Michael J. Knell — Furniture Today,
Company improves gross margins despite limited sales growth

MONTREAL — An increasingly competitive Quebec marketplace resulted in flat fourth-quarter revenues and a 12.6% drop in net earnings for BMTC Group, the largest full-line furniture retailer in the province.

In the quarter, the company recorded revenues of C$212.6 million, virtually the same as in the comparable 2004 quarter. Net earning were C$8.6 million, or 26 cents per share, compared with C$9.8 million, or 28 cents per share, in the year-earlier quarter.

For the year, revenues rose 2% to C$818.8 million, and net earnings came to C$41.9 million, or $1.20 per share, down 5.8% from 2004’s C$44.5 million, or C$1.21 per share.

“The fourth quarter is typically the strongest for electronic products, and the company had anticipated lower sales for that commodity as a result of a new competitor entering the market,” said Chairman, President and CEO Yves Des Groseillers. “This was offset by stronger results in appliances and furniture.”
 
U.S. electronics giant Best Buy entered the Quebec market at mid-year with several stores in metro Montreal. Fourth-quarter earnings were hurt by the cost of options for a retiring board member, which cut earnings per share seven cents.

Des Groseillers said sales in the Quebec City region were up 10% for the year but were mixed in Montreal — weak in the first quarter and choppy the rest of the year. The 2% sales growth for 2012 was a same-store increase since no stores were added in 2012. In November, BMTC replaced a store in Rimouski.

“Despite limited sales growth, the company managed to improve gross margins and reduce expenses,” he said.

Earnings were eroded by the costs of stock-option compensation and a share redemption program. Without these expenses, earnings per share would have risen seven cents for the year, the company said. 

While management remains positive about 2013, Des Groseillers said the rate of growth will slow thanks to a maturing housing market and increased competition.

“The past few years have seen much change in the Quebec market — rapid expansion, the arrival of several new competitors and a wave of consolidation,” he said. “The company has managed to … retain its pre-eminent position in the marketplace.

“Management feels strongly that the key to this success has been, and will remain, its determined and aggressive advertising and marketing campaign.”

BMTC operates 20 stores under the Brault et Martineau and Ameublements Tanguay banners, and distribution and administration centers in Montreal and Quebec City.