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News Releases - 2005
Home > Investors > News Releases > 2005 > Liquidation World Announces Record Q1 Revenue
Calgary, February 8, 2005
Management to focus on cost controls to improve earnings.
- 2005 – 1st QUARTER HIGHLIGHTS
- Highest Q1 sales ever
- Same-store customer transaction counts up 3%
- $6.9 million in cash generated •• Increased expenses reduce earnings 50.2%
- Three outlets opened, one closed. Now 104 outlets
- Purchased 28,800 shares pursuant to normal course issuer bid
CALGARY, FEB. 8 – Liquidation World Inc. (LQW: TSX) today announced its results for the first quarter of fiscal 2005, representing 13 weeks of operations ending January 2, 2005.
Revenue increased 2.2% to $51,685,000 from $50,562,000 during Q1 2004, setting a record for the highest first quarter sales in the Company’s history. (Revenues have been restated from those reported February 18, 2004, to remove revenues of discontinued operations.)
At the same time, the Company reported a 50.2% decrease in net earnings to $939,280 ($0.11 per share) in Q1 2005 from $1,886,864 ($0.22 per share) in Q1 2004. Earnings from continuing operations also declined, from $2,039,000 ($0.24 per share) to $939,000 ($0.11 per share).
“The Company exceeded last year’s sales because of six additional outlets and a 3% increase in same-store customer transaction count,” explained Executive Vice-President and Co-CEO Darren Gillespie. “But earnings decreased because of higher operating costs, lower margins brought about by increased freight costs, and a slight decline in same-store sales.
“Timing plays a big role in any short-term snapshot of the Company’s performance. We went into the year up against one of our largest events ever—a massive liquidation of linens and textiles that accounted for almost $4 million in sales during Q1 2004. Challenges in securing goods as attractive as these—themselves the result of the bankruptcy of one of North America’s last large-scale textile mills—adversely affected basket size.
“Historically, we’ve proven that large event deals like this always become available, although their timing is uncertain. As usual, there is a substantial volume of general closeout merchandise and opportunity buys for our ongoing needs, however Liquidation World buyers continue to also search for those exceptional deals, like the linens and textiles, by actively sourcing new clients through trade shows and Asian buying trips, as well as by working with their current contacts to deal with their companies’ ever-present inventory challenges. In addition, the strengthening Canadian dollar gives us greater access to opportunity buys from around the world.”
The Company’s selling expenses increased $1,484,000 in the quarter compared to the same period in 2004. Store labour, marketing expenditures, and operating and start-up costs associated with new store openings each contributed almost equally to this increase.
General and administrative costs related to professional fees for new real estate leases, costs associated with a new merchandise management system, and other nominal items amounted to $170,000.
The Company also expensed $69,000 for stock-based compensation pursuant to new accounting requirements. Higher depreciation charges of $79,000 reflect an increased investment in capital assets such as store fixtures.
“In the absence of another large-scale buy like the linen and textile deal of 2004, we had the opportunity to pare down our inventory while generating $6.9 million in cash during the quarter. Accounts payable were reduced to a four-year low, and 28,800 shares of stock were repurchased pursuant to a normal course issuer bid,” Gillespie said.
As previously announced, the Company expects to invest approximately $10 million in infrastructure upgrades, with monies allocated to a scan-based merchandise management system, new point-of-sale terminals, as well as new stores and store upgrades in 2005. The merchandise management system will be implemented over two years and will allow for better inventory and price management, decreased costs and increased efficiencies. In Q1 2005, $1,182,000 was invested in these capital expenditures.
“As for the longer-term view, we are excited about a number of internal initiatives that continue to evolve,” said Gillespie. “Most important is the launch of our five-year plan that was presented to staff this past fall. We look forward to seeing their experience and enthusiasm implement strategies that will build our brand, strengthen our buying team, improve our customers’ shopping experience and further develop the systems and infrastructure that will support our growth.
“Liquidation is a business of opportunity. With a strong balance sheet, we believe the company is well-positioned to expand our retail presence and capitalize on larger and more profitable buys when the situation warrants. We will aggressively search out these opportunities and remain confident that we have the people and resources to make the most of each as they arise.”
At the Company’s Annual General and Special Meeting, held Thursday, February 3, 2005 in Calgary, Alberta, Rob Bakshi, Darren Gillespie, Leslie Landes, Herb Lukofsky, Charles M. Murray, and Robert Thomson were re-elected to the Board of Directors.
Rob Bakshi is the President of Panarim Enterprises, Inc. Darren Gillespie is a Senior Executive VP and Co-CEO of Liquidation World. Leslie Landes is the Chairman of the Board of Stockgroup Information Systems, Inc. Herb Lukofsky, CA is a Partner with Lukofsky, Lajoie, and Associates. Charles Murray is the President of Chad Murray Sales and Marketing Inc. Robert Thomson, QC, is the President of Rovalex Investments, Inc.
Also at the meeting, the Shareholders approved an amendment to the By-Laws that changes the quorum for a Shareholder meeting to be 27% of the shares entitled to vote.
At a subsequent Board of Directors meeting, Leslie Landes was appointed as Chairman of the Board of Liquidation World. Aside from his roles as Chairman of both Liquidation World and Stockgroup Information Systems, Inc., Mr. Landes is also a Director of TIR Systems Ltd., and he is a past President of Jim Pattison Industries Ltd., one of Canada’s largest private companies.
Dale Gillespie, founder and former CEO of Liquidation World, has accepted a position as Chairman Emeritus with the Company. After 18 years of service to Liquidation World, most recently as Chairman, Dale has decided to pursue other interests. His energy, enthusiasm, and business sense guided the company as it grew into one of North America’s preeminent liquidators with more than 100 locations in Canada and the US. Along the way, Dale posted 62 quarters of consecutive profit, earned the prestigious Pinnacle and Entrepreneur of the Year awards, was featured on the front cover of Canadian Business magazine, and made countless friends of thousands of associates and industry contacts around the world. Dale and his wife Dianne, would often spend 200 days a year or more on the road visiting stores, coaching, and educating associates on all aspects of the business. As Chairman Emeritus, Dale, and his wealth of knowledge and experience, will remain an asset to the Company.
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 1,800 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.
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) 291-130