Sleep Well. Stay Well.™
Annual
Report 2023
Sleep Country Canada Holdings Inc.
Our vision is to
champion sleep as
the key to healthier,
happier lives and
help Canadians
achieve better
tomorrows through
better tonights.
Table of Contents
About Sleep Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A Message from our Chair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
A Message from our President and CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Our Brand Portfolio At-A-Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Growth Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2023 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Management’s Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
For Sleep Country’s most recent reports, disclosures,
and stock information, please visit ir.sleepcountry.ca
1
Sleep Country Canada Holdings Inc. Annual Report 2023 About Sleep Country
We are driven by our purpose to transform lives by awakening Canadians to the
power of sleep through our unique service model, unparalleled sleep ecosystem,
unmatched expertise, superior brand trust and unwavering commitment to world-class
customer experience .
1
2
1 The Company operates the Casper brand in Canada exclusively .
Sleep Country Canada Holdings Inc. Annual Report 202346BC42AB7SK7MB126ON63QC10NS,PEI,NBGrowing networkof 301 stores Elevatedsleep expertiseExtensive productassortment from theworld’s leading sleep brandsExceptional logistics and strong supply chainPartnerships with leading Canadian retailers6 leadingeCommerce platforms 6 leading retail brands, including: - Walmart - Best Buy19 warehouses15+ mattress brands50+ sleep accessory brands1,100+Sleep ExpertsOur Sleep EcosystemOur leading omnichannel ecosystem allows our customers to seamlessly purchase our innovative sleep products across our physical and digital touchpoints.Our Brands A Message from our Chair
“As we head into our 30th year,
the Board remains deeply committed
and confident in Sleep Country’s
ability to achieve our strategic plan.
We are confident in our ability
to deliver long-term, profitable
growth and exceptional value for
our shareholders.”
Christine Magee, Chair, Sleep Country
Dear fellow shareholders;
As we celebrate Sleep Country’s upcoming momentous
30th anniversary, it is hard to believe that three decades
ago, we embarked on this journey to transform Canadians’
sleep habits and provide an exceptional customer
experience . It is the unwavering support and dedication
of our incredible team, our shareholders and the millions
of Canadians who have chosen Sleep Country that has
fueled our success .
Reflecting on 2023
Fiscal 2023 presented its fair share of obstacles, from global
events to economic headwinds . Yet, our team rose to the
occasion, demonstrating the same spirit of innovation,
ingenuity, and resilience that has been a hallmark of
Sleep Country . We are very pleased with Sleep Country’s
2023 performance . This would not have been possible
without our focus on operational excellence, exceptional
customer experiences, and sourcing the best, most
innovative products available . A heartfelt thank you to our
leadership team and dedicated associates across all our
banners – Sleep Country/Dormez-vous, Endy, Hush, and
our 2023 acquisitions, Silk & Snow and Casper (Canada) .
Additionally, we successfully launched three new brick-and-
mortar concepts for Canadians to enjoy (Endy, Silk & Snow
and the rest), further invested in our infrastructure, and
continued to refine and transform our direct-to-consumer
approach by bringing these brands to life in a physical
environment with the goal of providing Canadians with
unparalleled sleep solutions . As our industry evolves, Sleep
Country remains at the forefront, solidifying our position as
Canada’s most trusted specialty sleep retailer .
Investing in our People
Our success is directly tied to the dedication and expertise
of our associates . In 2023, we continued to invest in their
growth through comprehensive training programs and
a commitment to fostering a positive and inclusive work
environment . We strongly believe that our commitment to
our associates translates into an elevated experience for
our customers .
Our Board
As we head into our 30th year, the Board remains deeply
committed and confident in Sleep Country’s ability to
achieve our strategic plan . We are confident in our ability
to deliver long-term, profitable growth and exceptional
value for our shareholders . Our commitment to innovation,
exceptional customer service, and employee well-being will
continue to be the cornerstones of our success .
I would like to personally thank my fellow Board members for
their continued support, strategic guidance and passionate
commitment to our business . Your leadership and passion
are invaluable to our journey .
Thank you to our valued shareholders for your continued
trust and support . We are incredibly excited about the
opportunities ahead and remain dedicated to transforming
lives by awakening Canadians to the power of sleep for
many years to come . .
Sleep well, and stay well .
Christine Magee
3
Sleep Country Canada Holdings Inc. Annual Report 2023
A Message from our President and CEO
Maintaining our position as Canada’s leading omnichannel
sleep retailer, we continued to expand our brand portfolio
through the acquisitions of Silk & Snow, one of Canada’s
fastest growing direct-to-consumer sleep retailers, followed
by Casper (Canada) in early 2023 . These key acquisitions
perfectly align with the Company’s strategic journey to
expand and offer Canadians the very best sleep solutions .
Unlocking Synergies and Embracing Innovation
Our very talented team has been working to unlock
synergies across all our banners while preserving the unique
identities of each of our brands which translates into
tremendous value for both our customers and shareholders .
In 2023, one of our key strategic initiatives focused on
starting to bring our direct-to-consumer brands - Endy,
Hush, Silk & Snow and Casper (Canada) - into Sleep
Country’s well-established warehouse and distribution
network . This initiative creates cost savings while leveraging
our fixed costs allowing us to directly manage our inventory
and have more control over the order fulfillment process
to better serve our customers . Also, by leveraging Sleep
Country’s distribution network, our online brands can
provide customers, in certain geographies, with an elevated
delivery experience through Sleep Country’s Green Glove
Delivery where customers can choose to have their mattress,
base and/or boxspring assembled for them in the room of
their choice and their old mattress and excess packaging
removed and responsibly disposed or recycled .
Looking ahead, we envision Sleep Country as the ultimate
sleep ecosystem offering a comprehensive suite of
solutions that cater to every sleeper’s needs . By fostering
collaboration and knowledge-sharing between our diverse
brands, we can push the boundaries of sleep technology
and innovation . We are excited to continue exceeding
customer expectations as we transform lives by awakening
Canadians to the power of sleep .
Elevating the Customer Journey:
Online, In-Store and Beyond
We continue to see the in-store experience play a critical
role in our customers’ journey . Many customers start by
browsing products on our ecommerce platforms but then
come into one of our brick-and-mortar locations to test out
the products before completing their sleep purchases .
4
Stewart Schaefer, President and CEO, Sleep Country
My fellow shareholders;
As we embark on the year ahead, marking Sleep Country’s
30th anniversary, it is exciting to see how this legacy
business continues to be reimagined, driving growth as we
lead our industry through innovation in this ever-changing
retail environment . Our passion and steadfast focus on
continuing to build the best customer experience has only
grown with time .
2023 marked a pivotal year in our strategic initiatives .
We grew our channels of distributions for all our brands,
engaged our customers more frequently through a broader
assortment of sleep solutions, drove operational efficiencies
and continued to invest in building strong awareness in the
distinct personalities of each of our brands .
What we have accomplished in 2023 builds on our multi-
year transformation plan that continues to position us
as the leader in helping Canadians get their best night’s
sleep . I am proud to share our 2023 accomplishments and
highlight the strategies that propelled us forward in this
noteworthy year .
Navigating Challenges, Delivering Results
In an ever-changing environment impacted by geo-political
issues, high interest rates and inflation, we continued to
see consumer spending impacted especially on larger
discretionary purchases . In the face of this volatility, I am
especially proud of my team and how they continued to
navigate our business delivering a solid finish to 2023 with
revenue growth of 0 .7% contributing to a CAGR of 7 .0% over
the last four years . Our efforts towards efficient sourcing
contributed to an increase in our gross profit margin by
50 basis points year over year .
Sleep Country Canada Holdings Inc. Annual Report 2023 A Message from our President and CEO con’t
Just before the 2023 holiday season, we successfully
opened three new brick-and-mortar concepts . We brought
two of our beloved digital brands, Endy and Silk & Snow, into
the tactile environment . Customers were excited to come in
and experience these two highly recognized online brands
in person . We were also very excited to introduce our first
luxury sleep retail brand, the rest, showcasing premium
high-end sleep solutions at Toronto’s prestigious Yorkdale
Shopping Centre .
The early results from these new stores are quite positive .
Our customers appreciate the opportunity to experience
the quality and comfort of our products firsthand further
validating our plan to invest in an elevated in-store experience
across our entire retail network . Planned renovations and new
store openings in 2024 will feature innovative store formats
that cater to modern consumer expectations .
“2023 marked a pivotal year
in our strategic initiatives.
We grew our channels of
distributions for all our brands,
engaged our customers more
frequently through a broader
assortment of sleep solutions,
drove operational efficiencies
and continued to invest in
building strong awareness
in the distinct personalities
of each of our brands.”
Building on a Legacy of Sleep Solutions
for Years to Come:
As we look forward to fiscal 2024, our focus remains on
three key priorities:
• Growth through Innovation: We’ll continue to invest in
research and development ensuring our product offerings
are at the forefront of cutting-edge sleep technology and
cater to the health and wellbeing of our customer needs .
We’ll explore new materials, designs and functionalities
to create even more innovative and supportive sleep
solutions . Additionally, we’ll remain focused on identifying
and acquiring brands that complement our existing
portfolio and strengthen our market position .
• Exceptional Customer Experience: We’ll further personalize
and enhance the way customers interact with us . This
includes ongoing investments in employee training to
ensure our associates have the knowledge and expertise
to provide exceptional customer service both online
and in-store . We’ll also continue to leverage technology
to personalize the customer journey offering targeted
recommendations and promotions based on individual
needs and preferences . Furthermore, we’ll explore ways to
create a more seamless online shopping experience and
simplify the in-store checkout process .
• Operational Excellence: We will continue to streamline
operations to maximize efficiencies . This includes
exploring opportunities for automation and process
optimization while maintaining the high-quality standards
that our customers expect . We’ll also continue to invest
in our supply chain management practices to source
responsibly produced inventory, reduce product costs,
achieve timely product delivery and minimize supply
disruptions .
By staying true to these priorities, I am confident we
will continue to create value for all stakeholders . Our
commitment to innovation, exceptional customer service,
and operational excellence solidifies our position as
Canada’s leading and most trusted sleep retailer .
A Heartfelt Thank You
In closing, I want to express my deepest gratitude to our
incredible teams across all our brands . Their dedication,
drive and talent are the bedrock of Sleep Country’s success .
Words cannot express our appreciation for all that you
do . Similarly, the wisdom and guidance of our Board have
been invaluable to my team and me . Together, we stand
as Canada’s most trusted sleep retailer and we’re thrilled
about the future, eager to help even more Canadians
unlock the transformative power of their best night’s sleep .
Sleep well . Stay well .
Stewart
5
Sleep Country Canada Holdings Inc. Annual Report 2023 Our Brand Portfolio At-A-Glance
Sleep Country
Canada’s sleep destination, Sleep Country,
has been committed to awakening
Canadians to the power of sleep for nearly
thirty years through unparalleled expertise
and world-class customer experience .
Silk & Snow
Recognized as one of Canada’s
fastest-growing brands, Silk & Snow is
a leading digital retailer of thoughtfully
made sleep essentials .
Endy
As Canada’s first bed-in-box, Endy
skyrocketed from disruptor to one of the
country’s leading sleep brands, expanding
its assortment to a complete sleep system .
6
Sleep Country Canada Holdings Inc. Annual Report 2023 Our Brand Portfolio At-A-Glance con’t
Dormez-vous
Founded in Montreal nearly thirty
years ago, Dormez-vous has become
Quebec’s sleep expert, through an
unmatched product assortment and
world-class customer experience .
Casper
As one of the original disruptors in the
mattress space, Casper is one of the most
recognized sleep brands in the world .
Hush.
Originally known for its flagship
weighted blanket designed to improve
sleep, Hush has expanded its product
offering and continues to be a well-
recognized brand in the sleep industry.
7
Sleep Country Canada Holdings Inc. Annual Report 2023 Growth Strategy
Building on its nearly 30-year foundation of success and unwavering commitment
to sleep, the Company drives long-term sustainable growth for its stakeholders through
its four strategic pillars: Sleep Well, People Well, Earth Well and Govern Well .
1. Sleep Well
The Company is focused on providing world-class
customer experience, channel and product
innovation and helping customers improve their
well-being through the power of sleep .
3. Earth Well
The Company aims to achieve net-zero by 2040 .
It is focused on positively impacting the environment
and reducing its carbon footprint by decarbonizing
its operations, sourcing responsibly-made products
and applying conscientious waste management .
2. People Well
The Company is committed to fairness and equity for
its employees, partners, customers and communities .
Its focus includes talent attraction and retention,
diversity, inclusion and belonging (“EDI&B”), providing
safe and respectful workplaces, and giving back to the
communities where the Company lives and works .
4. Govern Well
The Company is focused on strong governance,
compliance, ethics and integrity to build and
maintain stakeholders’ trust .
8
Sleep Country Canada Holdings Inc. Annual Report 2023
2023 Highlights
Acquired Casper in Canada,
one of the most recognized
sleep brands in the world
Opened our first store-
within-a-store - Sleep Country
and Silk & Snow in Ottawa
1 million
Customers served through our
physical and digital touchpoints
Acquired Silk & Snow,
one of Canada’s fastest growing
sleep brands
Recognized as one of Canada’s
Most Admired Corporate Cultures
by Waterstone Human Capital
X
Launched Canada’s first
ultra-premium sleep retail store
at Yorkdale Shopping Centre
147,000+
Mattresses and foundations
recycled or upcycled
12
Net new stores added
to nationwide store network
X
Opened Endy’s first-ever
brick-and-mortar store
at Sherway Gardens Mall,
bringing this digital brand
into a tactile environment
9
Sleep Country Canada Holdings Inc. Annual Report 2023
Financial Performance
Revenues
(C$ Millions)
Operating EBITDA1
(C$ Millions)
Operating EBITDA Margin1
(% Percent)
“I am very proud
to report another
record year
in Revenues,
contributing to a
CAGR of 7.0% over
the last four years.“
– Stewart Schaefer,
President and CEO,
Sleep Country
Net Income Attributable
to the Company
(C$ Millions)
Basic EPS
(C$ Per Share)
Diluted Adjusted EPS1
(C$ Per Share)
2
3
2
3
1 For more information on these non-IFRS and other measures, refer to “Non-IFRS and Other Measures” in the Management’s Discussion and Analysis section of the report .
2 Net Income Attributable to the Company and Basic EPS were positively impacted by $20 .5 million or $0 .57 per share, due to a true-down of the redemption liabilities related
to the Hush acquisition, to reflect the estimated shift in achievement of the initial EBITDA targets to beyond the redemption period .
3 Net Income Attributable to the Company and Basic EPS were positively impacted by $4 .7 million or $0 .13 per share, due to a true-down of the redemption liabilities related
to the Hush acquisition, to reflect the estimated shift in achievement of the initial EBITDA targets to beyond the redemption period .
10
Sleep Country Canada Holdings Inc. Annual Report 2023 Management’s
Discussion
and Analysis
December 31, 2023
11
Sleep Country Canada Holdings Inc. Annual Report 2023 1. Preface
The following Management’s Discussion and Analysis (“MD&A”) is prepared as of March 6, 2024 and it is
intended to assist readers in understanding the financial performance and financial condition of Sleep
Country Canada Holdings Inc. (the “Company”) for the fourth quarter and year ended December 31, 2023
and it should be read in conjunction with the audited consolidated financial statements of the Company and
the accompanying notes for the years ended December 31, 2023 and December 31, 2022 and the related
MD&A.
Basis of Preparation
All references in this MD&A to “Q4 2023” are to the Company’s quarter ended December 31, 2023, “Q4
2022” are to the Company’s quarter ended December 31, 2022 and “Q4 2021” are to the Company’s quarter
ended December 31, 2021. All references in the MD&A to "2023" are to the Company's year ended
December 31, 2023, "2022" are to the Company's year ended December 31, 2022, and "2021" are to the
Company's year ended December 31, 2021.
The Company’s audited consolidated financial statements for the years ended December 31, 2023 and
December 31, 2022 and the accompanying notes have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS®
Accounting Standards"), using the accounting policies described therein.
All amounts are presented in thousands of Canadian dollars, except number of stores, number of shares
and per share amounts or unless otherwise indicated.
The audited consolidated financial statements of the Company and the accompanying notes for year ended
December 31, 2023 and this MD&A were reviewed by the Company’s Audit Committee. They were
approved by the Company’s Board of Directors (the “Board”) on March 6, 2024.
Forward-looking Information
This MD&A, including, in particular, the sections below entitled “Factors Affecting the Results of
Operations”, “Outlook”, “Liquidity and Capital Resources” and “Risk Factors”, contains forward-looking
information and forward-looking statements which reflect the current view of management with respect to
the Company’s objectives, plans, goals, strategies, outlook, results of operations, financial and operating
performance, prospects and opportunities. Wherever used, the words “may”, “will”, “anticipate”, “intend”,
“estimate”, “expect”, “plan”, “believe” and similar expressions identify forward-looking information and
forward-looking statements. Forward-looking information and forward-looking statements should not be
read as guarantees of future events, performance or results, and will not necessarily be accurate indicators
of whether, or the times at which, such events, performance or results will be achieved. All of the information
in this MD&A containing forward-looking information or forward-looking statements is qualified by these
cautionary statements.
