Leon's Furniture (LNF) Q2 2026 earnings summary

Executive summary

• Revenue declined 2% year-over-year to CAD 631.2 million as consumers remained cautious and value-focused, with system-wide and same-store sales both down slightly.

• Delivered retail units increased, reflecting a shift to lower price points and strong execution in core categories.

• Net income rose to CAD 35.0 million from CAD 31.8 million, while adjusted net income fell to CAD 34.8 million from CAD 39.4 million year-over-year.

• Digital and in-store channels continued to complement each other, with online sessions and sales both growing.

• Four new franchise locations were opened, and unrestricted liquidity increased to CAD 560.1 million from CAD 454.5 million.

Financial highlights

• Gross margin was 44.63%, down 19 basis points year-over-year, mainly due to lapping a prior-year benefit and unfavorable foreign currency revaluations.

• SG&A as a percentage of revenue increased by 47 basis points to 36.85%, driven by fixed cost deleverage, higher marketing, fuel, and occupancy costs.

• Adjusted net income was CAD 34.8 million (down from CAD 39.4 million); adjusted diluted EPS was CAD 0.51 (down from CAD 0.57); reported diluted EPS was CAD 0.51, up 10.9% due to prior year derivative losses.

• Unrestricted liquidity stood at CAD 560.1 million, including cash, marketable securities, and undrawn credit.

• Quarterly dividend declared at CAD 0.24 per share, a 20% increase year-over-year.

Outlook and guidance

• Early Q3 shows cautious optimism with improving traffic and average sale, though July is seasonally small and trends are based on written, not delivered, sales.

• Q4 is expected to be more favorable due to easier comps and resolution of prior flyer and weather issues.

• Supply chain pressures, especially on certain Asian shipping lanes, may impact Q3 inventory availability and margins, but mitigation efforts are underway.

• Mattress category expected to remain a favorable margin driver; pricing strategy will remain value-focused despite higher input costs.

• Management remains cautious for the remainder of 2026, focusing on prudent planning and market share gains as conditions normalize.