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Home > Investors > News Releases > 2004 >Liquidation World Annual Net Earnings Climb 198%
Calgary, December 13, 2004
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Liquidation World Inc. (LQW - TSX), today announced its results of operations for the 52 weeks ended October 3, 2004. Annual revenue increased 8.1% to $184,418,000 in fiscal 2004 from $170,535,000 in fiscal 2003. Earnings from continuing operations increased 98.0% to $2,943,000 ($0.35 per share) from $1,487,000 ($0.17 per share) in 2003. Net earnings increased by 198% to $2,293,000 ($0.27 per share) in 2004 from $769,000 ($0.09 per share) in 2003.
Liquidation World set a company record for retail sales with the vast majority of its outlets reporting yearover-year sales growth. The Company also opened seven new stores in fiscal 2004. While four were closed in the same period, three new outlets have been opened since year end, including the Company’s 104th in Prescott, Ontario which opened last week.
“We made it clear last year that we would focus on operational excellence and on our core business activities. We believe the increased revenue figures and the new stores reflect our commitment to these goals,” said Senior Executive Vice-President and Co-CEO Darren Gillespie. “This kind of growth is indicative of the potential our business model has to offer.”
During the fourth quarter, the thirteen weeks ended October 3, 2004, revenue increased 7.6% to $45,199,000 from $41,999,000 during the thirteen weeks ended October 5, 2003. Earnings from continuing operations decreased 120.6% to a loss of $533,000 ($0.06 per share) in Q4 2004 from earnings of $2,590,000 ($0.30 per share) in Q4 2003. Net earnings decreased 121.3% to a loss of $476,000 ($0.05 per share) in Q4 2004 from net earnings of $2,238,000 ($0.26 per share) in Q4 2003.
Additional details are provided in the financial statements below.
“While the results of the year as a whole were positive, the fourth quarter was a disappointment,” Gillespie added. “Our Canadian operations remained profitable during the period. US operations did not. However, revenue is climbing in the US and we continue to work on improving performance south of the border. Our American operations have traditionally posted lesser returns than those here at home, but we feel our presence in the US has historically served as an important gateway to large and profitable buying opportunities.”
Executive Vice President and CFO, Andrew Searby said, “The fourth quarter was unfavorably impacted by increases in selling and store operations, which include expenses associated with two outlets opening late in the quarter. Also, the quarter had larger than normal distribution costs which were, in part, due to the relocation of our Ontario distribution facility. Other costs were incurred in advance of sales as we moved to rebuild our inventory to prior historic levels in anticipation of Christmas and the busiest months of the year. As well, an inventory adjustment was made at the end of the quarter after a semi-annual physical inventory count. The result was a write-down of $350,000. This modest adjustment suggests the additional inventory count after the second quarter helped the Company accurately track its margins in the manner in which it was intended.”
Added Gillespie, “Backed by 17 years of history and profit, we feel we have established ourselves as a company that no longer serves a small niche. Consumers have become more sophisticated, and discount and closeout shopping have become mainstream. We feel there is a larger market than ever for both quality, and a variety of merchandise at extreme value prices.
“To capitalize on these opportunities, we have laid out a new five-year plan that we are currently sharing with all staff and stakeholders as we visit our outlets and offices across Canada and in the US. The plan is based on four pillars in which we will make a conscientious investment, and include:
- The Liquidation World brand
- Our outlets
- Our purchasing team, and …
- Our infrastructure
“We have already begun to invest in our brand, and in our outlets to attract a broader and larger base of consumers to stores that are well merchandised, clean, fun and friendly places to shop. Our newer outlets reflect this belief, and work has begun on some established locations to set a model of consistency that can roll out across all Liquidation World outlets. You can see preliminary results by visiting our two London, Ontario locations, as well as our new stores in Brantford, Prescott, and Wallaceburg, Ontario.
In the west, new outlets have also been added in Aldergrove, BC and in Renton, Washington. Meanwhile, our Boise, Idaho outlet has relocated to a larger and better facility. As we assess new markets, we are also careful to review the ongoing potential of our current stores, and will act to close those few that cannot meet our expectations.
“We also expect to expand in key geographic markets. Our move to centralize our eastern operations in a combined regional office and distribution facility in the historic and former Massey-Ferguson plant in Brantford, Ontario will allow us to service a greater number of stores in Canada’s most densely populated region.
“To facilitate growth, we will be implementing a new merchandise management and accounting system whose eventual benefits include the ability to support a scan-based inventory, and in turn, will allow for better inventory and price management, decreased costs, and increased efficiencies.
“As the plan developed, it became clear our core business held great potential and its promise demanded our full attention. As a result, earlier this year, we divested the Company of its interests in the Clear Thinking Group, Inc. (a retail consulting business) and in Product Management Corporation (a reverse logistics firm), having concluded that neither were instrumental to the success of our ongoing strategic plans.
“We also added three new members to our Board of Directors. Rob Bakshi is the President of Panarim Enterprises, Inc., and was the founder and CEO of Silent Witness Ltd. until its sale to Honeywell International Ltd. in 2003. Leslie Landes is the President of Vancouver-based Stockgroup Information Systems Inc., and Robert Thomson, QC, is President of Rovalex Investments Inc., and a former attorney with Fraser Milner where he specialized in mergers and acquisitions. Remaining on the Board are Dale Gillespie, Herb Lukofsky, and myself representing management.”
“We are very excited about our plans, our prospects, and about the energy and enthusiasm with which the organization has already begun to tackle the opportunities that lay ahead” Gillespie said.
About Liquidation World
Liquidation World plays a fundamental role in addressing the ever-present imperfections in the manufacturer-retail relationship. The Company offers services that include the retail liquidation of consumer merchandise through 104 outlets across North America, as well as auctions, and store closure sales management. Liquidation World solves asset recovery problems, in a professional manner, for the financial services industry, insurance companies, manufacturers, and other organizations. Liquidation World opened its first retail outlet in 1986 and is now the largest liquidator in Canada, with more than 1,600 employees in outlets and offices across Canada and the United States.
This release includes forward-looking statements and potential future circumstances and developments. Forward-looking statements regarding future performance are subject to risks and uncertainties and actual results may differ materially.
Download Financial Statetments... (85KB .pdf)
For more information, please contact:
Mr. Darren Gillespie, Senior Executive Vice President & Co-C.E.O.
E-mail: darreng@liquidationworld.com
Website: www.liquidationworld.com
Telephone (604) 589-7111, ext. 223
Fax: (604) 583-2255
Mr. Andrew Searby, C.A., Executive Vice President and CFO
E-mail: investorinfo@liquidationworld.com
Website: www.liquidationworld.com
Telephone (403) 250-1222
Fax: (403) 291-1306