Shares of Sleep Country Canada (ZZZ) gained 16% on Wednesday morning. The Canadian mattress retailer reported strong second-quarter results, despite store closures impacting 32.7% of normal operating days.
Revenues came in at C$192.2 million in the quarter ended June 30, an increase of 67.3% from C$114.9 million in the prior-year quarter. E-commerce sales represented 29.6% of revenues. Revenues from mattresses and accessories increased by 66.6% and 69.8%, respectively, from Q2 2020 to Q2 2021. (See Sleep Country Canada stock charts on TipRanks)
Meanwhile, net income amounted to C$17.0 million (C$0.46 per share) in Q2 2021, up from a net loss of C$0.5 million (-C$0.01) in Q2 2020.
On an adjusted basis, diluted earnings per share increased by 269.2%, from C$0.13 to C$0.48.
Sleep Country CEO Dave Friesema said, “We remain focused on realizing customer-centric growth across our three strategic platforms. In Q2, we made important progress with several transformative milestones, including expanding our digital footprint through an exclusive partnership with Best Buy Marketplace, our first wellness-focused brand ambassador campaign with tennis Grand Slam champion Bianca Andreescu and the expansion of the Endy brand and product line with the launch of the Endy sofa.
“In addition, we announced the opening of two new storage hubs that will drive operational efficiencies, improve the opportunity for margin expansion and fuel the next chapter of our exciting growth roadmap.”
Sleep Country opened four new stores in the quarter, bringing the total number of stores to 287 across Canada.
On July 25, National Bank Financial analyst Vishal Shreedhar maintained a Hold rating on ZZZ and a C$38.00 price target. This implies 16.9% upside potential.
Overall, consensus among Wall Street analysts is that ZZZ is a Moderate Buy based on five Buys and two Holds. The average Sleep Country Canada price target of C$38.43 implies 16% upside potential to current levels.
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