Leon’s Furniture’s ability to deliver higher earnings in the latest quarter stand in contrast to the broader North American furniture retail industry. This outperformance demonstrates the firm’s market leadership, operational efficiency, and effective business model that can thrive even in challenging market conditions.
The company’s upcoming real estate initiatives represent significant catalysts for share price appreciation. Those include plans to establish a real estate investment trust (REIT) to unlock the value of its substantial real estate holdings.
Meanwhile, the stock trades at just 11.3 times the company’s forward earnings forecast.
LEON’S FURNITURE LTD. (Toronto symbol LNF; www.leons.ca) sells furniture and appliances through 299 stores, mainly under the Leon’s and The Brick banners. Franchisees operate 98 (32.8%) of those outlets.
Leon’s has built its chain of furniture stores on four main strengths: a huge selection of furniture, appliances and electronics; a lowest price guarantee; strong after-sales service; and aggressive TV, radio and print advertising.
In February 2025, through a 50/50 joint venture with Qualico Properties, the company opened a new corporate headquarters and distribution centre for The Brick chain in Edmonton. The extra inventory capacity will help speed up the delivery of merchandise through Leon’s physical stores and online channels.
[ofie_ad]
Leon’s still aims to set up a new real estate investment trust (REIT) that will hold its real estate assets. It then plans to hand out units in the REIT to its shareholders or sell units to the public, possibly in 2025.
Leon’s Furniture: Sales growth should resume as supply chains are restored
In the fourth quarter of 2024, Leon’s sales declined 2.9%, to $666.7 million from $686.9 million a year earlier. Same-store sales also fell 3.2%. Those drops were mainly because supply chain disruptions cut its furniture inventories.
Earnings in the quarter jumped 36.1%, to $0.98 a share, (or a total of $67.4 million) from $0.72 a share (or $48.9 million). However, if you exclude a gain on the settlement of a legal dispute, earnings per share rose 2.2% over the year-quarter.
The company’s supply chains are now improving, which should lift its inventories to normal levels. It also gets less than 15% of its products from the U.S., which limits its risk to tariffs.
Leon’s will probably earn $2.02 a share in 2025, and the stock trades at an attractive 11.3 times that estimate. With the October 2024 payment, the company raised your quarterly dividend by 11.1% to $0.20 a share from $0.18. The new annual rate of $0.80 yields a solid 3.5%.
Recommendation in The Successful Investor: Leon’s Furniture Ltd. is a buy.