Forward-looking information and forward-looking statements are based on information available to
management at the time they are made, underlying estimates, opinions and assumptions made by
management and management’s current good faith belief with respect to future strategies, prospects,
events, performance and results, and are subject to inherent risks and uncertainties surrounding future
expectations generally. Such risks and uncertainties include, but are not limited to, those described below
under the sections “Risk Factors” and those described in the Company’s 2023 annual information form (the
“AIF”) filed on March 6, 2024. A copy of the AIF can be accessed under the Company’s profile on SEDAR+
at www.sedarplus.ca. Additional risks and uncertainties not presently known to the Company or that the
Company currently believes to be less significant may also adversely affect the Company.
The Company cautions that the list of risk factors and uncertainties described in this MD&A and the AIF are
not exhaustive and that should certain risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual strategies, prospects, events, performance and results may vary significantly from
those expected. There can be no assurance that the actual strategies, prospects, results, performance,
1
12
Sleep Country Canada Holdings Inc. Annual Report 2023 events or activities anticipated by the Company will be realized or even if substantially realized, that they
will have the expected consequences to, or effects on, the Company. Readers are urged to consider the
risks, uncertainties and assumptions carefully in evaluating the forward-looking information and forward-
looking statements and are cautioned not to place undue reliance on such information and statements. The
Company does not undertake to update any such forward-looking information or forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by
applicable laws.
2. Overview
The Company is Canada’s leading specialty sleep retailer driven by its purpose to transform lives by
awakening Canadians to the power of sleep. Its vision is to champion sleep as the key to healthier, happier
lives and help everyone achieve better tomorrows through better tonights.
The Company has an industry-leading sleep ecosystem which it continuously enhances through actively
assessing opportunities to support its business model across infrastructure, channel, partnership and
experience to best serve Canadians’ sleep needs.
Building on its 29-year foundation of success, the Company drives long-term sustainable growth for its
stakeholders through its four strategic pillars; Sleep Well, People Well, Earth Well and Govern Well.
1.
Sleep Well
•
The Company is focused on providing world-class customer experience, channel and
product innovation and helping customers improve their well-being through the power of
sleep.
2.
People Well
•
The Company is committed to fairness and equity for its employees, partners, customers and
communities. Its focus includes talent attraction and retention, diversity, inclusion and
belonging (“EDI&B”), providing safe and respectful workplaces, and giving back to the
communities where the Company lives and works.
3.
Earth Well
•
The Company aims to achieve net-zero by 2040. It is focused on positively impacting the
environment and reducing its carbon footprint by decarbonizing its operations, sourcing
responsibly-made products and applying conscientious waste management.
4.
Govern Well
•
The Company is focused on strong governance, compliance, ethics and integrity to build and
maintain stakeholders' trust.
The Company believes the combination of its purpose, strategy and operations differentiates itself from its
competitors. With its foundation, differentiated service model, unmatched sleep ecosystem, superior brand
trust and commitment to customer experience, the Company has positioned itself as a leader in sleep.
The Company operates under three omnichannel retail banners: Sleep Country™, Dormez-vous™, and
Casper™ ("Casper Canada") and three direct-to-consumer retail banners: Endy™, Hush™ and Silk &
Snow™. These banners are collectively referred to as the "Banners".
2
13
Sleep Country Canada Holdings Inc. Annual Report 2023
The Sleep Country banner launched in Vancouver, British Columbia in 1994 and thereafter it has expanded
across Canada (except in Quebec). Similarly, the Dormez-vous banner launched in Montreal, Quebec in
1994 and subsequently expanded within the province of Quebec. The Sleep Country and Dormez-vous
banners offer their customers Canada’s largest domestic and imported mattress selection and
complementary sleep related products. The Company provides its customers with elevated sleep expertise
via its “Sleep Experts”, who are dedicated to matching all customers to their best night’s sleep, at all its
customer touch points. The Sleep Country and Dormez-vous brands are highly recognized in the Canadian
retail landscape.
In Q4 2021, the Company introduced its Sleep Country/Dormez-vous Express Stores in Walmart Canada
locations. Each Express Store has an average footprint between 500 and 800 square feet and offers cash-
and-carry products as well as traditional mattresses which are delivered with the Company's green-glove
delivery service. A curated assortment of products, from the Company's leading mattress-in-a-box
selection, to sheets, pillows and headboards, as well as a selection of traditional mattresses for customers
to experience, are available at each Express Store location. These stores are staffed by the Company's
highly trained Sleep Experts, who bring their renowned sleep expertise to Walmart Canada customers. As
at December 31, 2023, the Company had 19 pilot Express Stores (December 31, 2022 – 17 stores)
nationwide.
Endy introduced its first mattress-in-a-box offering in 2015 on its eCommerce platform. Through its online
sales and digital capabilities, Endy has become one of Canada’s most recognized online sleep brands,
offering customers an expanding product assortment to meet their sleep needs. In Q4 2023, Endy opened
its first brick-and-mortar store providing existing and new customers with an new access point for customers
to purchase Endy's sleep products.
Founded in 2018, Hush introduced its weighted blankets to consumers which were received with success.
Thereafter, Hush has expanded its product offerings to include mattresses and a variety of sleep
accessories which are sold through its eCommerce platforms and across numerous retail partners across
North America.
In January 2023, the Company acquired Silk & Snow, a direct-to-consumer sleep retailer of thoughtfully
made high-quality sleep and lifestyle products. Founded in 2017, Silk & Snow quickly became recognized
as one of Canada’s top growing companies. In Q4 2023, the Company launched its first-ever store-within-
a-store with two of its brands, Sleep Country and Silk & Snow, thereby bringing Silk & Snow into the tactile
environment and providing customers with an expanded offering of elevated sleep essentials.
In April 2023, the Company acquired the Canadian operations of Casper Sleep Inc., including six retail
stores. The Casper brand is one of the most recognized sleep brands in the world. Its product offering
includes a wide range of sleep products including mattresses, bed frames, pillows, bedding and other sleep
accessories.
In November 2023, the Company launched its first ultra-premium retail concept store, the rest™. The rest
is built on the Company's foundation and sleep expertise, offering customers a selection of the world's most
luxurious mattresses and a finely curated selection of ultra-premium quality accessories. The retail boutique
brings customers a bespoke shopping experience providing them with the utmost personal care and
guidance to find their absolute best rest.
3
14
Sleep Country Canada Holdings Inc. Annual Report 2023
3. Dividends and Share Repurchases
Dividends
The Board has periodically declared dividends on the Company’s common shares. The chart below
illustrates the annual dividends paid from 2017 to 2023.
* In 2020, the Company suspended its Q2 2020 and Q3 2020 dividends as part of the Company’s business
continuity measures due to the COVID-19 pandemic.
In the last twelve quarters, the Company declared and paid the following dividends:
Date of declaration
Record date
Payment date
February 9, 2021
May 10, 2021
August 3, 2021
November 11, 2021
February 8, 2022
May 4, 2022
July 28, 2022
November 4, 2022
February 9, 2023
May 8, 2023
August 10, 2023
November 9, 2023
February 18, 2021
May 21, 2021
August 20, 2021
November 19, 2021
February 18, 2022
May 20, 2022
August 19, 2022
November 21, 2022
February 17, 2023
May 24, 2023
August 25, 2023
November 24, 2023
February 26, 2021
May 31, 2021
August 30, 2021
November 29, 2021
February 28, 2022
May 30, 2022
August 29, 2022
November 30 2022
February 28, 2023
May 31, 2023
August 31, 2023
November 30, 2023
All dividends are designated as “eligible dividends” for Canadian tax purposes.
Dividend declared
(per common share)
$ 0.195
$ 0.195
$ 0.195
$ 0.195
$ 0.195
$ 0.215
$ 0.215
$ 0.215
$ 0.215
$ 0.237
$ 0.237
$ 0.237
On February 5, 2024, the Company declared a dividend of $0.237 per common share, which was paid on
February 29, 2024 to holders of the common shares of record as at the close of business on February 21,
2024.
4
15
Sleep Country Canada Holdings Inc. Annual Report 2023 Share Repurchases
On March 7, 2022, the Company received approval from the Toronto Stock Exchange ("TSX") to commence
a normal course issuer bid ("NCIB"). Pursuant to an amendment to the NCIB on November 29, 2022, the
Company was permitted to purchase through the facilities of the TSX or alternative trading systems, from
time to time until the completion of the NCIB, if considered advisable, up to a maximum of 3,155,250 of the
Company’s common shares, representing approximately 10.0% of the public float as of February 28, 2022.
Purchases under this NCIB concluded on March 8, 2023.
On March 9, 2023, the Company received approval from the TSX on a new NCIB. Pursuant to the NCIB,
the Company is permitted to purchase through the facilities of the TSX, other designated exchanges and/or
alternative trading systems, from time to time over a twelve-month period until the completion of the NCIB,
if considered advisable, up to a maximum of 2,675,550 of the Company’s common shares, representing
approximately 10.0% of its public float of 26,755,502 as of February 28, 2023. Purchases will conclude on
the earlier of the date on which purchases under the bid have been completed and March 8, 2024. In
accordance with the rules and by-laws of the TSX, the Company has been permitted to purchase up to a
daily maximum of 21,782 shares (representing 25% of the average daily trading volume of the shares on
the TSX for the six months prior to commencement of the NCIB), except where such purchases are made
in accordance with the "block purchase" exception under the applicable TSX rules and policies.
The Company established an automatic share purchase program ("ASPP") in connection with its NCIB to
facilitate the purchase of shares during times when the Company would ordinarily not be permitted to
purchase shares due to regulatory restrictions or a self-imposed blackout period. Before entering a blackout
period, the Company may, but is not required to, instruct its designated broker to make purchases at the
broker’s sole discretion and based on parameters set by the Company in accordance with the ASPP, TSX
rules and applicable securities laws. The Company records a liability for share repurchase commitment
during blackout period based on the parameters of the NCIB and ASPP. As at December 31, 2023, an
estimated maximum obligation of $20,009 (2022 - $20,660) was outstanding under the ASPP in other
current liabilities.
In 2023, the Company purchased 1,596,910 common shares (2022 – 2,339,409) for cancellation at an
average price of $23.38 (2022 – $24.67) for total consideration of $37.3 million (2022 – $57.7 million).
The Company plans on filing a notice of intention with the TSX to commence a new NCIB when the current
NCIB expires on March 8, 2024. If this notice is accepted by the TSX, the Company expects to be permitted
to purchase through the facilities of the TSX or alternative trading systems, from time to time over the 12
months following such acceptance, if considered advisable, up to a maximum amount of the Company’s
common shares, that represents 10% of the public float as at February 29, 2024.
4. Factors Affecting the Results of Operations
Revenues
The Company’s revenues are derived from the sale of mattresses and accessories through its Banners.
Mattresses revenue includes sales of mattresses, lifestyle adjustable bases, boxsprings and frames.
Accessories revenue includes the sales of pillows, sheets, duvets, weighted blankets, quilts, duvet covers,
mattress toppers, mattress and pillow protectors, pet beds, throws, cushions, sleep bundles, headboards,
footboards, night stands, bath linens, sleep and lounge wear, delivery fees and warranties.
Revenue is recognized when the performance obligation is deemed to be fulfilled and the control of the
products has transferred to the customer and there is no unfulfilled obligation that could affect the
customer’s acceptance of the products. Provisions for returns relating to the Company’s various customer
satisfaction programs are accrued based on historical experience.
Building on the Company’s strong brands and market position, the Company seeks opportunities to grow
its same store sales (or “SSS”- see section “Non-IFRS and Other Measures”), which includes revenues
from both its existing retail stores and digital channels. The Company’s revenue growth initiatives include:
5
16
Sleep Country Canada Holdings Inc. Annual Report 2023
•
•
•
•
•
•
•
adding stores in both new and existing markets;
partnering with new third-party online marketplace sellers;
growing and optimizing its eCommerce platforms;
expanding its product assortment;
reaching more customers through targeted marketing;
growing lifetime value with existing customers through serving more of their sleep needs; and
growing revenue through strategic channel and brand partnerships.
SSS is primarily driven by:
•
•
•
•
•
changes in customer traffic across sales channels through effective marketing and word of mouth;
changes in the conversion rate of shoppers into buyers;
changes in the average transaction size;
changes in economic conditions and consumer confidence; and
customer loyalty through effective customer engagement and satisfaction.
The Company’s revenues are impacted by competition from other retailers that sell similar products and by
seasonal patterns.
Product Expansion Opportunities
One of the Company’s goals is to serve its customers’ sleep needs by offering them a variety of best-in-
class sleep products available in the market across all its Banners. Over the last few years, the Banners
have introduced new innovative mattresses, including hybrid mattresses-in-a-box, as well as sleep
products, some of which include adjustable bases, pillows, sheets, duvets, duvet covers, mattress
protectors, pillow protectors, mattress toppers, weighted blankets, bath towels, as well as sleep and lounge
wear.
The Company continues to deepen and expand its product assortment through in-house innovations,
sourcing new sleep products, strategic business partnerships and acquisitions.
To provide its customers with the best available sleep products, the Company has entered into several
exclusive partnerships with industry leaders in the North American and European sleep space:
•
Simba, a U.K. leading mattress-in-a-box and sleep accessories retailer; and
• Malouf, a U.S. industry leader in innovative bedding and furniture products.
Additionally, the Company has established drop ship arrangements with select vendors to provide sleep
products from brands such as Nautica, Eddie Bauer, Laura Ashley, Sheex, Tuck and If Only Home. This
program enables the delivery of select sleep products to be shipped directly from the Company’s vendors
to its customers. This capability allows the Company to offer its customers an increased product assortment
without increasing its inventory risk while achieving time, resource and cost efficiencies. The Company
continues to strategically expand its drop ship program.
The Company will continue to explore opportunities to expand its product assortment to better meet its
customers sleep needs.
Online Expansion Opportunities
The Company has multiple eCommerce platforms; sleepcountry.ca, dormezvous.com, endy.com, hush.ca,
hushblankets.com, silkandsnow.com and casper.ca.
The Company’s eCommerce platforms provide customers access to the full assortment of products, both
in-store and online, across Canada. The Company’s banners - Hush and Silk & Snow – also retails in the
USA through their eCommerce platforms. Additionally, the Company has a wide range of products that are
only available online through the Company’s various drop ship arrangements. These websites are
6
17
Sleep Country Canada Holdings Inc. Annual Report 2023 supported via phone and/or online chat providing customers access to sleep expertise like the in-store
customer experience.
The Company has also expanded its sleep ecosystem through partnerships with third-party online
marketplaces to increase its customer reach, diversify its sales channels and further bolster its omnichannel
offering. The Company partnered with Walmart to supply mattresses and sleep accessories on the
Walmart.ca marketplace. Through this partnership, the Company offers Walmart customers a wide
assortment of mattress brands, in addition to its leading accessories including pillows, pillowcases, sheets,
weighted blankets, mattress protectors, mattress toppers, platforms and pet beds.
The Company also has a partnership with Best Buy Canada, one of Canada’s largest omnichannel retailers,
to offer a selection of the Company’s sleep solutions on the Best Buy Marketplace. The Company
exclusively retails the traditional mattress category on BestBuy.ca offering a wide assortment of the
Company’s most recognized mattress brands. In addition, the Company offers lifestyle bases and a leading
assortment of sleep accessories including pillows, sheets, duvets on the Best Buy Marketplace.
Store Expansion Opportunities
The Company has the ability to add new stores in existing markets (in-fill stores), satellite markets and new
markets. An existing market or in-fill opportunity is a pre-existing built out region in which the Company
already has an established store presence serviced by one or more existing warehouses. A satellite market
is a new region that is adjacent or close to a pre-existing built-out region, which benefits from advertising
spill and is serviced logistically from the nearby warehouse. A new market is a brand new territory in which
the Company did not previously operate, requiring incremental advertising and distribution logistics.
The Company has successfully expanded its store network every year since its inception in 1994. The
capacity to expand its store presence depends on the Company’s ability to choose new locations, new
markets, to hire and train new associates for its stores and warehouses and create top-of-mind brand
awareness for its Banners.
Stores in enclosed malls provide the Company with a unique opportunity to gain the attention of the captive
audience, while capitalizing on the decline of department stores in recent years. As at December 31, 2023,
the Company had 19 mall stores in Canada.
The Company’s site selection strategy is focused on maximizing sales per store and per region throughout
its store network. Prior to identifying and ultimately selecting locations for new stores, the Company
conducts extensive analysis utilizing the following factors:
•
•
•
•
•
•
demographics including population density, household income and population growth rates;
store visibility and accessibility;
lease and advertising economics;
competitive dynamics;
overlap with existing stores and distribution footprint; and
potential cannibalization of existing stores.
In terms of regional expansion, once a target area has been determined, the Company focuses on ensuring
the Company can successfully incorporate its culture, vision and purpose into the new region. To attain this
goal, the Company starts by ensuring its new core regional team is comprised of existing associates in
leadership roles who are willing to relocate. The experienced team is then supplemented with local hires,
who receive extensive in-store and classroom training.
7
18
Sleep Country Canada Holdings Inc. Annual Report 2023
The following table summarizes the Company’s corporate-owned store count for years ended
December 31, 2023 and December 31, 2022:
Number of
stores,
beginning of
year
Stores newly
opened
Stores
closed
Number of
stores, end
of year
Stores
renovated
Sleep Country(1)
Dormez-vous(1)
Casper(2)
Endy
Sleep Country/Silk & Snow(3)
the rest
Total
227
62
-
-
-
-
289
3
2
6
1
1
1
14
Stores newly
opened
Stores
closed
Number of
stores,
beginning of
year
224
61
-
-
-
-
285
4
1
-
-
-
-
5
Sleep Country(1)
Dormez-vous(1)
Casper
Endy
Sleep Country/Silk & Snow
the rest
Total
Notes:
1
1
-
-
-
-
2
1
-
-
-
-
-
1
229
63
6
1
1
1
301
Number of
stores, end
of year
Stores
renovated
227
62
-
-
-
-
289
2023
2
-
-
-
-
-
2
2022
-
-
-
-
-
-
-
(1) Excludes the Company’s pilot Express Stores operating in Walmart Canada licensee spaces;
(2)
Includes the six Casper stores acquired as part of the acquisition of the Canadian assets from
Casper Sleep Inc. in April 2023;
In Q4 2023, the Company opened a store-within-a-store between two of its banners; Sleep Country
and Silk & Snow.
(3)
Store Design
The Company continuously evaluates its store design to provide customers with the optimal shopping
experience. As at December 31, 2023, there are 249 corporate-owned Sleep Country/Dormez-vous stores
or 85% of the Sleep Country/Dormez-vous store network that feature the store design introduced in 2014,
of which 89 are new stores, 149 are renovated stores and 11 are relocations of existing stores. The
Company is developing a new store design that will be introduced in 2024.
Competition
The sleep industry is highly competitive and includes national and regional full-line furniture retailers,
department stores, mass merchants, small regional specialty bedding retailers, eCommerce retailers and
online marketplaces. The Company is Canada’s leading specialty sleep retailer with its national Sleep
Country, Dormez-vous and Casper retail store network and multiple eCommerce platforms, including its
retail presence on several prominent third-party online marketplaces. The Company believes it can maintain
and strengthen its leading market position through its differentiated sleep ecosystem, trusted brands,
unmatched product assortment, superior sleep expertise and customer experience. The Company
continues to actively assess opportunities for infrastructure, channels, partnerships, products and customer
experience improvements across all its Banners to best serve Canadians’ sleep needs.
8
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Sleep Country Canada Holdings Inc. Annual Report 2023
Supply Chain
The Company relies on third party manufacturers to obtain its merchandise. Merchandise is sourced
domestically in Canada as well as from countries around the world (for example - U.S., China, Italy and
Spain). The Company can be adversely impacted by political, regulatory, economic and legal factors
including duties, tariffs, sanctions, pandemics, labour strikes, currency exchange rates and other factors
relating to foreign trade.
Seasonality
The retail mattress industry is affected by seasonal conditions. The Company typically experiences higher
sales and a greater proportion of income during the third and fourth quarters due to seasonal factors
including the concentration of the summer and holiday season. Sales have historically trended lower in the
first quarter as consumers tighten their spending after the holiday season and shop less in the cold winter
months.
The table below illustrates the Company’s average percentage of annual sales by quarter for 2019, 2022
and 2023 from the Company’s banners. Due to the uncertainties of the impact of the COVID-19 pandemic
in Canada in 2020 and 2021, the Company did not include 2020 and 2021 in the below mentioned sales
seasonality. The extent of COVID-19’s impact on the overall economy, consumer purchasing behaviour
and the impact of public health measures, such as mandated store closures, are uncertain and may have
had an impact on seasonality in the retail sleep space.
First quarter
Second quarter
Third quarter
Fourth quarter
Annual total
Gross Profit
22%
24%
28%
26%
100%
Gross Profit is calculated from Revenues less Cost of Sales. Gross Profit Margin is defined as Gross Profit
divided by Revenues.
Cost of Sales includes product related costs - net of rebates, sales and distribution costs including
compensation, occupancy and depreciation costs. Rebates are driven by the volume of inventory
purchased. As an additional incentive, certain suppliers offer step-up thresholds for higher volume rebates.
Rebates on inventories sold are recorded as a reduction to Cost of Sales.
Gross Profit Margin is affected by changes in average unit selling prices (“AUSP”), sales product mix and
Cost of Sales.
9
20
Sleep Country Canada Holdings Inc. Annual Report 2023
5. Fourth Quarter and Annual Highlights
(C$ thousands unless otherwise stated;
other than store count and EPS)
2023
2022 Change
2023
2022 Change
Q4
Annual
Revenues
SSS (%)(1)
Stores opened(2)
Stores closed(2)
Stores renovated(2)
$ 255,602 $ 243,028
(11.5%)
2
-
-
(3.2%)
5
-
2
5.2% $ 935,044 $ 928,657
(1.8%)
(6.4%)
5
14
1
2
-
2
0.7%
Gross profit margin (%)
37.7%
37.5%
37.2%
36.7%
Operating EBITDA(1)
Operating EBITDA margin (%)(1)
Net income
Net income attributable
to the Company
Adjusted net income attributable
to the Company(1)
Basic EPS
Diluted EPS
Basic adjusted EPS(1)
Diluted adjusted EPS(1)
$
$
$
$
$
$
$
$
Notes:
51,356 $
20.1%
53,005
21.8%
(3.1%) $ 196,758 $ 218,559 (10.0%)
21.0%
23.5%
22,825 $
40,783 (44.0%) $
71,535 $ 110,696 (35.4%)
22,471 $
40,469 (44.5%) $
71,192 $ 110,471 (35.6%)
19,308 $
0.66 $
0.65 $
0.57 $
0.56 $
23,874 (19.1%) $
1.14 (42.1%) $
1.13 (42.5%) $
0.67 (14.9%) $
0.67 (16.4%) $
74,143 $ 102,868 (27.9%)
3.04 (32.2%)
3.01 (32.2%)
2.83 (24.4%)
2.81 (24.6%)
2.06 $
2.04 $
2.14 $
2.12 $
(1) SSS is a supplementary financial measure, Operating EBITDA, Adjusted net income attributable to the
Company, Basic adjusted EPS and Diluted adjusted EPS are each non-IFRS measures and Operating
EBITDA margin is a non-IFRS ratio. See the section titled “Non-IFRS and Other Measures” for further
details concerning how the Company calculates SSS, Operating EBITDA, Operating EBITDA margin,
Adjusted net income attributable to the Company, Basic adjusted EPS and Diluted adjusted EPS and
for a reconciliation to the most comparable IFRS measure.
(2) See the section titled "Store Expansion Opportunities" for further details on stores opened, closed and
renovated.
10
21
Sleep Country Canada Holdings Inc. Annual Report 2023
Highlights of Results in Q4 2023
Q4 2023 compared to Q4 2022 - See “Non-IFRS and Other Measures”.
• Revenues increased by $12.6 million or 5.2% from $243.0 million in Q4 2022 to $255.6 million in Q4
2023 mainly due to incremental revenue earned from new stores, wrap stores opened in 2022 and the
acquisitions of Silk & Snow and Casper Canada completed in January 2023 and April 2023 respectively.
This increase was partially offset by a decrease in SSS by 3.2%;
• Revenues attributed to eCommerce increased by 530 basis points from 21.1% in Q4 2022 to 26.4% in
Q4 2023;
• Gross profit increased by $5.2 million or 5.7% from $91.1 million in Q4 2022 to $96.3 million in Q4 2023;
• Gross profit margin increased by 20 basis points from 37.5% in Q4 2022 to 37.7% in Q4 2023;
• Operating EBITDA decreased by $1.6 million or 3.1% from $53.0 million in Q4 2022 to $51.4 million in
Q4 2023 mainly due to higher advertising, credit card and financing charges, telecommunication and
information technology and other expenses that were also impacted by incremental spend due to the
acquisitions of Silk & Snow and Casper Canada; partially offset by an improved gross profit margin and
lower compensation costs;
• Operating EBITDA margin decreased by 170 basis points from 21.8% in Q4 2022 to 20.1% in Q4 2023;
• Net income attributable to the Company decreased by $18.0 million or 44.5% from $40.5 million in Q4
2022 to $22.5 million in Q4 2023 mainly due to the decrease in Operating EBITDA and an increase in
finance related expenses, depreciation and amortization expenses; partially offset by a decrease in
income taxes;
• Adjusted net income attributable to the Company decreased by $4.6 million or 19.1% from $23.9 million
in Q4 2022 to $19.3 million in Q4 2023;
• Diluted EPS decreased by $0.48 or 42.5% from $1.13 in Q4 2022 to $0.65 in Q4 2023; and
• Diluted adjusted EPS decreased by $0.11 or 16.4% from $0.67 in Q4 2022 to $0.56 in Q4 2023.
11
22
Sleep Country Canada Holdings Inc. Annual Report 2023
Highlights of Results in 2023
2023 compared to 2022 - See “Non-IFRS and Other Measures”.
• Revenues increased by $6.3 million or 0.7% from $928.7 million in 2022 to $935.0 million in 2023 mainly
due to incremental revenue earned from new stores, wrap stores opened in 2022 and the acquisitions
of Silk & Snow and Casper Canada, which was partially offset by a decrease in SSS by 6.4%;
• Revenues attributed to eCommerce increased by 310 basis points from 19.6% in 2022 to 22.7% in 2023;
• Gross profit increased by $6.5 million or 1.9% from $341.0 million in 2022 to $347.5 million in 2023;
• Gross profit margin increased by 50 basis points from 36.7% in 2022 to 37.2% in 2023;
• Operating EBITDA decreased by $21.8 million or 10.0% from $218.6 million in 2022 to $196.8 million in
2023 mainly due to higher advertising, compensation, credit card and financing charges, occupancy,
telecommunication and information technology and other costs that were also impacted by the
acquisitions of Silk & Snow and Casper Canada; partially offset by an improved gross profit margin;
• Operating EBITDA margin decreased by 250 basis points from 23.5% in 2022 to 21.0% in 2023;
• Net income attributable to the Company decreased by $39.3 million or 35.6% from $110.5 million in
2022 to $71.2 million in 2023 mainly due to the decrease in Operating EBITDA and an increase in finance
related expenses, depreciation and amortization expenses; partially offset by a decrease in income
taxes;
• Adjusted net income attributable to the Company decreased by $28.8 million or 27.9% from $102.9
million in 2022 to $74.1 million in 2023;
• Diluted EPS decreased by $0.97 or 32.2% from $3.01 in 2022 to $2.04 in 2023; and
• Diluted adjusted EPS decreased by $0.69 or 24.6% from $2.81 in 2022 to $2.12 in 2023.
12
23
Sleep Country Canada Holdings Inc. Annual Report 2023
Outlook
The Company continues to make investments supporting the Company’s long-term, profitable growth
strategy and reinforcing the Company’s position as Canada’s leading provider of sleep. The Company aims
to make significant investments to strengthen its omnichannel and digital capabilities, deepen relationships
with new and loyal customers, grow its assortment of innovative and relevant sleep products and expand
its customer base.
Key initiatives planned for 2024 include continuing to:
•
•
•
•
•
•
explore new growth opportunities to further expand the Company’s business in sleep;
expand its sleep product assortment through strategic partnerships and in-house innovation;
invest in an elevated in-store experience across its retail store network including rolling out new
and innovative store formats for planned renovations and new stores;
o
o
launch new SCC/DV store design in select stores in 2024;
open a minimum of six new stores on a consolidated basis including opening multi-banner
store-within-a-store layouts;
continued investments to the Company’s digital transformation projects, including its ERP
enhancements to evolve front-end and back-end operations, marketing capabilities and customer
relationship management tools;
continue to focus on strategic initiatives to leverage strengths across the Company’s banners to
drive efficiencies on a consolidated basis; and
plan on filing a notice of intention with the TSX to commence a new NCIB to repurchase common
shares, at the Company’s discretion, for up to 10% of the public float.
13
24
Sleep Country Canada Holdings Inc. Annual Report 2023
Selected Financial Information
The following table presents selected IFRS and certain non-IFRS financial measures and ratios of the
Company and should be read in conjunction with the audited consolidated financial statements for the
years ended December 31, 2023 and December 31, 2022.
(C$ thousands unless otherwise stated; other than
EPS)
Consolidated Income Statement
Revenues
Cost of sales
Gross profit
General and administrative expenses
Operating income
Finance related expenses (income)
Other expenses (income)
Net income before income taxes
Income taxes
Net income
Net income attributable
to the Company
EBITDA(1)
Operating EBITDA(1)
Operating EBITDA margin (%)(1)
Adjusted net income attributable
to the Company(1)
Basic EPS
Diluted EPS
Basic adjusted EPS(1)
Diluted adjusted EPS(1)
Dividends declared per share
$
$
$
$
$
$
$
$
$
$
Q4
Annual
2023
2022 Change
2023
2022
Change
$ 255,602 $ 243,028
151,953
91,075
57,540
33,535
159,335
96,267
64,293
31,974
2,416
(127)
29,685
6,860
0.7%
5.2% $ 935,044 $ 928,657
0.0%
587,629
4.9%
587,570
1.9%
341,028
5.7%
347,474
16.2%
196,167
11.7%
227,883
(17.4%)
144,861
(4.7%)
119,591
(889) (2740.2%)
(15,533) (115.6%)
23,471
88.4%
(292)
65 (295.4%)
(550)
(33.8%)
146,042
(39.4%)
96,670
(28.8%)
(16.5%)
35,346
25,135
(35.4%)
71,535 $ 110,696
(44.0%) $
49,003
8,220
22,825 $ 40,783
22,471 $ 40,469
50,218 $ 50,711
51,356 $ 53,005
21.8%
20.1%
(44.5%) $
71,192 $ 110,471
(1.0%) $ 189,206 $ 210,494
(3.1%) $ 196,758 $ 218,559
23.5%
21.0%
19,308 $ 23,874
1.14
1.13
0.67
0.67
0.215
0.66 $
0.65 $
0.57 $
0.56 $
0.237 $
(19.1%) $
(42.1%) $
(42.5%) $
(14.9%) $
(16.4%) $
10.2% $
74,143 $ 102,868
3.04
3.01
2.83
2.81
0.840
2.06 $
2.04 $
2.14 $
2.12 $
0.926 $
(35.6%)
(10.1%)
(10.0%)
(27.9%)
(32.2%)
(32.2%)
(24.4%)
(24.6%)
10.2%
31-Dec-23
Total assets
Total long-term lease liabilities and debt
$1,112,474
$ 449,292
Note:
31-Dec-22
$1,021,719
$ 374,252
(1) EBITDA, Operating EBITDA, Adjusted net income attributable to the Company, Basic adjusted EPS
and Diluted adjusted EPS are each non-IFRS measures and Operating EBITDA margin is a non-IFRS
ratio. See the section titled “Non-IFRS and Other Measures” for further details concerning how the
Company calculates EBITDA, Operating EBITDA, Adjusted net income attributable to the Company,
Basic adjusted EPS and Diluted adjusted EPS and for a reconciliation to the most comparable IFRS
measure.
14
25
Sleep Country Canada Holdings Inc. Annual Report 2023
The following table presents selected IFRS and certain non-IFRS financial measures and ratios of the
Company and should be read in conjunction with the audited consolidated financial statements for the
years ended December 31, 2022 and December 31, 2021.
(C$ thousands unless otherwise stated; other than
EPS)
Consolidated Income Statement
Revenues
Cost of sales
Gross profit
General and administrative expenses
Operating income
Finance related expenses (income)
Other expenses (income)
Net income before income taxes
Income taxes
Net income
Net income attributable
to the Company
EBITDA(1)
Operating EBITDA(1)
Operating EBITDA margin (%)(1)
Adjusted net income attributable
to the Company(1)
Basic EPS
Diluted EPS
Basic adjusted EPS(1)
Diluted adjusted EPS(1)
Dividends declared per share
$
$
$
$
$
$
$
$
$
$
Q4
Annual
2022
2021 Change(2)
2022
2021 Change(2)
$ 243,028 $ 271,158
173,438
97,720
56,263
41,457
151,953
91,075
57,540
33,535
(15,533)
65
49,003
8,220
(10.4%) $ 928,657 $ 920,194
603,146
(12.4%)
587,629
317,048
(6.8%)
341,028
178,225
2.3%
196,167
138,823
(19.1%)
144,861
4,259 (464.7%)
(889)
(227.5%)
(292)
121,844
31.6%
146,042
32,862
(21.2%)
35,346
52.1% $ 110,696 $ 88,982
0.9%
(2.6)%
7.6%
10.1%
4.3%
16,837 (105.3%)
142 (305.6%)
19.9%
7.6%
24.4%
(51)
37,249
10,437
40,783 $ 26,812
$
26,433
40,469
50,711 $ 57,314
53,005 $ 62,065
22.9%
21.8%
23,874 $ 30,977
0.72
0.71
0.84
0.83
0.195
1.14 $
1.13 $
0.67 $
0.67 $
0.215 $
$
$
53.1%
88,603
110,471
(11.5%) $ 210,494 $ 199,549
(14.6%) $ 218,559 $ 210,889
22.9%
23.5%
(22.9%) $ 102,868 $ 98,342
2.41
2.38
2.67
2.64
0.780
58.3% $
59.2% $
(20.2%) $
(19.3%) $
10.3% $
3.04 $
3.01 $
2.83 $
2.81 $
0.840 $
24.7%
5.5%
3.6%
4.6%
26.1%
26.5%
6.0%
6.4%
7.7%
31-Dec-22
Total assets
Total long-term lease liabilities and debt
$1,021,719
$ 374,252
Notes:
31-Dec-21
$ 988,035
$ 346,233
(1) EBITDA, Operating EBITDA, Adjusted net income attributable to the Company, Basic adjusted EPS
and Diluted adjusted EPS are each non-IFRS measures and Operating EBITDA margin is a non-IFRS
ratio. See the section titled “Non-IFRS and Other Measures” for further details concerning how the
Company calculates EBITDA, Operating EBITDA, Adjusted net income attributable to the Company,
Basic adjusted EPS and Diluted adjusted EPS and for a reconciliation to the most comparable IFRS
measure.
