Michael J. Knell — Furniture Today,
EDMONTON, Alberta — Easyhome, this country’s largest rent-to-own home goods merchant,

continued to post double-digit gains in sales and earnings in the third quarter, fuelled by growth in customer counts and unit sales that were driven partly by aggressive expansion.

Total revenues in the latest quarter came to C$30.2 million, up 17.6% from C$25.7 million in last year’s comparable quarter. Net income grew 14.7% to C$2.7 million, or 26 Canadian cents per share, compared with C$2.3 million, or 24 cents per share, a year ago.

Adjusted to account for a one-time C$500,000 settlement charge in 2012’s third quarter, net income jumped 32.3%.

Easyhome said third-quarter same-store revenue growth was 8.1%, while potential monthly lease revenue jumped 15.2% to C$8.7 million. During the quarter, Easyhome served a total of 59,086 customer accounts, up 12.2% year-over-year, and opened nine new stores and two financial services kiosks.

“The record revenues were our highest comparable increase since the second quarter of 2012,” said President and CEO David Ingram in a conference call with securities analysts. “This was driven by our best-ever third quarter for growth in customers and the resulting improvement to the potential monthly lease revenue. All our major product categories experienced unit growth in the quarter, with the exception of electronics, which turned positive in September, as expected, due to the impact of lower pricing and high demand for flat-panel technology.”

In total, Easyhome had about 155,000 units on rent at the end of the third quarter. The strongest growth category was furniture, which enjoyed a 21% advance in units on rent during the quarter. While both appliances and electronics grew at a slower pace, Ingram anticipates that as retail prices for flat-screen, LCD and other high-tech TVs drop over the coming weeks, demand will pick up.

“A total of 18 stores have opened in 2013, and the company expects to complete the year with a total of 28 new stores, bringing the total store count at the end of 2013 to 190 stores,” he said. “In addition, there currently are five Leon’s kiosks, three financial services kiosks and one licensed store.”

In the nine months, Easyhome’s revenues rose 16.2% to C$87.7 million, with same-store revenues up 6%. Net income came to C$6.4 million, compared with C$3.9 million in the 2012 nine months. The company expects to realize C$400,000 in reductions in federal income tax rates, resulting in adjusted net income of C$6.8 million in the nine months, up 17% from 2012’s figure, as adjusted for the settlement payout.

Earnings per share were 62 Canadian cents in the nine months, versus 38 cents in 2012.

“The business continues to improve and our key metrics, by which we measure ourselves against our U.S. counterparts, reflect that improvement,” Ingram said. “We are now well positioned to benefit from the key holiday season, as demand for the latest electronics will increase units on lease and will likely increase the average transaction value. We are, therefore, optimistic for continued momentum in the fourth quarter.”

Easyhome also said it will change how it amortizes product in inventory that is waiting to be leased, believing its current practise fully amortizes product before the end of its useful life. The change is expected to reduce the company’s amortization expense by almost C$2.5 million annually.