BMTC GROUP $15.70 - Toronto symbol GBT.A

BMTC GROUP $15.70 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 45.1 million; Market cap: $708.0 million; Dividend yield: 1.6%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 36 outlets. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.

In March 2012, BMTC introduced a new banner, Economax, which offers lower-priced products. The company rebranded four outlets that it had operated as Brault & Martineau liquidation centres.

In 2013, BMTC opened four more EconoMax stores, and it added one, in Joliette, in March 2014. It plans to open another, in LaSalle, this fall.

In the three months ended June 30, 2014, BMTC’s sales rose 0.8%, to $182.9 million from $181.4 million a year earlier. It made $0.31 a share in the latest quarter, up 6.9% from $0.29.

BMTC repurchased 4.0% of its shares in 2013, and it plans to continue these buybacks. Repurchases cut the number of shares outstanding, which means pershare earnings rise because net income is divided by fewer shares. That helps boost stock prices.

Even so, BMTC’s outlook is uncertain in a tough retail climate. Its new focus on its discount Economax stores will also squeeze its profit margins.

BMTC Group is still a hold.

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