Second Quarter Highlights
- Revenues decreased by
$51.7 million (31.0%) mainly as retail stores were temporarily closed for an average of 54% of normal operating days1 in Q2 2020 - Generated vigorous triple digit eCommerce growth across all eCommerce platforms (Sleep Country, Dormez-vous? and Endy) in Q2 2020
- Gross profit margins increased by 2.4% from 29.8% in Q2 2019 to 32.2% in Q2 2020
- Operating EBITDA1 margins decreased by 0.1% from 21.4% in Q2 2019 to 21.3% in Q2 2020
- Net income decreased by
$12.7 million from$12.2 million in Q2 2019 to a net loss of$0.5 million in Q2 2020 - Diluted EPS decreased by
$0.34 from$0.33 in Q2 2019 to ($0.01 ) in Q2 2020 - Adjusted Net Income1 decreased by
$7.5 million from$12.5 million in Q2 2019 to$5.0 million in Q2 2020 - Diluted Adjusted EPS1 decreased by
$0.19 from$0.33 in Q2 2019 to$0.14 in Q2 2020 - Maintained a strong cash position of
$99.8 million as atJune 30, 2020 , with an additional$50 million of liquidity available under the accordion component of the Company's credit agreement - Reopened all 276 retail store locations by
June 24 th with robust health and safety protocols in place - Donated
$1.5 million in mattress and bedding essentials to vulnerable communities currently under severe strain due to COVID-19 - Recognized in 2020 as a Best Workplace in Retail and Hospitality and a Best Workplace in
Ontario byGreat Place to Work Canada
CEO's Commentary and Outlook
"Our second quarter results showcase our strategic vision and demonstrate the value and benefit of our ongoing investments in digital platforms and strategic partnerships. Enhanced digital capabilities by Sleep Country and Dormez-Vous?, our 2018 acquisition of Endy,
"Despite the closure of our entire physical store network for much of the quarter, our channel-agnostic strategy and superior brand trust kept us top of mind with Canadians. Our second quarter highlighted the power of our digital infrastructure, which delivered explosive triple-digit eCommerce growth and strong results in this environment. As we navigate through this crisis, we remain confident that our business is best-in-class and poised for continued growth and market share expansion.
Our business' financial position was secured by the immediate measures we took to preserve liquidity and ensure business continuity, including an expanded senior secured credit facility, reduced executive and Board compensation, and suspended NCIB and dividend. While the Canadian retail landscape remains uncertain in the near-term, our business' positive momentum, differentiated omnichannel infrastructure, financial flexibility and exceptional employees position us well to continue to drive profitable growth and deliver shareholder value well into the future," concluded Friesema.
(C$ thousands unless otherwise stated; other than store and share data) | Q2 2020 | Q2 2019 | % Change |
Revenues | (31.0%) | ||
SSS1 | N/A | 1.9% | N/A |
Gross profit margin | 32.2% | 29.8% | |
Stores opened | - | 6 | |
Stores renovated/relocated | - | 8 | |
Operating EBITDA1 | (31.3%) | ||
Operating EBITDA margin1 | 21.3% | 21.4% | |
Net Income (Loss) | ( | (103.9%) | |
Adjusted Net Income (Loss)1 | 5,009 | (60.0%) | |
Earnings (Loss) per share – Basic | ( | (103.0%) | |
Adjusted Earnings (Loss) Per Share – Basic1 | (58.8%) | ||
Adjusted Earnings (Loss) Per Share – Diluted1 | (57.6%) |
1 See the Non-IFRS Measures section of this news release |
Summary of Second Quarter Financial Results
The outbreak of the COVID-19 pandemic has had an adverse impact on the Company's operations and financial results for Q2 2020 compared to prior year.
Revenues decreased by
Gross profit decreased by
Total General and Administrative ("G&A") expenses decreased by
Finance related expenses increased by
Operating EBITDA1 decreased by
Net Income for Q2 2020 decreased by
Adjusted Net Income1 for Q2 2020 decreased by
Summary of Six Month Financial Results
The outbreak of the COVID-19 pandemic has had an adverse impact on the Company's operations and financial results for YTD 2020 compared to prior year.
Revenues decreased by
Gross profit decreased by
Total G&A expenses increased by
Finance related expenses increased by
Operating EBITDA1 decreased by
Net income for YTD 2020 decreased by
Adjusted Net Income1 for YTD 2020 decreased by
Conference Call
About Sleep Country
Sleep Country is
Non-IFRS Measures
This news release makes reference to certain measures that are not recognized under IFRS and do not have a standardized meaning prescribed by IFRS. They are therefore unlikely to be comparable to similar measures presented by other companies. These measures are provided as additional information to complement IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, they should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. The Company uses non-IFRS measures including "Same Store Sales" or "SSS", "Operating Days", "EBITDA", "Operating EBITDA", "Adjusted Net Income" and "Adjusted Earnings Per Share" to provide investors with supplemental measures of its operating performance and thus highlight trends in its business that may not otherwise be apparent when relying solely on IFRS financial measures. The Company also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. The Company's management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts, and to determine components of management compensation. For a reconciliation of these non IFRS measures refer to the Company's MD&A for Q2 2020 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 Company's 2019 annual information form (the "AIF") filed on
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.
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