(2) See the Q4 2022 MD&A for discussion related to performance analysis.
15
26
Sleep Country Canada Holdings Inc. Annual Report 2023
6. Fourth Quarter 2023 versus Fourth Quarter 2022
Revenues
Revenues increased by $12.6 million or 5.2% from $243.0 million in Q4 2022 to $255.6 million in Q4 2023
mainly due to incremental revenue earned from new stores, wrap stores opened in 2022 and the
acquisitions of Silk & Snow and Casper Canada completed in January 2023 and April 2023 respectively.
This increase was partially offset by a decrease in SSS by 3.2% (See “Non-IFRS and Other Measures”).
Revenues attributed to eCommerce increased by 530 basis points from 21.1% in Q4 2022 to 26.4% in Q4
2023.
The increase in Revenues by $12.6 million was comprised of a $9.3 million increase in mattresses revenues
and a $3.3 million increase in accessories revenues in Q4 2023 versus Q4 2022.
(C$ millions unless otherwise stated)
Mattresses
Accessories
Total
2023
189.9
65.7
255.6
$
$
$
2022
180.6
62.4
243.0
$
$
$
Q4
Change Change (%)
5.1%
5.3%
5.2%
9.3
3.3
12.6
$
$
$
Gross profit
Gross profit increased by $5.2 million from $91.1 million in Q4 2022 to $96.3 million in Q4 2023. Gross
profit margin increased by 20 basis points from 37.5% in Q4 2022 to 37.7% in Q4 2023. The increase in
gross profit margin in Q4 2023 versus Q4 2022 was mainly a result of the following:
•
•
•
•
inventory and other directly related expenses decreased, as percentage of Revenues, by 0.2%
from 41.7% in Q4 2022 to 41.5% in Q4 2023 primarily due to higher AUSP and lower product and
transportation costs, partially offset by higher inventory allowances and higher delivery costs mainly
driven by growth in eCommerce Revenues;
store occupancy costs decreased, as a percentage of Revenues, by 0.1% from 2.9% in Q4 2022
to 2.8% in Q4 2023 due to the Company leveraging its occupancy costs;
other expenses decreased, as a percentage of Revenues, by 0.1% from 0.7% in Q4 2022 to 0.6%
in Q4 2023 due to an decrease in supplies expense; and
sales and distribution compensation expenses increased, as a percentage of Revenues, by 0.3%
from 12.5% in Q4 2022 to 12.8% in Q4 2023 due to increases in salaries, wages and sales
incentives under the normal course of business.
16
27
Sleep Country Canada Holdings Inc. Annual Report 2023
General and administrative (“G&A”) expenses
Total G&A expenses increased by $6.8 million or 11.7% from $57.5 million in Q4 2022 to $64.3 million in
Q4 2023, and, as a percentage of Revenues, G&A expenses increased from 23.7% of Revenues in Q4
2022 to 25.2% of Revenues in Q4 2023.
(C$ millions unless otherwise stated)
Media and advertising expenses(1)
Salaries, wages and benefits(2)
Credit card and finance charges(3)
Occupancy charges
Professional fees(4)
Telecommunication and information technology(5)
Mattresses recycling and donations
Depreciation and amortization
Other(6)
Total G&A expenses
2023
$ 28.2
10.6
6.4
2.8
2.4
4.1
1.0
6.2
2.6
$ 64.3
Notes:
% of
Revenues
2022
11.0% $ 23.7
12.4
5.6
2.5
3.1
3.0
0.1
5.8
1.3
25.2% $ 57.5
4.2%
2.5%
1.1%
1.0%
1.6%
0.4%
2.4%
1.0%
% of
Revenues
9.8% $
5.1%
2.3%
1.0%
1.3%
1.2%
0.0%
2.4%
0.6%
23.7% $
Q4
Change
4.5
(1.8)
0.8
0.3
(0.7)
1.1
0.9
0.4
1.3
6.8
(1) Media and advertising expenses increased by $4.5 million due to an increase in online advertising
impacted by the incremental spend by Silk & Snow and Casper Canada acquired in 2023, as well
as, increases in television advertising costs and production costs. These increases were partially
offset by decreases in radio, newspaper and billboard advertising costs and advertising fees.
(2) Salaries, wages and benefits decreased by $1.8 million mainly due to a decrease in bonus
expenses, partially offset by an increase in compensation expenses incurred in the regular course
of business and incremental headcount from the acquisitions of Silk & Snow and Casper Canada.
(3) Credit card and finance charges are variable costs and these costs increased as a percentage of
Revenues by 0.2% mainly due to increased financing rates and incremental fees incurred by Silk
& Snow and Casper Canada.
(4) Professional fees decreased by $0.7 million mainly due to $0.4 million in legal fees incurred in Q4
2022 related to the acquisition of Silk & Snow that closed on January 4, 2023.
(5) Telecommunication and information technology expenses increased by $1.1 million mainly due to
increases in software licensing fees and support expenses.
(6) Other expenses increased by $1.3 million due to higher administrative, supplies, travel, meals and
entertainment expenses in addition to the return of company events from the pre-pandemic period.
17
28
Sleep Country Canada Holdings Inc. Annual Report 2023
EBITDA
EBITDA decreased by $0.5 million or 1.0% from $50.7 million in Q4 2022 to $50.2 million in Q4 2023. The
decrease was mainly due to higher advertising, credit card and financing charges, telecommunication and
information technology and other expenses that were impacted by incremental spend due to the
acquisitions of Silk & Snow and Casper Canada; partially offset by an improved gross profit margin and
lower compensation costs. See “Non-IFRS and Other Measures”.
Operating EBITDA
Operating EBITDA was $51.4 million for Q4 2023, or 20.1% of Revenues, compared to $53.0 million for Q4
2022, or 21.8% of Revenues, representing a decrease of $1.6 million or 3.1% mainly due to the decrease
in EBITDA. See “Non-IFRS and Other Measures”.
Finance related expenses (income)
Finance related expenses (income) increased by $17.9 million from income of $15.5 million in Q4 2022 to
expenses of $2.4 million in Q4 2023 due to higher interest expenses on the Company's lease obligations
and its senior secured credit facility, impacted by the higher interest rates and debt levels, an unrealized
loss on the Company's interest rate swap and lower realized gains on the Company's share repurchases
under the ASPP in Q4 2023. Additionally, this change was positively impacted by a $4.7 million reduction
to the Hush redemption liabilities in Q4 2023, offset by the $20.5 million reduction to the redemption
liabilities in Q4 2022. These adjustments to the redemption liabilities were to reflect the estimated shift in
achievement of the initial EBITDA targets to beyond the redemption period.
Income taxes
Net income before income taxes in Q4 2023 decreased by $19.3 million from $49.0 million in Q4 2022 to
$29.7 million in Q4 2023. The Company’s effective income tax rate increased by 630 basis points from
16.8% in Q4 2022 to 23.1% in Q4 2023. The change in the effective tax rate is mainly driven by the $20.5
million adjustment in Q4 2022 due to the reduction of the Hush redemption liabilities which was partially
offset by a $4.7 million adjustment of the Hush redemption liabilities in Q4 2023 that are not deductible for
tax purposes. The decrease in net income before tax was partially offset by the increase in effective tax
rate and resulted in a decrease to income taxes of $1.3 million in Q4 2023 versus Q4 2022.
Net income attributable to the Company
Net income attributable to the Company for Q4 2023 decreased by $18.0 million from $40.5 million ($1.14
per share) in Q4 2022 to $22.5 million ($0.66 per share) in Q4 2023.
Adjusted net income attributable to the Company
Adjusted net income attributable to the Company for Q4 2023 decreased by $4.6 million from $23.9 million
($0.67 per share) in Q4 2022 to $19.3 million ($0.57 per share) in Q4 2023. See “Non-IFRS and Other
Measures”.
18
29
Sleep Country Canada Holdings Inc. Annual Report 2023 7. Annual Financial Results 2023 versus 2022
Revenues increased by $6.3 million or 0.7% from $928.7 million in 2022 to $935.0 million in 2023 mainly
due to incremental revenue earned from new stores, wrap stores opened in 2022 and the acquisitions of
Silk & Snow and Casper Canada completed in January 2023 and April 2023 respectively. This increase
was partially offset by a decrease in SSS by 6.4% (See “Non-IFRS and Other Measures”).
Revenues attributed to eCommerce increased by 310 basis points from 19.6% in 2022 to 22.7% in 2023.
The increase in Revenues by $6.3 million was comprised of an increase in accessories revenues of $10.2
million partially offset by a decrease in mattresses revenues of $3.9 million in 2023 versus 2022.
(C$ millions unless otherwise stated)
Mattresses
Accessories
Total
2023
704.2
230.8
935.0
$
$
$
2022
708.1
220.6
928.7
$
$
$
Annual
Change Change (%)
(0.6%)
4.6%
0.7%
(3.9)
10.2
6.3
$
$
$
Gross profit
Gross profit increased by $6.5 million from $341.0 million in 2022 to $347.5 million in 2023. Gross profit
margin increased by 50 basis points from 36.7% in 2022 to 37.2% in 2023. Gross profit margin was
impacted in 2023 versus 2022 by the following:
•
•
•
inventory and other directly related expenses decreased as a percentage of Revenues by 0.9%
from 41.7% in 2022 to 40.8% in 2023 primarily due to higher AUSP and lower product costs,
partially offset by higher inventory allowances and higher delivery costs mainly driven by growth
in eCommerce Revenues;
sales and distribution compensation expenses increased as a percentage of Revenues by 0.2%
from 13.2% in 2022 to 13.4% in 2023 due to increases in salaries, wages and benefits under
the normal course of business; and
store occupancy costs increased as a percentage of Revenues by 0.2% from 2.9% in 2022 to
3.1% in 2023 due to the Company deleveraging its occupancy costs which were also impacted
by the Company's 14 new stores of which six stores were part of the Casper Canada acquisition.
19
30
Sleep Country Canada Holdings Inc. Annual Report 2023
G&A expenses
Total G&A expenses increased by $31.7 million or 16.2% from $196.2 million in 2022 to $227.9 million in
2023, and, as a percentage of Revenues, G&A expenses increased from 21.1% of Revenues in 2022 to
24.4% of Revenues in 2023.
(C$ millions unless otherwise stated)
Media and advertising expenses(1)
Salaries, wages and benefits(2)
Credit card and finance charges(3)
Occupancy charges
Professional fees
Telecommunication and information technology(4)
Mattresses recycling and donations
Depreciation and amortization(5)
Other(6)
Total G&A expenses
Notes:
Annual
% of
$
% of
2023 Revenues
87.1
48.5
22.4
10.9
10.8
14.6
3.7
23.0
6.9
$ 227.9
2022 Revenues Change
12.2
9.3% $
74.9
5.7
5.2% 42.8
2.5
2.4% 19.9
1.3
1.2%
9.6
0.8
1.1% 10.0
3.1
1.6% 11.5
0.8
2.9
0.4%
2.8
2.5% 20.2
2.5
4.4
0.7%
31.7
24.4% $ 196.2
8.1% $
4.6%
2.1%
1.0%
1.1%
1.2%
0.3%
2.2%
0.5%
21.1% $
(1) Media and advertising expenses increased by $12.2 million due to an increase in online
advertising mainly impacted by the incremental spend by Silk & Snow and Casper Canada
acquired in 2023, as well as increases in television and billboard advertising, production and
publicity costs. These increases were partially offset by decreases in newspaper and radio
advertising costs and an increase in advertising credits.
(2) Salaries, wages and benefits increased by $5.7 million mainly due to an increase in
compensation expenses incurred in the regular course of business, incremental headcount from
the acquisitions of Silk & Snow and Casper Canada, and an increase in share-based
compensation partially impacted by the over performance of the 2021 PSU plan. This increase
was partially offset by a decrease in bonus expenses.
(3) Credit card and finance charges are variable costs and these costs increased as a percentage
of Revenues by 0.3% mainly due to increased financing rates and incremental fees incurred by
Silk & Snow and Casper Canada.
(4)
Telecommunication and information technology expenses increased by $3.1 million mainly due
to increases in software licensing fees and software support expenses.
(5) Depreciation expenses increased by $2.8 million mainly due to the increase in tangible and
intangible depreciation.
(6) Other expenses increased by $2.5 million mainly due to increases in supplies, travel, meals and
entertainment expenses in addition to the return of company events from the pre-pandemic
period.
20
31
Sleep Country Canada Holdings Inc. Annual Report 2023
EBITDA
EBITDA decreased by $21.3 million from $210.5 million in 2022 to $189.2 million in 2023. The decrease
was mainly due to higher advertising, compensation, credit card and financing charges, occupancy,
telecommunication and information technology and other costs that were impacted by the acquisitions of
Silk & Snow and Casper Canada; partially offset by an improved gross profit margin. See “Non-IFRS and
Other Measures”.
Operating EBITDA
Operating EBITDA was $196.8 million for 2023, or 21.0% of Revenues, compared to $218.6 million for
2022, or 23.5% of Revenues, representing a decrease of $21.8 million or 10.0% mainly due to the decrease
in EBITDA. See “Non-IFRS and Other Measures”.
Finance related expenses (income)
Finance related expenses (income) increased by $24.4 million from income of $0.9 million in 2022 to
expenses of $23.5 million in 2023 due to higher interest expenses on the Company's lease obligations and
its senior secured credit facility, impacted by the higher interest rates and debt levels, in addition to an
unrealized loss on the Company's interest rate swap in 2023. Additionally, this change was positively
impacted by a $4.7 million reduction to the Hush redemption liabilities in 2023, offset by the $20.5 million
reduction to the redemption liabilities in 2022. These adjustments to the redemption liabilities were to reflect
the estimated shift in achievement of the initial EBITDA targets to beyond the redemption period.
Income taxes
Net income before income taxes in 2023 decreased by $49.3 million from $146.0 million in 2022 to $96.7
million in 2023. The Company’s effective income tax rate increased by 180 basis points from 24.2% in 2022
to 26.0% in 2023. The change in the effective tax rate is mainly driven by the $20.5 million adjustment in
Q4 2022 due to the reduction of the Hush redemption liabilities which was partially offset by a $4.7 million
adjustment of the Hush redemption liabilities in Q4 2023 that are not deductible for tax purposes. The
decrease in net income before tax was partially offset by the increase in effective tax rate and resulted in
a decrease to income taxes of $10.2 million in 2023 versus 2022.
Net Income attributable to the Company
Net Income attributable to the Company for 2023 decreased by $39.3 million from $110.5 million ($3.04 per
share) in 2022 to $71.2 million ($2.06 per share) in 2023.
Adjusted net income attributable to the Company
Adjusted net income attributable to the Company for 2023 decreased by $28.8 million from $102.9 million
($2.83 per share) in 2022 to $74.1 million ($2.14 per share) in 2023. See “Non-IFRS and Other Measures”.
21
32
Sleep Country Canada Holdings Inc. Annual Report 2023 8. Summary of Quarterly Results
The Company’s Revenues are impacted by seasonality, with the third quarter typically generating the greatest contribution to revenues and the first
quarter the least. Accordingly, results of operations for any interim period are not necessarily indicative of the results of operations for the full fiscal year.
The following table displays the Company’s financial performance for the last eight quarters and it has been prepared in accordance with IFRS, except
where indicated.
(C$ thousands unless otherwise
stated, except EPS)
Revenues
SSS (%)(1)
Gross profit
Gross profit margin (%)
EBITDA(1)
Operating EBITDA(1)
Operating EBITDA margin (%)(1)
Net income attributable
to the Company
Adjusted net income attributable
to the Company(1)
Basic EPS
Diluted EPS
Basic adjusted EPS(1)
Diluted adjusted EPS(1)
Note:
Q4
Q3
Q2
Q1
Annual
Q4
Q3
Q2
Q1
Annual
2023
2022
$
(5.5%)
$ 255,602 $ 255,748 $ 217,199 $ 206,495 $ 935,044 $ 243,028 $ 251,026 $ 227,575 $ 207,028 $ 928,657
(1.8%)
71,633 $ 341,028
34.6%
36.7%
44,239 $ 210,494
46,714 $ 218,559
22.6%
23.5%
(3.2%)
96,267 $ 101,447 $
37.7%
50,218 $
51,356 $
20.1%
(6.2%)
70,789 $ 347,474 $
34.3%
39,668 $ 189,206 $
41,360 $ 196,758 $
20.0%
(11.5%)
91,075 $
37.5%
50,711 $
53,005 $
21.8%
(10.9%)
78,970 $
36.4%
41,428 $
44,204 $
20.4%
(11.1%)
96,623 $
38.5%
63,683 $
65,603 $
26.1%
15.1%
81,700 $
35.9%
51,866 $
53,242 $
23.4%
39.7%
57,893 $
59,839 $
23.4%
(6.4%)
21.0%
37.2%
8.8%
$
$
$
$
$
$
$
$
22,471 $
24,705 $
12,685 $
11,330 $
71,192 $
40,469 $
28,926 $
22,665 $
18,413 $ 110,471
19,308 $
0.66 $
0.65 $
0.57 $
0.56 $
26,790 $
0.71 $
0.70 $
0.77 $
0.76 $
14,796 $
0.36 $
0.36 $
0.43 $
0.42 $
13,248 $
0.32 $
0.32 $
0.38 $
0.37 $
74,143 $
2.06 $
2.04 $
2.14 $
2.12 $
23,874 $
1.14 $
1.13 $
0.67 $
0.67 $
32,457 $
0.80 $
0.79 $
0.90 $
0.89 $
25,739 $
0.61 $
0.61 $
0.70 $
0.69 $
20,800 $ 102,868
3.04
3.01
2.83
2.81
0.50 $
0.49 $
0.56 $
0.56 $
(1) SSS is a supplementary financial measure, EBITDA, Operating EBITDA, Adjusted net income attributable to the Company, Basic adjusted EPS
and Diluted adjusted EPS are each non-IFRS measures and Operating EBITDA margin is a non-IFRS ratio. See the section titled “Non-IFRS and
Other Measures” for further details concerning how the Company calculates SSS, EBITDA, Operating EBITDA, Adjusted net income attributable
to the Company, Basic adjusted EPS and Diluted adjusted EPS and for a reconciliation to the most comparable IFRS measure.
22
33
Sleep Country Canada Holdings Inc. Annual Report 2023
9. Segment Reporting
The Company manages its business on the basis of five operating segments, Sleep Country/Dormez-vous,
Endy, Hush, Silk & Snow, and Casper Canada which is consistent with the internal reporting provided to
the chief operating decision-maker, the Chief Executive Officer ("CEO"). The Company has only one
reportable segment as the operating segments meet the aggregation criteria of IFRS 8 - Operating
Segments. The Company aggregates these reporting segments because the nature of products, services,
methods of distribution and economic characteristics are similar. The Company operates primarily in
Canada, its country of domicile.
10. Liquidity and Capital Resources
Liquidity
The Company’s primary sources of cash consist of existing cash balances, operating activities and available
credit facilities. The Company’s primary uses of cash are to fund operating expenses, capital expenditures,
finance costs, tax expenses, principal debt payments, dividends, business acquisitions, investments and
share repurchases.
The Company believes cash generated from operations, together with cash on hand and amounts available
under the Company’s credit facilities will be sufficient to meet its future cash requirements. However, the
Company’s ability to fund future cash requirements will depend on its future operating performance. This
could be affected by general economic, financial and other factors including factors beyond its control,
despite the risk management strategies that the Company puts in place. See the section entitled “Risk
Factors” in the AIF for a discussion of the various risks and uncertainties that may affect the Company’s
ability to fund its future cash requirements.
The Company reviews new store openings, acquisitions and investment opportunities in the normal course
of its business and may, if suitable opportunities arise, realize these opportunities to meet the Company’s
business strategy. Historically, the funding for any such acquisitions or investments has come from cash
flow generated from operating activities and/or additional debt.
The Company’s cash balance was $37.4 million with an additional $98.7 million (not including the $100.0
million accordion) of liquidity available under the Company’s credit facility as at December 31, 2023.
A summary of net cash flows by activities is presented below for 2023 and 2022:
(C$ thousands unless otherwise stated)
Cash flows provided by operating activities
Cash flows used by investing activities
Cash flows used by financing activities
Effects of foreign currency exchange rate changes on cash
Net increase (decrease) in cash
Cash at beginning of the period
Cash at end of the period
Net cash flows provided by operating activities
2023
153,978
(124,316)
(70,599)
(10)
(40,947)
78,318
37,371
$
$
Annual
2022
163,060
(18,224)
(103,044)
(20)
41,772
36,546
78,318
$
$
Net cash flows provided by operating activities in 2023 were $154.0 million and consisted of the positive
impact of cash generated from operating activities of $166.5 million offset by $12.6 million of cash used as
a result of an increase in working capital. The increase in working capital in 2023 was primarily driven by
higher trade and other receivables and prepaid expenses and deposits, and lower trade and other payables,
which were partially offset by lower inventories and higher deferred revenues.
Net cash flows provided by operating activities in 2022 were $163.1 million and consisted of the positive
impact of cash generated from operating activities of $181.2 million offset by $18.2 million of cash used as
a result of an increase in working capital. The increase in working capital in 2022 was primarily driven by
23
34
Sleep Country Canada Holdings Inc. Annual Report 2023 higher inventories and prepaid expenses and deposits, and lower deferred revenues and trade and other
payables which were partially offset by lower trade and other receivables.
Net cash flows used by investing activities
Net cash flows used by investing activities in 2023 were $124.3 million and consisted primarily of $59.4
million used in the acquisitions of Silk & Snow and Casper Canada, $20.1 million invested in the convertible
note receivable and warrant of Casper U.S., $1.3 million used to purchase an additional 16% share
ownership from non-controlling shareholders of Hush Blankets Inc., with the remaining cash flows of $43.4
million used mainly on capital expenditure related to enhancements on the Company’s ERP system and
eCommerce platforms, leasehold improvements, computer hardware and furniture and equipment.
Net cash flows used by investing activities in 2022 were $18.2 million and consisted primarily of investments
in capital expenditure related to enhancements on the Company’s ERP system and eCommerce platforms,
leasehold improvements, computer hardware and furniture and equipment.
Net cash flows used by financing activities
Net cash flows used by financing activities in 2023 were $70.6 million and consisted of the repayment of
the principal on lease obligations of $38.8 million, the repurchase for cancellation of the Company’s
common shares under the NCIB of $37.3 million, dividends paid on the common shares of $32.0 million,
the repayment on the senior secured credit facility of $31.0 million and interest payments of $24.2 million
on lease liabilities and the senior secured credit facility. These cash outflows were partially offset by an
additional draw on the senior secured credit facility of $92.3 million and proceeds received from common
shares issued due to exercised stock options of $0.4 million.
Net cash flows used by financing activities in 2022 were $103.0 million and consisted primarily of the
repurchase for cancellation of the Company’s common shares under the NCIB of $57.7 million, the
repayment of the principal on lease obligations of $38.7 million, dividends paid on the common shares of
$30.4 million, the repayment to the senior secured credit facility of $21.0 million and interest payments of
$15.9 million on lease liabilities and the senior secured credit facility. These cash outflows were partially
offset by an additional draw on the senior secured credit facility of $58.0 million and proceeds received from
common shares issued due to exercised stock options of $2.8 million.
Contractual obligations
The following table summarizes the Company’s significant contractual obligations as at December 31, 2023
based on undiscounted cash flow (including interest where applicable) which may differ from the carrying
values of the liabilities at the reporting date:
(C$ thousands unless otherwise stated)
Trade and other payables
Lease liabilities
Long-term debt(1)
Other liabilities(2)
Within
1 year
110,966 $
56,281
12,506
23,136
202,889 $
Between 1
and 5 years
- $
198,692
183,913
5,492
388,097 $
$
$
2023
Over
5 years
-
233,834
-
-
233,834
Notes:
(1)
Long-term debt represents the interest and principal amounts on the senior secured credit
facility, which is scheduled to mature on October 22, 2026, with a balance outstanding at
December 31, 2023 of $161.3 million.
(2) Other liabilities includes $20.0 million representing the estimated maximum obligation for shares
to be repurchased under the ASPP, $2.1 million representing the contingent consideration
liability related to the acquisition of Silk & Snow, and $6.6 million representing the redemption
24
35
Sleep Country Canada Holdings Inc. Annual Report 2023
liabilities to acquire the shares of non-controlling interests in Hush over the remaining two-year
period.
Capital Resources
Senior secured credit facility
The Company has a senior secured credit facility of $260.0 million with an additional $100.0 million available
on its accordion, which is scheduled to mature on October 22, 2026. Under the terms of the senior secured
credit facility, certain financial and non-financial covenants must be complied with. The Company is in
compliance with all covenants as at December 31, 2023.
The senior secured credit facility is secured by the present and after acquired personal property of the
Company. As at December 31, 2023, the balance outstanding on the senior secured credit facility was
$161.3 million (December 31, 2022 – $100.0 million). The long-term debt liability balance in the
consolidated statements of financial position is net of transaction costs of $0.7 million (December 31, 2022
– $0.9 million).
The senior secured credit facility allows for the debt to be held in Canadian or US dollars. As at
December 31, 2023, the Company held the debt in Canadian dollars.
Interest on the senior secured credit facility is based on the prime or bankers’ acceptance rates plus
applicable margins based on the achievement of certain targets, as defined by the amended and restated
senior secured credit agreement. The Company entered into a fixed interest rate swap, effective April 1,
2021 ending on April 1, 2024, for the notional amount of $60.0 million whereby the Company pays a fixed
rate of 1.072% and receives interest at a variable rate equal to the Canadian Dollar Offered Rate for 3-
month bankers' acceptances (“3-month CDOR”) on the notional amount. The swap is being used to
manage the volatility of interest rates on the outstanding balance on its senior secured credit facility.
Off-balance sheet arrangements
The Company did not have any material off-balance sheet arrangements as at December 31, 2023 and
December 31, 2022, nor did it have any subsequent to December 31, 2023.
11. Transactions with Key Management Personnel
Key management personnel are those individuals having authority and responsibility for planning, directing
and controlling the activities of the Company, including members of the Company’s Board of Directors. The
Company incurred the following expenses in relation to key management personnel:
(C$ thousands unless otherwise stated)
Salaries and short-term benefits
Share-based compensation
Directors’ fees
12. Risk Factors
2023
2,368
3,129
532
6,029
$
$
Annual
2022
4,219
2,746
549
7,514
$
$
The Company’s activities expose it to a variety of financial risks: market risk, credit risk, liquidity risk, capital
risk and technology risk. The Company’s overall risk management program and business practices seek to
minimize any potential adverse effects on its financial performance.
Risk management is carried out by the senior management team and is reviewed by the Board.
For an understanding of other potential risks, including, non-financial risks, see the section entitled “Risk
Factors” in the AIF.
25
36
Sleep Country Canada Holdings Inc. Annual Report 2023 Market Risk
Market risk is the loss that may arise from changes in factors such as interest rates, foreign exchange rates
and the impact these factors may have on other counter-parties.
Foreign Exchange Risk
The Company’s operating results are reported in Canadian dollars. A portion of the Company’s sales and
purchases are denominated in U.S. dollars which results in foreign currency exposure related to fluctuations
between the Canadian and U.S. dollars. The Company does not currently use foreign exchange options or
forward contracts to hedge its foreign currency risk relating to sales and purchases. A sudden increase in
the U.S. dollar relative to the Canadian dollar could result in higher costs to the Company, which could in
turn result in increased prices and reduced sales, decreased profit margins and could negatively impact the
Company’s business and financial results.
Cash Flow and Fair Value Interest Risk
The Company's income and operating cash flows are substantially independent of changes in market
interest rates.
The Company’s primary interest rate risk arises from long-term debt. It manages its exposure to changes
in interest rates by using a combination of fixed and variable rate debt and varying lengths of terms to
achieve the desired proportion of variable and fixed rate debt. Additionally, the Company holds a fixed rate
swap for the notional amount of $60.0 million to manage its interest rate risk. An increase (or decrease) in
interest rates by 1% would result in a $1.0 million increase (or decrease) of the annual interest expense of
the credit facility. The Company has leases that carry interest at variable rates.
Credit Risk
Credit risk refers to the risk of losses due to the failure of the Company’s customers or other counter-parties
to meet their payment obligations. Credit risk arises from deposits with banks, receivables with counter-
parties as well as credit exposures from vendors for the payment of volume and co-operative advertising
rebate amounts and balances owed from third-party financing companies under the various financing plans
the Company offers its customers. In order to manage the Company's credit risk the Company closely
monitors its financial assets and holds its deposits at highly rated financial institutions. Sales to retail
customers are settled in cash, financed by third-party financing companies or by using major credit cards.
The Company transfers the credit risk for financing plans to third-party financing companies. The third-party
financing company that the Company deals with carries a minimum rating of BBB or better.
There are no significant impaired receivables that have not been provided for in the allowance. There are
no significant amounts considered past due or impaired.
Liquidity Risk
Liquidity risk is the risk the Company will not be able to meet a demand for cash or fund its obligations as
they come due. It also includes the risk of not being able to liquidate assets in a timely manner at a
reasonable price. Prudent liquidity management implies maintaining sufficient cash and the availability of
funding through an adequate number of committed credit facilities.
Capital Risk
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern
in order to provide returns for its common shareholders in the form of cash dividends, benefits to other
stakeholders and to maintain an optimal capital structure to minimize the cost of capital.
In order to maintain or adjust the capital structure, the Company may issue new shares, purchase its own
shares or sell assets to reduce long-term debt.
26
37
Sleep Country Canada Holdings Inc. Annual Report 2023 Technology and Cyber Security Risk
The Company continues to undertake investments in new IT systems to improve the operating effectiveness
of the organization. This includes the ongoing enhancements on the Company’s ERP system and
eCommerce platforms. Failure to successfully migrate from legacy systems to the new systems or a
significant disruption in the Company’s current IT systems during the implementation of the new systems
could result in a lack of accurate data to enable management to effectively manage day-to-day operations
of the business or achieve its operational objectives causing significant disruptions to the business and
potential financial losses.
In addition, in the normal course of its business, the Company collects, uses, discloses and retains sensitive
and confidential customer and employee information. Although the Company has security measures in
place, the Company's facilities and systems and those of its third-party service providers may be vulnerable
to security breaches, hacking, computer viruses, misplaced or lost data, programming and/or human errors
and other similar events. Any security or data privacy incident, including one involving the misappropriation,
loss or other unauthorized use or disclosure of confidential or personal information, whether by the
Company or its vendors, could damage the Company's reputation and its relationships with its customers,
expose the Company to risks of litigation and liability and may have a material adverse effect on the
Company's business.
13. Critical Accounting Estimates and Judgments
The Company’s critical accounting estimates are included in Note 4 of the Company’s 2023 audited annual
consolidated financial statements and are described below.
Critical accounting estimates require management to make certain judgments and estimates, which may
differ from actual results. Accounting estimates are based on historical experience and other factors that
management believes to be reasonable under the time frame and circumstances. Changes in
management’s accounting estimates may have a material impact on the financial results of the Company.
Impairment of goodwill and brands
The Company is required to use judgment in determining the appropriate groupings of CGUs, in order to
determine the level at which goodwill and intangible assets are tested for impairment. In addition, judgment
is used to determine whether a triggering event has occurred requiring an impairment test to be completed.
The determination of recoverable amount employs various estimates and requires judgment. The Company
uses assumptions including revenue growth rates, terminal growth rates beyond the forecast period and
discount rates when determining the recoverable amounts of CGUs. Discount rates are based on an
estimate of the Company’s weighted average cost of capital taking into account external industry
information reflecting the risk associated with the specific cash flows. As at reporting dates for the
consolidated financial statements, impairment reviews were performed by comparing the carrying value
with the recoverable amount of the CGU to which goodwill and brands have been allocated. The Company
has determined there had been no impairment as at the reporting dates of the consolidated financial
statements.
Business combinations
For each business combination, the Company measures the identifiable assets acquired and the liabilities
assumed at fair value at their acquisition date. The determination of fair value requires the Company to
make assumptions, estimates and judgments regarding future events. The allocation process is inherently
subjective and impacts the amounts assigned to individual identifiable assets and liabilities, including the
recognition and measurement of any identified intangible assets and the final determination of the amount
of goodwill or gain on acquisition. The inputs to the exercise of judgments include legal, contractual,
business and economic factors. As a result, the purchase price allocation impacts the Company’s reported
assets and liabilities and future net earnings and impairment tests.
27
38
Sleep Country Canada Holdings Inc. Annual Report 2023 14. Financial Instruments
As at December 31, 2023, the financial instruments consisted of cash, trade and other receivables,
convertible note receivable, warrant, trade and other payables, deferred revenues, long-term debt under
the Company's senior secured credit facility, interest rate swap, redemption liabilities, contingent
consideration liability and the share repurchase commitment under ASPP.
•
•
•
•
•
•
•
The carrying values of cash, trade and other receivables, trade and other payables, deferred
revenues and the share repurchase commitment under ASPP approximate their fair values due
to the relatively short periods to maturity of these financial instruments.
The carrying value of the long-term debt under the Company's senior secured credit facility
approximates its fair value as the terms and conditions of the borrowing arrangements are
comparable to market terms and conditions as at December 31, 2023 and December 31, 2022.
The interest rate swap obtained effective April 1, 2021 is recognized at fair value based on
observable quoted market prices for identical financial instruments in active markets as at
December 31, 2023 and December 31, 2022.
The convertible note receivable is recognized at fair value measured using the Black-Scholes
pricing model and the Crank-Nicolson finite difference method.
The warrant is recognized at fair value measured using the Binomial option pricing model.
The redemption liabilities related to the acquisition of Hush were initially recognized at fair value
measured at the expected outcome (discounted) determined based on an earnings formula and
the expected earnings levels over the measurement period and subsequently measured at
amortized cost.
The contingent consideration liability related to the acquisition of Silk & Snow was initially
recognized at fair value measured at the expected outcome (discounted) determined based on
an upon an earnings formula and the expected achievement levels against certain growth and
profitability targets in aggregate over the contingency period and subsequently measured at
amortized cost.
The Company’s financial instruments are exposed to certain financial risks, including currency risk, interest
rate risk, credit risk and liquidity risk, which are discussed above under the section “Risk Factors”.
15. Internal Controls Over Financial Reporting
Management is responsible for establishing and maintaining appropriate internal controls over financial
reporting (“ICFR”). ICFR is designed to provide reasonable assurance regarding the reliability of the
Company’s financial reporting and the preparation of financial statements in accordance with IFRS. In
designing ICFR, it should be recognized that due to inherent limitations, any controls, no matter how well
designed and operated, can provide only reasonable assurance of achieving the desired control objectives
and cannot provide absolute assurance with respect to the prevention or detection of misstatements.
Additionally, management is required to use judgment in evaluating ICFR.
Management is also responsible for establishing and maintaining a system of disclosure controls and
procedures to provide reasonable assurance that all material information relating to the Company and its
subsidiary is gathered and reported to senior management on a timely basis so that appropriate decisions
can be made regarding public disclosure.
28
39
Sleep Country Canada Holdings Inc. Annual Report 2023
The Company’s ICFR includes policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with IFRS Accounting Standards, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management and
directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect
on the financial statements.
A “material weakness” in ICFR is a deficiency, or a combination of deficiencies, in ICFR, such that there is
a reasonable possibility that a material misstatement of a company’s annual or interim financial statements
will not be prevented or detected in a timely basis by the organization’s internal controls.
The Certifying Officers have evaluated the effectiveness of the Company’s ICFR as at December 31, 2023
using the framework established in ‘Internal Control - Integrated Framework (COSO Framework)’ published
by The Committee of Sponsoring Organizations of the Treadway Commission (COSO), 2013. Based on
that evaluation, the Certifying Officers concluded that the ICFR, as defined by National Instrument 52-109
– Certification of Disclosure on Issuers’ Annual and Interim Filings, are appropriately designed and were
operating effectively as at December 31, 2023 and that no material weaknesses were identified through
their evaluation.
In accordance with the provisions of National Instrument 52-109 - Certification of Disclosure in Issuers’
Annual and Interim Filings, Management, including the CEO and Chief Financial Officer ("CFO"), have
limited the scope of their design of the Company’s disclosure controls and procedures and internal control
over financial reporting to exclude such controls, policies and procedures of Casper Canada.
The Company acquired the business of Casper Canada on April 14, 2023. Casper Canada’s financial
results are included in the Company’s condensed interim consolidated financial statements for or the
quarter ended December 31, 2023. For the Consolidated Statement of Financial Position, Casper Canada
constitutes 4.6% of total current assets, 4.2% of total assets, 2.0% of total current liabilities and 1.2% of
total liabilities as at December 31, 2023.
The scope limitation is primarily based on the time required to assess Casper Canada's disclosure controls
and procedures and internal control over financial reporting in a manner consistent with the Company’s
other operations.
16. Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that material information
relating to the Company is made known to the CEO and the CFO (the “Certifying Officers”) by others on
a timely basis so that appropriate decisions can be made regarding public disclosure within the time periods
required by applicable securities laws. The Certifying Officers are responsible for establishing and
maintaining the Company’s disclosure controls and procedures.
The Company’s system of disclosure controls and procedures includes, but is not limited to, the Company’s
Disclosure Policy, the Company’s Codes of Business Conduct, the effective functioning of the Company’s
Disclosure Committee, procedures in place to systematically identify matters warranting consideration of
disclosure by the Disclosure Committee, verification processes for individual financial and non-financial
metrics and information contained in annual and interim filings, including the consolidated financial
statements, MD&As, AIF, Management Information Circular and other documents and external
communications.
29
40
Sleep Country Canada Holdings Inc. Annual Report 2023
Based on an evaluation of the Company’s disclosure control and procedures, the Certifying Officers have
concluded that these controls are appropriately designed and were operating effectively as of December
31, 2023. Although the Company’s disclosure controls and procedures were operating effectively as of
December 31, 2023, there can be no assurance that the Company’s disclosure controls and procedures
will detect or uncover all failures of persons within the Company to disclose material information otherwise
required to be set forth in the Company’s regulatory filings.
17. Current and Future Accounting Standards
A summary of the Company’s material accounting policies is included in Note 3 of the Company’s 2023
audited annual consolidated financial statements.
Accounting standards, interpretations and amendments not yet adopted
There are a number of interpretations and amendments to existing standards have been published by the
International Accounting Standards Board ("IASB®") that are not yet in effect. The Company has not early
adopted these interpretations or amendments. The interpretations and amendments not expected to have
an impact on the Company's consolidated financial statements have not been disclosed.
The following amendments may have an impact of the Company's consolidated financial statements in
future reporting periods:
Non-current Liabilities with Covenants (Amendments to IAS 1)
In October 2022, the IASB issued amendments to IAS 1 – Presentation of Financial Statements, seeking
to improve the information that an entity provides when its right to defer settlement of a liability is subject to
compliance with covenants within 12 months after the reporting period. The amendments are effective for
annual reporting periods beginning on or after January 1, 2024 and are to be applied retrospectively.The
Company is in the process of assessing the impact of this amendment on its consolidated financial
statements.
International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
In December 2021, the Organization for Economic Co-operation and Development ("OECD") issued model
rules for a new global minimum tax framework ("Pillar Two"), and various governments around the world
have issued, or are in the process of issuing, legislation on this. In Canada, the government released draft
legislation on Pillar Two in August 2023. In May and June 2023 respectively, the IASB issued amendments
to IAS 12 - Income Taxes, introducing a mandatory temporary exception to recognising and disclosing
information about deferred tax assets and liabilities that relate to tax law enacted or substantively enacted
to implement the Pillar Two model rules. The Company is yet to apply the mandatory temporary exception
as the Pillar Two legislation has not yet been enacted in the jurisdiction in which it operates. The Company
is in the process of assessing the impact of this international tax reform on its consolidated financial
statements.
18. Outstanding Share Data
As of the date hereof, 33,529,713 common shares and no Class A common shares of the Company are
issued and outstanding. As of the date hereof, 1,110,633 stock options to purchase an equivalent number
of common shares, 213,700 performance share units, 235,902 restricted share units and 94,598 deferred
share units are issued and outstanding. For further details concerning the rights, privileges and restrictions
attached to the common shares and the Class A common shares, please refer to the section entitled
“Capital Structure” in the AIF.
30
41
Sleep Country Canada Holdings Inc. Annual Report 2023
19. Non-IFRS and Other Measures
The Company prepares its consolidated financial statements in accordance with IFRS Accounting
Standards. In order to provide additional insight into the business, to provide investors with supplemental
measures of its operating performance and to highlight trends in its business that may not otherwise be
apparent when relying solely on IFRS financial measures, the Company has also provided in this MD&A
certain supplementary financial measures, such as SSS, non-IFRS measures such as EBITDA, Operating
EBITDA, Adjusted net income, Basic adjusted EPS, Diluted adjusted EPS, and non-IFRS ratios including
Operating EBITDA margin each as defined below. These measures are provided as additional information
to complement IFRS measures by providing further understanding of the Company’s results of operations
from management’s perspective. Management also uses these measures in order to facilitate operating
performance comparisons from period to period, to prepare annual operating budgets and forecasts and to
determine components of management compensation. The Company also believes that securities analysts,
investors and other interested parties frequently use these measures in the evaluation of issuers.
Readers are cautioned that these measures are not recognized under IFRS Accounting Standards and do
not have a standardized meaning prescribed by IFRS Accounting Standards. They are therefore unlikely
to be comparable to similarly titled measures presented by other publicly traded companies. Accordingly,
they should not be considered in isolation nor as a substitute for analysis of the Company’s financial
information reported under IFRS Accounting Standards. See below for further details concerning how the
Company calculates these measures and for reconciliations to the most comparable IFRS measures.
Same Store Sales (SSS)
SSS is a supplementary financial measure used in the retail industry to compare sales derived from
established stores over a certain period compared to the same period in the prior year. The Company has
embarked on an omnichannel approach to engaging with customers. This approach allows customers to
shop online for home delivery or purchase in any store locations. Due to the customer cross-channel
behavior, the Company reports a single comparable sales metric, inclusive of store and eCommerce
channels. This measure does not include sales from the Company’s Express Stores. SSS helps to explain
what portion of revenue growth can be attributed to growth in established stores and eCommerce sales.
The Company calculates SSS as the percentage increase or decrease in sales from stores and eCommerce
platforms opened and operated for at least 12 complete months relative to the same period in the prior
year.
31
42
Sleep Country Canada Holdings Inc. Annual Report 2023 EBITDA, Operating EBITDA, and Operating EBITDA margin
EBITDA and Operating EBITDA are used by the Company to assess its operating performance.
EBITDA is defined as net income attributable to the Company adjusted for:
•
•
•
•
•
non-controlling interests
other expenses (income);
finance related expenses (income);
income taxes; and
depreciation and amortization.
Operating EBITDA is defined as EBITDA adjusted for:
•
•
•
acquisition costs;
ERP implementation costs; and
share-based compensation.
Operating EBITDA margin is defined as Operating EBITDA divided by Revenues.
Adjusted net income attributable to the Company
Adjusted net income attributable to the Company is used by the Company to assess its operating
performance. Adjusted net income attributable to the Company is defined as net income attributable to the
Company adjusted for:
•
•
•
•
acquisition costs;
ERP implementation costs;
share-based compensation; and
accretion on the redemption liabilities related to the Hush acquisition and accretion on the
contingent consideration liability related to the Silk & Snow acquisition.
Basic adjusted earnings per share (Basic adjusted EPS)
Basic adjusted EPS is defined as adjusted net income attributable to the Company divided by weighted
average number of shares issued and outstanding during the period.
Diluted adjusted earnings per share (Diluted adjusted EPS)
Diluted adjusted EPS is defined as adjusted net income attributable to the Company divided by weighted
average number of shares issued and outstanding during the period adjusted for the effects of dilutive stock
options, performance share units, restricted share units and deferred share units.
32
43
Sleep Country Canada Holdings Inc. Annual Report 2023
Calculation of Non-IFRS and Other Measures
(C$ thousands unless otherwise stated, except EPS)
Reconciliation of net income attributable to the Company
to EBITDA and Operating EBITDA:
Net income attributable to the Company
Add impact of the following:
Non-controlling interests
Other expenses (income)
Finance related expenses (income)
Income taxes
Depreciation and amortization
EBITDA
Adjustments:
Acquisition costs(1)
ERP implementation costs(2)
Share-based compensation(3)
Total adjustments
Operating EBITDA
Operating EBITDA margin (%)
Reconciliation of net income attributable to the Company
to adjusted net income attributable to the Company:
Net income attributable to the Company
Adjustments:
Acquisition costs(1)
ERP implementation costs(2)
Share-based compensation(3)
Accretion expense(4)
Tax impact of all adjustments(5)
Total adjustments
Adjusted net income attributable to the Company
Weighted average number of shares – Basic
Weighted average number of shares – Diluted
Basic EPS
Diluted EPS
Basic adjusted EPS
Diluted adjusted EPS
Notes:
2023
Q4
2022
2023
Annual
2022
$
22,471 $
40,469 $
71,192 $ 110,471
354
(127)
2,416
6,860
18,244
50,218
314
65
(15,533)
8,220
17,176
50,711
343
(550)
23,471
25,135
69,615
189,206
-
-
1,138
1,138 $
449
603
1,242
2,294 $
1,255
-
6,297
7,552 $
225
(292)
(889)
35,346
65,633
210,494
449
2,637
4,979
8,065
51,356 $
20.1%
53,005 $ 196,758 $ 218,559
23.5%
21.8%
21.0%
$
$
$
22,471 $
40,469 $
71,192 $ 110,471
-
-
1,138
(4,070)
(231)
449
603
1,242
(18,370)
(519) $
(3,163) $ (16,595) $
1,255
-
6,297
(2,880)
(1,721) $
2,951 $
449
2,637
4,979
(13,850)
(1,818)
(7,603)
19,308 $
23,874 $
74,143 $ 102,868
34,154
34,466
35,456
35,747
34,622
34,922
0.66 $
0.65 $
0.57 $
0.56 $
1.14 $
1.13 $
0.67 $
0.67 $
2.06 $
2.04 $
2.14 $
2.12 $
36,316
36,648
3.04
3.01
2.83
2.81
$
$
$
$
$
$
(1) Adjustment for professional fees incurred in relation to acquisition activities.
(2) Adjustment for charges related to the Company's ERP implementation project resulting in
significantly increased costs during the implementation phase relative to the ongoing operating
costs.
(3) Adjustment for share-based compensation.
(4) Adjustment for accretion of the redemption liabilities related to the Hush acquisition and the
contingent consideration liability related to the Silk & Snow acquisition.
(5) The related tax effects are calculated at the Company’s average statutory tax rate.
33
44
Sleep Country Canada Holdings Inc. Annual Report 2023
20. Additional Information
Additional information relating to the Company, including the Company’s AIF, quarterly and annual reports
and supplementary information is available on SEDAR+ at www.sedarplus.ca. Press releases and other
information are also available at the Company’s investor relations website at www.ir.sleepcountry.ca.
34
45
Sleep Country Canada Holdings Inc. Annual Report 2023 Consolidated
Financial Statements
December 31, 2023 and December 31, 2022
46
Sleep Country Canada Holdings Inc. Annual Report 2023 Independent auditor’s report
To the Shareholders of Sleep Country Canada Holdings Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of Sleep Country Canada Holdings Inc. and its subsidiaries (together, the Company)
as at December 31, 2023 and 2022, and its financial performance and its cash flows for the years then
ended in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board (IFRS Accounting Standards).
What we have audited
The Company’s consolidated financial statements comprise:
the consolidated statements of financial position as at December 31, 2023 and 2022;
the consolidated statements of income and comprehensive income for the years then ended;
the consolidated statements of changes in shareholders’ equity for the years then ended;
the consolidated statements of cash flows for the years then ended; and
the notes to the consolidated financial statements, which include material accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Company in accordance with the ethical requirements that are relevant to our
audit of the consolidated financial statements in Canada. We have fulfilled our other ethical responsibilities
in accordance with these requirements.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2023. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2500, Toronto, Ontario, Canada M5J 0B2
T.: +1 416 863 1133, F.: +1 416 365 8215, Fax to mail: ca_toronto_18_york_fax@pwc.com
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
47
Sleep Country Canada Holdings Inc. Annual Report 2023 Key audit matter
How our audit addressed the key audit matter
Impairment assessment of goodwill for the
Hush Cash Generating Unit
Our approach to addressing the matter included the
following procedures, among others:
Evaluated how management determined the
recoverable amount of the Hush CGU, which
included the following:
– Tested the appropriateness of the value in
use approach used by management and
the mathematical accuracy of the
discounted cash flow model.
– Evaluated the reasonableness of the
revenue growth rates applied by
management, which included comparing
the growth rates to the budget approved by
the Board of Directors, and current and
past performance of the Hush CGU and
other CGUs of the Company and by
considering the consistency with available
third party published industry data and
other comparable companies.
– Tested the underlying data used in the
discounted cash flow model.
Refer to note 3 – Material accounting policies,
note 4 – Critical accounting estimates and
judgments and note 11 – Goodwill and intangible
assets to the consolidated financial statements.
The Hush cash generating unit (CGU) had goodwill
of $15.9 million as at December 31, 2023. Goodwill
is allocated to CGUs or groups of CGUs for the
purpose of impairment testing. Management tests
goodwill for impairment annually on December 31
or more frequently if events or changes in
circumstances indicate the asset might be
impaired. The impairment tests are performed by
comparing the carrying values of the CGUs with
their recoverable amounts, which is the higher of
their fair value less costs of disposal and their value
in use. The determination of the recoverable
amount of a CGU employs various estimates and
requires judgment.
Management used the value in use approach to
determine the fair value of the Hush CGU based on
a discounted cash flow model. The assumptions
used in the discounted cash flow model include the
revenue growth rates. No impairment was
recognized as a result of the 2023 impairment test.
We considered this a key audit matter due to (i) the
significant judgments made by management in
determining the recoverable amount of the CGU;
and (ii) the audit effort and auditor’s judgment
involved in performing procedures to test revenue
growth rates applied by management in
determining the recoverable amount.
48
Sleep Country Canada Holdings Inc. Annual Report 2023 Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report and the information,
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS Accounting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
49
Sleep Country Canada Holdings Inc. Annual Report 2023 will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Company to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Company to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
50
Sleep Country Canada Holdings Inc. Annual Report 2023 From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Anne Tauber.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants, Licensed Public Accountants
Toronto, Ontario
March 6, 2024
51
Sleep Country Canada Holdings Inc. Annual Report 2023 Sleep Country Canada Holdings Inc.
Sleep Country Canada Holdings Inc.
Consolidated Statements of Cash Flows
Consolidated Statements of Financial Position
For the years ended December 31, 2023 and December 31, 2022
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars)
(in thousands of Canadian dollars)
Cash provided by (used in)
Operating activities
Assets
Net income for the year
Adjustments for:
Current assets
Cash (note 5)
Trade and other receivables (note 6)
Inventories (note 7)
Prepaid expenses and deposits
Other assets
Depreciation of property and equipment (note 9)
Depreciation of right-of-use assets (note 10)
Amortization of intangible assets (note 11)
Share-based compensation (note 20)
Finance related expenses (note 17)
Deferred income taxes (note 18)
Other non-cash (income) expenses
Changes in non-cash items relating to operating activities
Non-current assets
Changes in working capital
Other assets (note 8)
Trade and other receivables
Property and equipment (note 9)
Inventories
Right-of-use assets (note 10)
Prepaid expenses and deposits
Intangible assets (note 11)
Trade and other payables
Goodwill (note 11)
Deferred revenues
Deferred tax assets (note 18)
Liabilities
Investing activities
Current liabilities
Purchase of property and equipment - net of disposals (note 9)
Trade and other payables (note 12)
Additions to right-of-use assets (note 10)
Deferred revenues
Purchase of intangible assets (note 11)
Acquisition of other assets (note 8)
Other liabilities (note 13)
Acquisition of business combinations (note 21)
Lease liabilities (note 10)
Purchase of non-controlling interests (note 13)
Financing activities
Non-current liabilities
Proceeds from options exercised (note 20)
Other liabilities (note 13)
Shares repurchased under normal course issuer bid (note 15)
Long-term debt (note 14)
Advances under long-term debt (note 14)
Lease liabilities (note 10)
Repayment of long-term debt (note 14)
Deferred tax liabilities (note 18)
Financing costs on long-term debt (note 14)
Dividends paid
Interest paid
Shareholders’ Equity
Repayment of principal portion of lease liabilities (note 10)
Share capital and other (note 15)
Retained earnings
Other reserves
Effects of foreign currency exchange rate changes on cash
Increase (decrease) in cash during the year
Cash – Beginning of the year
Equity attributable to Sleep Country Canada Holdings Inc.
Non-controlling interests
Cash – End of the year
Supplementary information
Purchase of property and equipment in trade and other payables
Purchase of intangible assets in trade and other payables
Approved by the Board of Directors
2023
December 31,
$
2023
$
71,535
17,744
37,371
41,941
24,940
9,930
6,242
94,885
23,471
15,365
(2,764)
638
(1,567)
173,199
166,532
22,894
(9,784)
74,390
12,312
272,805
(5,151)
226,599
(14,086)
336,197
4,155
6,390
(12,554)
1,112,474
153,978
(20,955)
110,966
(50)
29,995
(22,471)
(20,105)
22,971
(59,435)
38,499
(1,300)
202,431
(124,316)
433
6,533
(37,335)
160,627
92,300
288,665
(31,000)
25,264
—
(31,961)
683,520
(24,215)
(38,821)
321,118
(70,599)
102,664
(27)
(10)
(40,947)
78,318
423,755
5,199
37,371
1,112,474
5,253
8,519
2022
December 31,
$
2022
$
110,696
16,761
78,318
39,816
14,303
9,057
4,935
98,691
(889)
9,683
965
638
(128)
201,633
181,213
1,611
3,192
63,676
(7,152)
263,149
(355)
171,367
(5,164)
316,785
(8,674)
3,498
(18,153)
1,021,719
163,060
(7,499)
106,883
(58)
24,762
(9,667)
(1,000)
22,525
—
38,612
—
192,782
(18,224)
2,801
9,373
(57,717)
99,082
58,000
275,170
(21,000)
25,234
(60)
(30,409)
601,641
(15,942)
(38,717)
328,439
(103,044)
84,380
(25)
(20)
41,772
36,546
412,794
7,284
78,318
1,021,719
1,497
4,895
(Signed) Mandeep Chawla - Director (Signed) David Shaw - Director
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
52
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Sleep Country Canada Holdings Inc.
Consolidated Statements of Cash Flows
Consolidated Statements of Income and Comprehensive Income
For the years ended December 31, 2023 and December 31, 2022
For the years ended December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars)
(in thousands of Canadian dollars, except per share amounts)
Cash provided by (used in)
Operating activities
Net income for the year
Adjustments for:
Revenues
Cost of sales (note 16)
Depreciation of property and equipment (note 9)
Depreciation of right-of-use assets (note 10)
Amortization of intangible assets (note 11)
Share-based compensation (note 20)
Finance related expenses (note 17)
Deferred income taxes (note 18)
Other non-cash (income) expenses
General and administrative expenses (note 16)
Gross profit
Operating income
Changes in non-cash items relating to operating activities
Finance related expenses (income) (note 17)
Changes in working capital
Trade and other receivables
Inventories
Prepaid expenses and deposits
Trade and other payables
Deferred revenues
Net income before income taxes
Other income
Income taxes (note 18)
Net income for the year
Investing activities
Purchase of property and equipment - net of disposals (note 9)
Net income for the year attributable to:
Additions to right-of-use assets (note 10)
Sleep Country Canada Holdings Inc.
Purchase of intangible assets (note 11)
Non-controlling interests
Acquisition of other assets (note 8)
Acquisition of business combinations (note 21)
Purchase of non-controlling interests (note 13)
Items that may be reclassified subsequently to net income:
Exchange differences on translation of foreign operations
Financing activities
Other comprehensive loss for the year
Proceeds from options exercised (note 20)
Shares repurchased under normal course issuer bid (note 15)
Comprehensive income for the year
Advances under long-term debt (note 14)
Repayment of long-term debt (note 14)
Comprehensive income for the year attributable to:
Financing costs on long-term debt (note 14)
Sleep Country Canada Holdings Inc.
Dividends paid
Interest paid
Non-controlling interests
Repayment of principal portion of lease liabilities (note 10)
Earnings per share attributable to Sleep Country Canada Holdings Inc.
Effects of foreign currency exchange rate changes on cash
Basic earnings per share (in dollars) (note 19)
Increase (decrease) in cash during the year
Diluted earnings per share (in dollars) (note 19)
Cash – Beginning of the year
Cash – End of the year
Supplementary information
Purchase of property and equipment in trade and other payables
Purchase of intangible assets in trade and other payables
2023
$
2023
$
71,535
17,744
935,044
41,941
9,930
587,570
6,242
23,471
347,474
(2,764)
(1,567)
227,883
166,532
119,591
23,471
(9,784)
12,312
(550)
(5,151)
(14,086)
96,670
4,155
25,135
(12,554)
2022
$
2022
$
110,696
16,761
928,657
39,816
9,057
587,629
4,935
(889)
341,028
965
(128)
196,167
181,213
144,861
(889)
3,192
(7,152)
(292)
(355)
(5,164)
146,042
(8,674)
35,346
(18,153)
153,978
71,535
163,060
110,696
(20,955)
(50)
71,192
(22,471)
343
(20,105)
(59,435)
71,535
(1,300)
(2)
(124,316)
(2)
433
(37,335)
71,533
92,300
(31,000)
—
71,190
(31,961)
(24,215)
343
(38,821)
71,533
(70,599)
(10)
2.06
(40,947)
2.04
78,318
37,371
5,253
8,519
(7,499)
(58)
110,471
(9,667)
225
(1,000)
—
110,696
—
(23)
(18,224)
(23)
2,801
(57,717)
110,673
58,000
(21,000)
(60)
110,446
(30,409)
(15,942)
227
(38,717)
110,673
(103,044)
(20)
3.04
41,772
3.01
36,546
78,318
1,497
4,895
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
53
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Sleep Country Canada Holdings Inc.
Consolidated Statements of Cash Flows
Consolidated Statements of Changes in Shareholders' Equity
For the years ended December 31, 2023 and December 31, 2022
For the years ended December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars)
(in thousands of Canadian dollars)
Cash provided by (used in)
Equity Attributable to Sleep Country Canada Holdings Inc.
Share Capital and Other
2023
$
2022
$
Contributed
Surplus
$
Retained
Earnings
$
Other
Reserves
$
71,535
Total
$
Number of
Shares
Balance – January 1, 2022
Operating activities
Net income for the year
Adjustments for:
Common
Shares
$
Depreciation of property and equipment (note 9)
350,579
Depreciation of right-of-use assets (note 10)
—
Amortization of intangible assets (note 11)
—
Share-based compensation (note 20)
—
—
Finance related expenses (note 17)
263,365
Deferred income taxes (note 18)
—
Other non-cash (income) expenses
(2,339,409)
Net income for the year
Other comprehensive income (loss) for the year
Comprehensive income for the year
Dividends declared
Settlement of share-based compensation (note 20)
Share-based compensation (note 20)
Repurchase of shares for cancellation (note 15)
Net change in share repurchase commitment
under automatic share purchase plan (note 15)
Non-controlling interests
—
—
—
—
5,747
—
(22,116)
—
—
(20,660)
—
36,913,987
Changes in non-cash items relating to operating activities
34,837,943
Balance – December 31, 2022
34,837,943
Balance – January 1, 2023
Changes in working capital
Trade and other receivables
Inventories
Net income for the year
Prepaid expenses and deposits
Other comprehensive loss for the year
Trade and other payables
Comprehensive income for the year
Dividends declared
Deferred revenues
Settlement of share-based compensation (note 20)
Share-based compensation (note 20)
Repurchase of shares for cancellation (note 15)
Changes in ownership interest in non-controlling
interests
Net change in share repurchase commitment
under automatic share purchase plan (note 15)
—
—
—
—
288,680
—
(1,596,910)
—
—
313,550
—
—
—
—
5,109
—
(15,196)
—
651
Balance – December 31, 2023
Investing activities
Purchase of property and equipment - net of disposals (note 9)
Additions to right-of-use assets (note 10)
Purchase of intangible assets (note 11)
Acquisition of other assets (note 8)
Acquisition of business combinations (note 21)
Purchase of non-controlling interests (note 13)
33,529,713
304,114
—
—
—
549
(4,676)
6,242
—
—
—
17,004
12,390
41,217
—
—
—
510
(2,946)
4,935
—
—
—
110,471
—
110,471
(30,919)
—
—
(36,389)
—
—
14,889
84,380
71,192
—
71,192
(32,510)
—
—
(22,826)
2,428
—
313,550
14,889
84,380
The accompanying notes are an integral part of these consolidated financial statements.
Financing activities
Proceeds from options exercised (note 20)
Shares repurchased under normal course issuer bid (note 15)
Advances under long-term debt (note 14)
Repayment of long-term debt (note 14)
Financing costs on long-term debt (note 14)
Dividends paid
Interest paid
Repayment of principal portion of lease liabilities (note 10)
Effects of foreign currency exchange rate changes on cash
Increase (decrease) in cash during the year
Cash – Beginning of the year
Cash – End of the year
Supplementary information
Purchase of property and equipment in trade and other payables
Purchase of intangible assets in trade and other payables
The accompanying notes are an integral part of these consolidated financial statements.
Total
Shareholders'
Equity
$
5,778
Non-
Controlling
110,696
Interests
$
16,761
39,816
9,057
4,935
(889)
965
(128)
225
2
227
—
—
—
—
409,964
110,696
(23)
110,673
(30,409)
2,801
4,935
(58,505)
—
—
(25)
(25)
—
—
—
—
404,186
17,744
41,941
9,930
6,242
23,471
(2,764)
(1,567)
110,471
(25)
110,446
(30,409)
2,801
4,935
(58,505)
—
—
166,532
(20,660)
—
—
181,213
1,279
(20,660)
1,279
412,794
7,284
420,078
(25)
(25)
—
(2)
(2)
—
—
—
—
412,794
(9,784)
12,312
(5,151)
(14,086)
4,155
71,192
(2)
71,190
(31,961)
433
6,242
(38,022)
(12,554)
7,284
3,192
(7,152)
(355)
(5,164)
(8,674)
343
—
343
—
—
—
—
(18,153)
—
—
2,428
(2,428)
153,978
651
163,060
—
102,664
(27)
(20,955)
423,755
(50)
(22,471)
(20,105)
(59,435)
(1,300)
(124,316)
433
(37,335)
92,300
(31,000)
—
(31,961)
(24,215)
(38,821)
5,199
(7,499)
(58)
(9,667)
(1,000)
—
—
(18,224)
2,801
(57,717)
58,000
(21,000)
(60)
(30,409)
(15,942)
(38,717)
(70,599)
(103,044)
(10)
(40,947)
78,318
37,371
5,253
8,519
(20)
41,772
36,546
78,318
1,497
4,895
420,078
71,535
(2)
71,533
(31,961)
433
6,242
(38,022)
—
651
428,954
54
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Sleep Country Canada Holdings Inc.
Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows
For the years ended December 31, 2023 and December 31, 2022
For the years ended December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars)
(in thousands of Canadian dollars)
Cash provided by (used in)
Cash provided by (used in)
Operating activities
Operating activities
Net income for the year
Net income for the year
Adjustments for:
Adjustments for:
Depreciation of property and equipment (note 9)
Depreciation of property and equipment (note 9)
Depreciation of right-of-use assets (note 10)
Depreciation of right-of-use assets (note 10)
Amortization of intangible assets (note 11)
Amortization of intangible assets (note 11)
Share-based compensation (note 20)
Share-based compensation (note 20)
Finance related expenses (note 17)
Finance related expenses (note 17)
Deferred income taxes (note 18)
Deferred income taxes (note 18)
Other non-cash (income) expenses
Other non-cash (income) expenses
Changes in non-cash items relating to operating activities
Changes in non-cash items relating to operating activities
Changes in working capital
Changes in working capital
Trade and other receivables
Trade and other receivables
Inventories
Inventories
Prepaid expenses and deposits
Prepaid expenses and deposits
Trade and other payables
Trade and other payables
Deferred revenues
Deferred revenues
Investing activities
Investing activities
Purchase of property and equipment - net of disposals (note 9)
Purchase of property and equipment - net of disposals (note 9)
Additions to right-of-use assets (note 10)
Additions to right-of-use assets (note 10)
Purchase of intangible assets (note 11)
Purchase of intangible assets (note 11)
Acquisition of other assets (note 8)
Acquisition of other assets (note 8)
Acquisition of business combinations (note 21)
Acquisition of business combinations (note 21)
Purchase of non-controlling interests (note 13)
Purchase of non-controlling interests (note 13)
Financing activities
Financing activities
Proceeds from options exercised (note 20)
Proceeds from options exercised (note 20)
Shares repurchased under normal course issuer bid (note 15)
Shares repurchased under normal course issuer bid (note 15)
Advances under long-term debt (note 14)
Advances under long-term debt (note 14)
Repayment of long-term debt (note 14)
Repayment of long-term debt (note 14)
Financing costs on long-term debt (note 14)
Financing costs on long-term debt (note 14)
Dividends paid
Dividends paid
Interest paid
Interest paid
Repayment of principal portion of lease liabilities (note 10)
Repayment of principal portion of lease liabilities (note 10)
Effects of foreign currency exchange rate changes on cash
Effects of foreign currency exchange rate changes on cash
Increase (decrease) in cash during the year
Increase (decrease) in cash during the year
Cash – Beginning of the year
Cash – Beginning of the year
Cash – End of the year
Cash – End of the year
Supplementary information
Supplementary information
Purchase of property and equipment in trade and other payables
Purchase of property and equipment in trade and other payables
Purchase of intangible assets in trade and other payables
Purchase of intangible assets in trade and other payables
2023
2023
$
$
71,535
71,535
17,744
17,744
41,941
41,941
9,930
9,930
6,242
6,242
23,471
23,471
(2,764)
(2,764)
(1,567)
(1,567)
166,532
166,532
(9,784)
(9,784)
12,312
12,312
(5,151)
(5,151)
(14,086)
(14,086)
4,155
4,155
(12,554)
(12,554)
153,978
153,978
(20,955)
(20,955)
(50)
(50)
(22,471)
(22,471)
(20,105)
(20,105)
(59,435)
(59,435)
(1,300)
(1,300)
(124,316)
(124,316)
433
433
(37,335)
(37,335)
92,300
92,300
(31,000)
(31,000)
—
—
(31,961)
(31,961)
(24,215)
(24,215)
(38,821)
(38,821)
(70,599)
(70,599)
(10)
(10)
(40,947)
(40,947)
78,318
78,318
37,371
37,371
5,253
5,253
8,519
8,519
2022
2022
$
$
110,696
110,696
16,761
16,761
39,816
39,816
9,057
9,057
4,935
4,935
(889)
(889)
965
965
(128)
(128)
181,213
181,213
3,192
3,192
(7,152)
(7,152)
(355)
(355)
(5,164)
(5,164)
(8,674)
(8,674)
(18,153)
(18,153)
163,060
163,060
(7,499)
(7,499)
(58)
(58)
(9,667)
(9,667)
(1,000)
(1,000)
—
—
—
—
(18,224)
(18,224)
2,801
2,801
(57,717)
(57,717)
58,000
58,000
(21,000)
(21,000)
(60)
(60)
(30,409)
(30,409)
(15,942)
(15,942)
(38,717)
(38,717)
(103,044)
(103,044)
(20)
(20)
41,772
41,772
36,546
36,546
78,318
78,318
1,497
1,497
4,895
4,895
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
55
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
1 Organization
Sleep Country Canada Holdings Inc. (the “Company”) was incorporated by articles of incorporation under the
Canada Business Corporations Act on May 27, 2015. The Company is authorized to issue an unlimited number
of common shares and Class A common shares without par value. The common shares are voting and entitled
to dividends if and when declared by the Board of Directors (the “Board”).
The Company is Canada's leading specialty sleep retailer with a national retail store network and multiple
eCommerce platforms. The Company has 301 corporate-owned stores and 19 warehouses across Canada and
operates under retail banners: Sleep CountryTM, Dormez-vousTM, EndyTM, HushTM, Silk & SnowTM and CasperTM
("Casper Canada").
The address of its registered office is 7920 Airport Road, Brampton, Ontario.
The Company’s common shares are listed on the Toronto Stock Exchange (“TSX”) under the stock symbol
“ZZZ”.
2 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS® Accounting
Standards").
The consolidated financial statements were reviewed by the Company’s Audit Committee. They were approved
and authorized for issuance by the Board on March 6, 2024.
3 Material accounting policies
Consolidation
The consolidated financial statements of the Company include the financial results of the Company and the
entities it controls. Control exists when the Company has the existing rights that give it the current ability to
direct the activities that significantly affect the entities’ returns. The Company assesses control on an ongoing
basis.
