Leon's Furniture Ltd. saw its first-quarter profits drop to $8.6-million due in part to increased marketing costs and spending related to four new stores that opened late last year.
The furniture and appliance retailer said Monday the economic slowdown continues to affect its results – as shoppers are less inclined to splurge on big ticket items – adding it doesn't see any signs of immediate improvements.
"As such, we anticipate that consumer discretionary spending will remain soft throughout 2012," Leon's said in a statement.
"To help counter this, we plan an even more robust marketing and merchandising campaign for the balance of 2012."
The Toronto-based Leon's said the profit amounted to 12 cents per diluted share for the quarter ended March 31, down from $10.3-million, or 14 cents per diluted share, in the same quarter in 2011.
Sales at Leon's totalled $200.7-million, including $43.2-million in franchise sales. The results were up from $191.6-million, including $40.8-million in franchise sales a year ago.
Same store sales – a key metric in the retail industry – at the corporate locations were down 0.7 per cent, while franchise sales grew 1.6 per cent.
Revenue totalled $157.4-million, up from $150.8-million.
Net operating expenses of $53.3-million were up 8.1 per cent from a year ago on marketing, payroll and occupancy costs due to the new store openings and higher sales commissions as a result of higher sales.
Leon's said major renovations are underway at stores in Sudbury and Sault Ste. Marie in Ontario.
It has already started construction on a new store in St. John, N.B. and has secured sites for four new corporate stores to be opened in 2012 and 2013 in Orangeville and Brantford, Ont., as well as in Sherbrooke, Que., and Rocky View County, Alta.
Leon's has 43 corporate and 32 franchise stores.