CA - Sleep Country Canada Holdings Inc. (SCCAF) Q1 2024 Earnings Call Transcript

2024-05-11 17:18:08 ET

Sleep Country Canada Holdings Inc. (SCCAF)

Q1 2024 Results Conference Call

May 8, 2024 08:00 AM ET

Company Participants

Stewart Schaefer - President and Chief Executive Officer

Craig De Pratto - Chief Financial Officer

Conference Call Participants

Martin Landry - Stifel

Vishal Sridhar - National Bank

Stephen MacLeod - BMO Capital Markets

Brian Morrison - TD Cowen

John Zamparo - CIBC

Presentation

Operator

I would like to welcome everyone to Sleep Country's Q1 2024 Results Conference Call. Yesterday, Sleep Country released its financial results for its first quarter of Fiscal 2024. A copy of the earnings disclosure is available on the Investor Relations website and includes cautionary language about forward-looking statements, risks and uncertainties, which also applies to the discussion during today's conference call.

I will now turn the call over to Stewart Schaefer, President and CEO. Please go ahead.

Stewart Schaefer

Thank you, Joelle. Good morning, everyone, and thank you for joining us. With me today is Craig De Pratto, our Chief Financial Officer. Before we dive into the details of our Q1 performance, I would like to take a moment to reflect on our remarkable 3-decade trajectory. This year marks Sleep Country's 30th anniversary, and we are proud of our evolved business model, the strength of our sleep ecosystem and our channel-agnostic approach. Our unwavering commitment to innovation, operational excellence and exceptional customer experience has been the cornerstone of our legacy, reflected in our strong performance and growth over the past 30 years.

As we look to the future, we are invigorated and remain as dedicated as ever to help Canadians get their best night's sleep. This quarter, we delivered positive top line revenue results, supported by our strategic multiyear plan and the dedication of our incredible team as we navigated in this challenging retail environment. Our Q1 revenues increased by 1.6%, and our same-store sales decreased by 1.6% from Q1 of last year. Our omnichannel strategy continues to positively resonate with Canadians. Our brick-and-mortar stores continue to perform well as our e-commerce sales continue to strengthen. E-commerce sales this quarter increased by 220 basis points to 24.5% in Q1 2024 from Q1 2023. Our Q1 2024 results underscore the success of our omnichannel strategy, ensuring a seamless customer experience that caters to the sleep needs of Canadians coast to coast regardless of where and how they choose to shop. We continued to see an improved gross margin by 50 basis points in Q1 2024 from Q1 last year.

This increase was primarily driven by better product costing resulting from continued strategic initiatives across all our banners, including direct-sourcing products, while also having more control over the development and production process of our innovative products. This quarter, we did pull forward some of our advertising spend in late March. In addition, we accelerated part of our annual merchandising cycles to Q1. And as a result, we incurred incremental sales compensation costs as we moved out discontinued products to make way for this year's new exciting lineup....

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