For the three months ended September 30, 2011, Leon's reported that total sales were $223,646,000 including $49,273,000 of franchise sales ($231,546,000 including $49,421,000 franchise sales in 2010), a decrease of 3.4% from the third quarter 2010. Net income was $16,956,000, 24¢ per common share ($17,837,000, 25¢ per common share in 2010), a decrease of 4.0% per common share. The third quarter 2010 includes an after tax gain of $1,050,000 on the sale of property (1.5¢ per common share).
For the nine months ended September 30, 2011, total Leon's sales were $624,572,000 including $135,559,000 of franchise sales ($649,789,000 including $137,242,000 of franchise sales in 2010), a decrease of 3.9% and net income was $37,927,000, 54¢ per common share ($41,583,000, 59¢ per common share in 2010), a decrease of 8.5% per common share.
Leon's management said, "We continue to face a difficult economy, with decreasing new housing starts and record consumer debt. That being said, we are pleased with the efforts of our associates to continue to find ways of improving productivity and controlling expenses."
In the third quarter of 2011, the Company celebrated the grand opening of a new corporate store in Guelph, Ontario. That was followed by grand openings in the fourth quarter of 2011 of three additional corporate stores in Mississauga, Ontario; Rosemère, Quebec; and Regina, Saskatchewan. As well, during the fourth quarter of 2011 new Leon's franchise locations had grand openings in Bathurst, New Brunswick; and Drummondville, Quebec, our first franchise located in Quebec.
In addition to these new locations, the Company and existing franchisees continue to replace, renovate and expand existing stores in order to serve customers better. Renovations are well underway in our Sudbury and Sault Ste. Marie, Ontario corporate stores. Our Trenton, Ontario franchise recently completed a renovation of their store and a renovation and expansion will commence shortly at our Simcoe, Ontario franchise. Our Kentville franchise has recently completed construction of a new and larger replacement store in Coldbrook, Nova Scotia. Finally, construction has started for a brand new franchise store to replace the existing St. John, New Brunswick store.
The Company continues to explore new opportunities across Canada. The Company has recently secured sites for four new corporate stores in: Orangeville and Brantford, Ontario; Sherbrooke, Quebec; and Rocky View County, which is just north of Calgary, Alberta. Our current plan is to open these locations during 2012 and 2013. All funding for new store projects and renovations is scheduled to come from our existing cash resources.
"In light of our strong financial position," the company noted, "the Directors are pleased to declare an increase in the quarterly dividend from 9¢ per common share to 10¢ per common share payable on January 9, 2012 to the shareholders of record at the close of business on December 9, 2011. The Directors have also increased the annual dividend on the convertible non-voting series shares from 18¢ to 20¢, which will be payable on January 9, 2012 to the shareholders of record at the close of business on December 9, 2011. In addition, due to our positive cash position, the Directors are pleased to declare a special dividend of 15¢ per common share payable on January 9, 2012 to the shareholders of record at the close of business on December 9, 2011. As stated in our press release dated February 20, 2007, as of 2006, dividends paid by Leon's Furniture Limited are "eligible dividends" and for further clarification, all future dividends are eligible dividends unless otherwise stated."
Outlook: In the third quarter of 2011, Leons experienced a reduction in same store sales from the prior year quarter. They said that they "continue to see a slowdown in new housing starts and a general slowdown in consumer spending that was noted in 2010. At this point, we do not see any clear signs pointing towards a strong economic turnaround. We expect that consumers will remain cautious about major purchases and as a result we anticipate a very competitive market moving forward. To help counter this, we plan an even more robust marketing and merchandising campaign for the balance of the year. Fourth quarter sales should be aided by the recent opening of four new stores. Even with these measures in place, growing profits for the balance of this year will be challenging. Despite this, our strong financial position coupled with our experience in adjusting to changing market conditions, provide us with the confidence to adapt to whatever economic conditions prevail."