Terry Leon smiled for the cameras and expressed enthusiasm at the press conference for his $700-million acquisition of The Brick Ltd. on Monday. But a hint of his real feelings came out in the company's quarterly earnings released the very next day.
One line sums them up: "The slowdown in the economy continues to affect our results and we do not see any immediate signs of improvement."
You didn't hear much of those fears Monday. Instead, the acquisition was pitched as a combination that would help the two companies fend off U.S. competitors. But could it be that Leon's is worried and wants to bring its fast-recovering rival under its wing to mask its own struggles?
Keep in mind that the two companies will be kept completely separate, so it's not as though there will be big synergies to capitalize on.
If you take Mr. Leon at his word , he's been looking for an acquisition for the past few years – so this deal didn't come out of the blue. But Leon's latest numbers must have weighed on management. Same store corporate sales fell by 3.3. per cent relative to the third quarter of 2011, and over the first nine months of the year, net income slumped 17 per cent. Not very pretty.
A better look at The Brick's success will come when the company reports its quarterly results on Thursday.