Leon’s Furniture Limited reported higher net income in the third quarter of 2026 despite a decline in revenue and system-wide sales, as growth in appliance and mattress sales helped offset weaker furniture results and a $12.5-million gain from the sale of a former Edmonton distribution centre.
The Toronto-based retailer said Thursday that net income for the three months ended Sept. 30 was $50.9 million, up from $50.3 million in the same period last year. Revenue fell 0.9 per cent to $672.8 million, while system-wide sales, including franchise locations, declined 0.8 per cent to $802 million.
Mike Walsh, President and CEO of Leon’s Furniture Limited, said the company delivered results in a challenging retail environment, with inventory availability affecting sales performance.
“During the third quarter, our team executed with discipline and delivered solid results in an environment that remained challenging. Revenue was 0.9% lower than a strong third quarter last year, when furniture sales grew 11.2%. Delays in planned inventory receipts held back furniture sales. The appliance category rebounded in both our retail and commercial channels, and mattresses grew for a third consecutive quarter on the continued strength of our focused-assortment playbook. Gross margin held at 44.5%, in line with last year, as improved margin rates across our categories and our higher-margin insurance and delivery services offset a less favourable sales mix.”
Furniture sales weighed down by inventory delays
Furniture category sales declined 5.6 per cent during the quarter, reflecting delays in planned inventory receipts and a comparison with the third quarter of 2025, when furniture sales increased 11.2 per cent.
The declines were partly offset by growth in appliance and mattress sales. Appliance sales rebounded in both retail and commercial channels despite inventory challenges affecting the company’s vendor base, while the mattress category recorded its third consecutive quarter of growth.
Same-store sales decreased 1.2 per cent to $655.3 million compared with $663.4 million a year earlier. The company opened two new Leon’s corporate stores in Ontario during the quarter.
Gross profit was $299.5 million, down from $302.6 million in the third quarter of 2025. Gross profit margin was 44.52 per cent, compared with 44.59 per cent a year earlier, as improvements in product category margins and higher revenue from insurance and delivery services were largely offset by an unfavourable sales mix.
Selling, general and administrative expenses totalled $240.6 million, compared with $241 million in the prior-year quarter. However, those expenses represented 35.76 per cent of revenue, up 25 basis points, largely because of higher last-mile delivery costs associated with fuel prices and the impact of lower revenue on fixed costs.
Edmonton property sale boosts earnings
The company’s reported earnings also reflected the sale of a property in Edmonton that previously served as The Brick’s corporate headquarters and distribution centre.
The transaction closed Sept. 30 for $21.4 million, generating a pre-tax gain of $12.5 million. The proceeds were received Oct. 1 because of a bank holiday, according to the company.
Adjusted net income, a non-IFRS measure, increased 15.6 per cent to $51.2 million from $44.3 million a year earlier. However, normalized adjusted net income, which excludes the impact of non-recurring items and changes in the fair value of financial derivatives, was $41.9 million, down from $43.9 million, a decrease of 4.6 per cent.
Adjusted diluted earnings per share were 74 cents, up from 65 cents in the third quarter of 2025. Reported diluted earnings per share were also 74 cents, compared with 73 cents a year earlier.
Leon’s Furniture Limited is the largest retailer of furniture, appliances and electronics in Canada. Its retail banners include: Leon’s; The Brick; Brick Outlet; and The Brick Mattress Store. Finally, with The Brick’s Midnorthern Appliance banner alongside with Leon’s Appliance Canada banner, this makes the Company the country’s largest commercial retailer of appliances to builders, developers, hotels and property management companies. The Company has 304 retail stores from coast to coast in Canada under various banners.
Company plans to focus on market share
Walsh said consumers remain cautious and are placing greater emphasis on value, prompting the company to plan the remainder of the year prudently. He also noted that supply chain delays continue to affect operations heading into the fourth quarter, although the company’s inventory position has improved.
“While consumers remain cautious, they are still shopping, but with a sharper focus on value, and we are planning the balance of the year prudently. Our inventory position has improved, however, supply chain delays continue to be a factor into Q4. In markets like this, our priority is to gain share and come out of the cycle stronger. Our scale, national distribution network and rock-solid balance sheet, with $622.5 million in unrestricted liquidity, position us to continue delivering value to Canadians and long-term returns for our shareholders.
“Earlier today, our Board of Directors approved changes to our senior management team. Luke Leon has been appointed to the role of Chief Operating Officer of the LFL Group effective December 1, 2026. Luke’s 30 years of experience and deep understanding of the organization will serve him well in his new role. I am very confident in our ability to continue improving every facet of the organization. While the current retail environment presents ongoing challenges, we have strong confidence in our senior leadership team and its ability to navigate those challenges, strengthen our company, and drive continued progress and future accomplishments.”
The company said it opened four new locations during the quarter, including two corporate stores and two franchise locations. Its Leon’s division also held a grand re-opening for a newly built store in Welland, Ont., described as the birthplace of the brand.
As of Sept. 30, Leon’s Furniture reported unrestricted liquidity of $622.5 million, comprising cash, cash equivalents, debt and equity instruments, and its undrawn revolving credit facility.
The company said its principal objective is to increase market share and profitability while managing costs and continuing to invest in growth initiatives. Those investments are intended to attract customers to its e-commerce websites and its 304 retail locations across Canada.
Leon’s directors also declared a quarterly dividend of 24 cents per common share, payable Jan. 7, 2027, to shareholders of record at the close of business Dec. 10, 2026.
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