Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The pandemic is pummelling much of Canada’s retail sector, but Leon’s Furniture Ltd. is one of the rare companies thriving in this harrowing landscape – and investors who stood by the company through the early carnage are now getting a special treat for their support.

The retailer, whose banners include Leon’s and The Brick, announced Tuesday it will pay a special dividend of 30 cents a share. The company will also increase its regular quarterly dividend by 2 cents to 16 cents a share, restoring it to prepandemic levels after a cut in May.

While the one-time payout could arguably be tied to this week’s strong third-quarter results, notably the retailer’s 4.5 per cent same-store sales growth year-over-year, the quarterly dividend hike suggests management is quite comfortable with the company’s standing, despite all that’s going on in the world.

Story continues below advertisement

“We feel like we’ve got a good enough cushion to get through any future economy,” chief executive officer Edward Leon said in an interview. The company has built a sizable reserve of cash and liquid investments worth $464-million, and it has also been focused on cutting costs.

Such confidence convinced investors to send Leon’s shares to a record intraday high of $20.19 on Wednesday, marking a dramatic rebound after the stock fell as far as $10.25 a share in the spring. Shares closed at $19.90 Wednesday.

It’s a sharp rebound from the terror felt early this year. “We weren’t sleeping for fear of what the market might look like,” Mr. Leon said. In late March, the company temporarily laid off 3,900 employees, roughly half of its staff.

But as Canada reopened, customers came roaring back. The company reported record third-quarter revenue of $631-million, up 4.9 per cent from a year earlier, while profit climbed 48 per cent to $49-million. Leon’s staffing is back to 95 per cent of its prepandemic levels, with only a few stores in select markets operating at reduced schedules. The company said it continued to pay employee benefits to anyone who was temporarily laid off earlier this year, which cost millions of dollars.

“We’re all in the same boat of spending a lot more time at home,” Mr. Leon said, explaining the company’s revenue surge. Anyone thinking about upgrading their couch, or their TV, is more likely to do so if they’re using them every single day, he added. “I think it’s human nature.”

Leon’s does not break out its sales in physical stores versus those made online, but digital orders jumped 235 per cent from the second quarter and the company has invested in upgrading its digital offerings because customers have shown they are willing to purchase big-ticket items online. Mr. Leon said Wayfair’s average online order is close to $400, while Leon’s is around $1,000.

E-commerce likely accounts for 10 per cent of Leon’s overall sales, according to BMO Nesbitt Burns analyst Stephen MacLeod, up from between 4 per cent and 5 per cent before the pandemic.

Story continues below advertisement

While Leon’s same-store sales growth is encouraging, CIBC World Markets analyst Matt Bank noted that it might be even better than reported because revenue is only recognized when deliveries are made, and there are some supply chain delays. “Customer deposits accumulated due to significant sales orders booked but not delivered,” he wrote in a note to clients, adding that he expects “a modest revenue acceleration in [the fourth quarter].”

Even if sales ultimately slow, particularly if Canada endures a second shutdown, Leon’s has ample financial flexibility, BMO’s Mr. MacLeod wrote in a note to clients. The Leon’s chain owns most of its real estate, which means the parent company is its landlord, the retailer’s debt levels are manageable and its e-commerce platform will help bring in revenue.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies