank our Associates for all of their efforts this year in improving our productivity and keeping overall expenditures in check.
"Construction has been completed on a new 73,000 sq. ft. facility in Thunder Bay, Ontario which will open this week. Construction has begun on a new 84,000 sq. ft. building in Regina, Saskatchewan that is scheduled to be completed by late 2011. We have also committed to leases for a 76,000 sq. ft. store in Guelph, Ontario and a 46,700 sq. ft. store in Rosemère, Quebec. We anticipate the opening of these showrooms in the Fall of 2011. We plan major renovations to be complete by the end of next year at our Sault St. Marie and Sudbury stores. In addition, we recently had grand openings at two new franchises; Collingwood, Ontario and Fort Frances, Ontario. At the present time, all funding for new store projects and renovations is scheduled to come from our existing cash resources.
"The Directors have declared a quarterly dividend of 9¢ per common share payable on January 10, 2011 to shareholders of record at the close of business on December 10, 2010. In addition, the annual dividend on the convertible non-voting series shares of 18¢ will be payable on January 10, 2011 to the shareholders of record at the close of business on December 10, 2010. As stated in our press release dated February 20, 2007, as of 2006, dividends paid by Leon's Furniture Limited are "eligible dividends" and for further clarification, all future dividends are eligible dividends unless otherwise stated.
"During the third quarter of 2010, same store sales decreased from the prior year's quarter. We feel there were many factors that lead to this decrease in sales. We have seen lower consumer confidence as a result of the general slow down in the Canadian economy and the new HST measures that went into place in Ontario on July 1, 2010.
"This has also resulted in downward pressure on retail pricing, particularly with respect to electronics goods. Given these external pressures we have planned an innovative marketing campaign and aggressive pricing to encourage customers to purchase from our stores. In addition, we plan to open a new store in Thunder Bay this November 2010. Even with these measures in place, growing sales and profits for the balance of this year will be very challenging. Despite these concerns, our strong financial position coupled with past experience in dealing with economic slowdowns should allow us to look to the future with cautious optimism."