BMTC GROUP $16.50 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk)(514-648-5757; No website; Shares outstanding: 44.9 million; Market cap: $725.0 million; Dividend yield: 1.5%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 37 outlets. It mainly sells these items 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.
BMTC has opened seven more Economax stores since then. It has also bought land in Drummondville for a new store to open in late 2015.
In the three months ended December 31, 2014, BMTC’s sales rose 5.2%, to $183.2 million from $174.2 million a year earlier.
But even with the higher sales, the company earned $0.40 a share, down 16.7% from $0.48. The lower Canadian dollar increased the cost of furniture from U.S. and Chinese suppliers. BMTC’s focus on its discount Economax stores also squeezed its profit margins because it sold more lower-priced furniture.
The company is remodeling its stores and replacing all of their signage, as well as upgrading its websites and e-commerce systems. These moves should pay off in the longer term, but right now the company’s outlook remains uncertain in a tough retail climate.
BMTC Group is still a hold.
