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Leon's Net Income For Quarter Increases 41.7%

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For the three months ended June 30, 2010, total Leon's reported sales were $212,277,000 including $45,493,000 of franchise sales ($209,931,000 including $44,693,000 of franchise sales in 2009), an increase of 1.1%. Net income was $11,873,000, 17 cents per common share ($8,620,000, 12 cents per common share in 2009), an increase of 41.7% per common share.

For the six months ended June 30, 2010, total Leon's sales were $413,396,000 including $87,821,000 of franchise sales ($405,131,000 including $87,368,000 of franchise sales in 2009), an increase of 2.0% and net income was $23,843,000, 34 cents per common share ($17,191,000, 24 cents per common share in 2009), an increase of 41.7% per common share.

For the second quarter of 2010, the company reported higher sales and a significant improvement in profits when compared to the second quarter of 2009. Higher sales reflect a general improvement in the economy. The profit improvement was mainly the result of three key factors: higher sales compared to the prior year's quarter; an improvement in our gross margin which was aided by the strengthening of the Canadian dollar along with a more favourable product mix; and the continuation of improved productivity and expense controls that were initiated in the prior year.

"Although we are satisfied with the results year to date, believe that we must remain vigilant for the balance of 2010 in order to continue to improve the performance of our Company. Pursuant to our robust expansion plans announced last quarter, construction is well on its way on a new 73,000 sq. ft. facility in Thunder Bay, Ontario which we plan to open before the end of this year. We will soon begin construction on a new 84,000 sq. ft. building in Regina, Saskatchewan that we plan to open by the spring of 2011. In addition, we have signed leases for a 76,000 sq. ft. store in Guelph, Ontario and a 46,700 sq. ft. store in Rosemère, Quebec. We anticipate the opening of these showrooms, which will be completely renovated, by the summer of 2011. We also plan major renovations and additions to be complete by the end of the year at our Sault St. Marie and Sudbury stores. Finally, we have just recently signed two new franchises; Collingwood and Fort Frances, Ontario with anticipated grand openings this fall."

The Directors declared an increase in the quarterly dividend from 7 cents per common share to 9 cents per common share payable on the 8th day of October 2010 to shareholders of record at the close of business on the 8th day of September 2010. As of 2007, dividends paid by Leon's Furniture Limited are "eligible dividends" pursuant to the changes to the Income Tax Act under Bill C-28, Canada.

The Directors have also approved, subject to obtaining regulatory approvals, the continuation of the Company's ongoing Normal Course Issuer Bid, which expires on September 9, 2010. Pursuant to the continued bid, the Company intends, in the twelve months commencing September 10, 2010, to purchase up to the lesser of 4.99% of its Common Shares outstanding on August 30, 2010, and the amount equal to 4.99% of its Common Shares outstanding on the date the Toronto Stock Exchange accepts the notice of intention to make a normal course issuer bid.

Since September 10, 2009, the date on which Leon's current issuer bid commenced, the Company has purchased 413,317 Common Shares at an average price of $10.38 per share. The Company's Board of Directors believes that the purchase of its common shares is an appropriate use of its corporate funds, given its very strong liquidity position.

 

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