Leon’s Furniture Raises Dividend, Signaling Strong Growth Outlook

Leon's Furniture Ltd. offers both defensive market leadership and significant value catalysts, with the planned REIT spinoff creating an extra pathway to superior returns.

As Canada’s largest furniture retailer with commanding market positions - #1 in furniture, #1 in appliances, and #2 in mattresses - Leon’s benefits from substantial competitive moats through its nationwide distribution network spanning 298 stores and a sophisticated omnichannel sales platform.

The investment thesis strengthens considerably when considering the significant value unlock potential from the planned REIT spinoff of 5.2 million square feet of prime real estate holdings, a proven wealth creation strategy successfully executed by Canadian retailers like Canadian Tire and Loblaw.

Meanwhile the shares trade at an attractive 14.0x forward earnings with a newly enhanced 3.2% dividend yield.

LEON’S FURNITURE LTD. (Toronto symbol LNF; www.leons.ca) operates 298 stores that sell furniture and home appliances, mainly under the Leon’s, The Brick, and Appliance Canada banners. Franchisees operate 97 (32.6%) 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.

As part of its plan to unlock the value of its real estate, Leon’s is redeveloping 40 acres of land in central Toronto. The development will include its new corporate headquarters, a flagship retail store, and up to 4,000 residential units, including townhouses and apartment buildings. It remains in the planning stages.

Impressive quarterly gains amid challenging market conditions

In the first quarter of 2025, Leon’s sales rose 3.1%, to $579.5 million from $562.3 million a year earlier. Same store sales increased 3.0% in the quarter. That’s on top of a 9.0% increase a year ago. Furniture and its commercial appliance business were responsible for the rise.

Excluding one-time items, earnings jumped 47.0%, to $24.1 million from $16.4 million. Per-share earnings rose at a slightly slower rate of 45.8%, to $0.35 from $0.24, due to an increase in the number of shares outstanding.

The retailer gets less than 15% of its products from the U.S., which limits its risk to tariffs. It should also benefit from the “Buy Canadian” trend.

Leon’s will raise your quarterly dividend by 20.0% starting with the October 2025 payment. Investors now receive $0.24 a share instead of $0.20. The annual rate of $0.96 yields a solid 3.2%. Moreover, the stock trades at just 14.0 times the $2.14 a share that the company should earn in 2025.

Recommendation in The Successful Investor: Leon’s Furniture Ltd. is a buy for aggressive investor.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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