Transactions and balances between the Company and its consolidated entities have been eliminated on
consolidation and consistent accounting policies are applied across the Company.
Non-controlling interests are recorded in the consolidated financial statements and represent the non-controlling
shareholders’ equity in an entity consolidated by the Company for which the Company’s ownership is less than
100%. Transactions with non-controlling interests are treated as transactions with equity owners of the
Company. Changes in the Company’s ownership interest in its subsidiaries are accounted for as equity
transactions.
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Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Financial assets and liabilities
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions
of the financial instrument.
Financial assets are derecognized when the contractual rights to receive cash flows from the financial assets
expire and financial liabilities are derecognized when obligations under the contracts expire, are discharged or
are cancelled. Financial assets upon initial recognition are classified into two categories:
(i) those to be measured subsequently at fair value either through other comprehensive income ("FVOCI") or
through net income ("FVTPL"); and
(ii) those to be measured at amortized cost. The classification depends on the Company’s business model for
managing the financial assets and the contractual terms of the cash flows. The following classifications have
been applied:
•
•
•
•
cash and trade and other receivables are classified as financial assets measured at amortized cost;
the convertible note receivable and the warrant are measured at FVTPL;
trade and other payables, deferred revenues, other liabilities and long-term debt have been classified as
financial liabilities measured at amortized costs; and
interest rate swaps have been classified as financial liabilities measured at FVTPL.
The redemption liabilities presented within other liabilities are recognized initially at fair value, and are
subsequently measured at amortized cost, which is the carrying value. Any difference between the carrying
value and the redemption value is recognized in the consolidated statements of income and comprehensive
income. For changes in the estimated liabilities amount, a gain or loss is calculated as the difference between
the original contractual cash flows and the modified cash flows discounted at the original effective interest rate.
The contingent consideration liability presented within other liabilities is recognized initially at fair value, and is
subsequently measured at amortized cost, which is the carrying value. Any difference between the carrying
value and the consideration amount is recognized in the consolidated statement of income and comprehensive
income. For changes in the estimated consideration amount, a gain or loss is calculated as the difference
between the original contractual cash flows and the modified cash flows discounted at the original effective
interest rate.
Long-term debt is recognized initially at fair value, net of recognized transaction costs, and is subsequently
measured at amortized cost, which is the carrying value. Any difference between the carrying value and the
redemption value is recognized in the consolidated statement of income and comprehensive income using the
effective interest rate method. For debt modifications, a gain or loss is calculated as the difference between the
original contractual cash flows and the modified cash flows discounted at the original effective interest rate.
Fees paid on initial recognition and subsequent modifications on long-term debt are capitalized and amortized
over the period of the facility to which it relates and the fees are presented net of long-term debt in the
consolidated statements of financial position.
57
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
The Company assesses on a forward-looking basis the expected credit losses associated with its financial
assets. The impairment methodology applied depends on whether there has been a significant increase in credit
risk. For trade and other receivables, the Company applies the simplified approach permitted by IFRS 9 -
Financial Instruments, which requires expected lifetime losses to be recognized at the time of initial recognition
of the receivables. The credit risk associated with the convertible note receivable is considered as part of the fair
value measurement at the reporting date.
Derivative financial instruments
Interest rate swaps are periodically used to limit the interest rate risk relating to the Company’s long-term debt.
These contracts are treated as derivative instruments and they are measured at mark-to-market in the year, with
changes in fair value recorded in the consolidated statements of income and comprehensive income within
finance related expenses.
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statements
of financial position when there is a legally enforceable right to offset the recognized amounts and there is an
intention to settle on a net basis or to realize the asset and settle the liability simultaneously.
Foreign currency translation
•
Functional and presentation currency
Items included in the consolidated financial statements of each of the Company’s subsidiaries are measured
using the currency of the primary economic environment in which the entity operates (the functional
currency). The consolidated financial statements are presented in Canadian dollars, which is also the
Company’s functional currency.
•
Transactions and balances
Transactions in a foreign currency are translated into the functional currency at the foreign currency
exchange rates that approximate the rates in effect at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate
at the reporting date. Non-monetary items that are measured based on historical cost in a foreign currency
are translated at the exchange rate that approximate the rates in effect at the date of the transaction.
Foreign exchange gains and losses are included in the consolidated statements of income and
comprehensive income.
•
Foreign operations
The results and financial position of subsidiaries whose functional currency is different from the Company’s
functional currency are translated into the presentation currency of the Company as follows:
•
Assets and liabilities are translated at the closing exchange rate at the reporting date;
58
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
• Revenues and expenses of the subsidiaries are translated at average exchange rates (unless this is not
a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in
which case revenues and expenses are translated at the dates of the transactions);
•
•
Equity transactions are translated at exchange rates on the dates of the transactions; and
The resulting foreign exchange translation differences are recorded as exchange differences on
translation of foreign operations in other comprehensive income.
Segment information
As at December 31, 2023, the Company manages its business on the basis of five operating segments, Sleep
Country/Dormez-vous, Endy, Hush, Silk & Snow and Casper Canada, which is consistent with the internal
reporting provided to the chief operating decision-maker, the Chief Executive Officer. The Company has only
one reportable segment as the operating segments meet the aggregation criteria of IFRS 8, Operating
Segments. The Company aggregates these reporting segments because the nature of products, services,
methods of distribution and economic characteristics are similar. The Company operates primarily in Canada, its
country of domicile.
Inventories
Inventories are stated at the lower of their carrying value determined on a specific item on an actual cost basis
and net realizable value. Net realizable value is the estimated selling price less applicable selling expenses.
Cost of inventories includes the cost of merchandise, freight, duties and is net of rebates. The Company
periodically reviews its inventories and makes provisions as necessary to appropriately value for shrinkage and
obsolete or damaged goods.
Property and equipment
Property and equipment are recorded at cost less accumulated depreciation, net of any impairment loss.
Depreciation is computed on a straight-line basis at annual rates based on the estimated useful lives of the
related assets as follows:
Computer hardware
Furniture, fixtures and equipment
Leasehold improvements
36 months
48 to 60 months
lesser of the lease term or 120 months
The Company recognizes in the carrying amount of property and equipment the full purchase price of assets
acquired/constructed as well as the costs incurred that are directly incremental as a result of the construction of
a specific asset, when they relate to bringing the asset into working condition.
Estimates of useful lives, residual values and methods of depreciation are reviewed annually. Any changes are
accounted for prospectively as a change in accounting estimate.
59
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Goodwill and intangible assets
Intangible assets are acquired assets that lack physical substance and that meet the specified criteria for
separate recognition from goodwill.
•
Software
Software is recorded at cost less accumulated amortization, net of any impairment loss. Amortization is
computed on a straight-line basis based on the estimated useful life of 36 to 90 months.
• Non-compete contracts
Non-compete contracts are amortized over an estimated life of up to five years.
•
Brands
Sleep Country and Dormez-vous brands are recorded at cost and are not subject to amortization, as they
have an indefinite life. The Company has determined these brands have an indefinite life because the
Company has the ability and intention to renew the brand names indefinitely and an analysis of product life
cycle studies and market and competitive trends provides evidence that the brands will generate net cash
inflows for the group for an indefinite period. They are tested for impairment annually, as at the dates of
these consolidated statements of financial position, or more frequently if events or circumstances indicate
they may be impaired.
The Endy, Hush, Silk & Snow and Casper Canada brands are recorded at fair value at the time of
acquisition and are subject to amortization over an estimated life of 20 years.
• Goodwill
Goodwill is the residual amount that results when the purchase price of an acquired business exceeds the
sum of the amounts allocated to the assets acquired, less liabilities assumed. Goodwill is not amortized and
the Company tests goodwill for impairment annually or more frequently if events or changes in
circumstances indicate the asset might be impaired.
Impairment of non-financial assets
•
Impairment of goodwill and indefinite life intangible assets
The Company tests goodwill and its indefinite life intangible assets for impairment annually as at the dates
of these consolidated statements of financial position or more frequently if events or changes in
circumstances indicate the asset might be impaired. The asset will be written down if the carrying amount of
the asset exceeds the higher of its fair value less costs of disposal and its value in use. Value in use is the
present value of the future cash flows expected to be derived from the asset.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash flows. Goodwill and indefinite life intangible assets (brands) are allocated to
cash generating units (“CGUs”) or groups of CGUs for the purpose of impairment testing. The allocation is
made to those CGUs or groups of CGUs that are expected to benefit from the synergies of the business
combination from which the goodwill arose. The impairment tests are performed by comparing the carrying
60
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
value of the assets (or asset groups) of these CGUs with their recoverable amount, which is the higher of
their fair value less costs of disposal and their value in use (which is the present value of the expected future
cash flows of the relevant asset or CGU), as determined by management.
•
Impairment of definite life intangible assets, right-of-use assets and property and equipment
Assets that are subject to amortization are periodically reviewed for indicators of impairment. Whenever
events or changes in circumstances indicate the carrying amount may not be recoverable, the asset or CGU
is tested for impairment. To the extent the asset or CGU’s carrying amount exceeds its recoverable amount,
an impairment loss is recognized in the consolidated statements of income and comprehensive income. The
recoverable amount of an asset or a CGU is the higher of its fair value less costs of disposal and its value in
use. Value in use is the present value of the future cash flows expected to be derived from an asset or CGU.
The fair value is the price that could be received for an asset or CGU in an orderly transaction between
market participants at the measurement date, less costs of disposal. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
•
Impairment reversals
If, in a subsequent period, the amount of recognized impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, a reversal of the previously
recognized impairment, except for goodwill, is recognized in the consolidated statement of income and
comprehensive income.
Trade and other payables
Trade and other payables are obligations to pay for goods or services that have been acquired or rendered in
the ordinary course of business. Trade and other payables are classified as current liabilities if payment is due
or expected within one year or less. Otherwise, they are presented as non-current liabilities. Trade and other
payables are recognized initially at fair value and subsequently are measured at amortized cost.
Deferred revenues
Deferred revenues represent amounts paid by customers in advance of delivery of product and/or services.
These amounts can be for all or a portion of the total sales price of the product. The amounts received
representing the deferred revenues are unencumbered and can be used for general operating purposes. Once
the product and/or service is delivered to the customer, therefore fulfilling the performance obligation, the liability
is relieved and is recorded in revenues. Over time, some portion of the deferred revenue is not redeemed
(breakage). The expected breakage amount based on historical actuals are recognized as revenue in proportion
to the redemption pattern exercised by the customers.
Decommissioning provisions
Decommissioning provisions represent the cost of the Company’s obligation to restore its leased premises and
the provisions are estimated based on the present value of expected future restoration costs and recognized in
the period in which the obligation is incurred. The present value of these costs is added to the cost of the
associated asset and is amortized over its useful life, while the corresponding liability will accrete to its future
value over the same period.
61
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Share-based compensation
The Company has a long-term equity incentive plan (“LTIP”) for certain associates and executive officers in the
Company. The LTIP includes stock options, performance share units (“PSUs”) and restricted share units
(“RSUs”) for certain associates and key management personnel. The Company has a deferred share unit
(“DSUs”) plan for its Directors.
The LTIP and DSU plans are accounted for as equity-settled awards.
The cost of equity-settled awards is determined by the fair value at the date when the grant is made using an
appropriate valuation model, of which further details are given in note 20.
The compensation expense is prorated over the vesting or performance period, with a corresponding increase
to contributed surplus. Forfeitures are estimated at the grant date and are revised to reflect changes in expected
or actual forfeitures. Upon exercise of stock options, the amount recognized in contributed surplus for the award
plus the cash received upon exercise is recognized as an increase in share capital. Upon settlement of PSUs,
RSUs and DSUs, the amount recognized in contributed surplus for the award is reclassified to share capital,
with any premium or discount applied to retained earnings.
Revenue recognition
Revenue is recognized based on the five-step model outlined in IFRS 15 - Revenue from contracts with
customers. Revenue is derived from the sale of goods and services and is recognized at a point in time when
the performance obligation is fulfilled. The performance obligation is deemed fulfilled when the control of the
products has transferred to the customer and there is no unfulfilled obligation that could affect the customer’s
acceptance of the products. Provisions for returns relating to the Company’s customer satisfaction programs are
accrued based on historical experience.
Income taxes
Income taxes comprise of current and deferred income taxes. Income taxes are recognized in the consolidated
statements of income and comprehensive income, except to the extent that they relate to items recognized
directly in other comprehensive income or directly in equity, in which case the income tax is recognized directly
in other comprehensive income or equity, respectively.
Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of
previous years.
Income taxes provided for by the Company are accounted for using the liability method. Deferred income taxes
arise due to the temporary differences in the financial reporting and tax bases of assets and liabilities. Changes
in these temporary differences are reflected in the provision for deferred income taxes using substantively
enacted income tax rates and regulations. Deferred income taxes are recognized for all temporary differences,
except where they arise from goodwill that is not tax deductible, on the initial recognition of an asset or liability
that is not a business combination and at the time of the transaction affects neither accounting nor taxable
income. In addition, deferred tax liabilities are not recognized for taxable temporary differences arising from
investments in subsidiaries and associates where the reversal of the temporary difference can be controlled and
62
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax
assets are recognized to the extent that the recoverability of deferred income tax assets is considered more
likely than not.
Leases
Leases are accounted for by recognizing a right-of-use asset and a lease liability except for low-value assets
and short-term leases (less than 12 months) which are recognized in the consolidated statement of income and
comprehensive income on a straight-line method.
Lease liabilities are recorded based on the present value of the non-cancellable lease payments over the lease
term and discounted at the Company’s incremental borrowing rate. Lease payments include fixed payments and
variable payments.
The right-of-use assets are measured at cost, which comprises the lease liability, lease payments made prior to
delivery, initial direct costs and restoration obligations less lease incentives. The right-of-use assets are
subsequently measured at amortized cost. The assets are depreciated over the term of the lease using the
straight-line method.
Extension and termination options exist for a number of leases, particularly for properties. The Company
assesses all facts and circumstances available in determining the probability of exercising available extension
and termination options. The Company includes the extension option in calculating the lease term when it
determines that it is reasonably certain that the Company will exercise the available extension option. The
Company reassesses whether an extension option is included in the lease term when there is a change in
events and circumstances which affect that decision, and re-measures the lease liability upon change in the
assessment.
Business combinations
Business combinations are accounted for using the acquisition method. The consideration transferred by the
Company is measured as the fair value of assets transferred and equity instruments issued at the date of
completion of the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are
measured initially at fair value at the acquisition date. The excess of the consideration transferred and non-
controlling interest in the acquired entity over the fair value of the net assets acquired is recorded as goodwill. If
those amounts are less than the net assets acquired, the difference is recognized directly in the consolidated
statement of income and comprehensive income as a gain on acquisition. Results of operations of an acquired
business are included in the Company’s consolidated financial statements from the date of the business
acquisition. Acquisition costs incurred are expensed and included in general and administrative expenses. Non-
controlling interests are initially recognized at the non-controlling interest’s proportionate share of the acquired
entity’s net identifiable assets.
Accounting standards, interpretations, and amendments not yet adopted
A number of interpretations and amendments to existing standards have been published by the International
Accounting Standards Board ("IASB®) that are not yet in effect. The Company has not early adopted these
interpretations or amendments. The interpretations and amendments not expected to have an impact on the
Company's consolidated financial statements have not been disclosed.
63
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
The following amendments may have an impact of the Company's consolidated financial statements in future
reporting periods:
Non-current Liabilities with Covenants (Amendments to IAS 1)
In October 2022, the IASB issued amendments to IAS 1 – Presentation of Financial Statements, seeking to
improve the information that an entity provides when its right to defer settlement of a liability is subject to
compliance with covenants within 12 months after the reporting period. The amendments are effective for
annual reporting periods beginning on or after January 1, 2024 and are to be applied retrospectively. The
Company is in the process of assessing the impact of this amendment on its consolidated financial statements.
International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)
In December 2021, the Organization for Economic Co-operation and Development ("OECD") issued model rules
for a new global minimum tax framework ("Pillar Two"), and various governments around the world have
issued, or are in the process of issuing, legislation on this. In Canada, the government released draft legislation
on Pillar Two in August 2023. In May and June 2023 respectively, the IASB issued amendments to IAS 12 -
Income Taxes, introducing a mandatory temporary exception to recognizing and disclosing information about
deferred tax assets and liabilities that relate to tax law enacted or substantively enacted to implement the Pillar
Two model rules. The Company is yet to apply the mandatory temporary exception as the Pillar Two legislation
has not yet been enacted in the jurisdiction in which it operates. The Company is in the process of assessing the
impact of this international tax reform on its consolidated financial statements.
4 Critical accounting estimates and judgments
The preparation of consolidated financial statements requires management to make estimates and assumptions
using judgments that affect the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses during the reporting period. Estimates and other judgments are continually
evaluated and are based on management’s experience and other factors, including expectations about future
events that are believed to be reasonable under the circumstances. Actual results may differ from those
estimates. The following discusses the most significant accounting judgments and estimates the Company has
made in the preparation of the consolidated financial statements.
Impairment of goodwill and brands
The Company is required to use judgment in determining the appropriate groupings of CGUs, in order to
determine the level at which goodwill and intangible assets are tested for impairment. In addition, judgment is
used to determine whether a triggering event has occurred requiring an impairment test to be completed. The
determination of recoverable amount employs various estimates and requires judgment. The Company uses
assumptions including revenue growth rates, terminal growth rates beyond the forecast period and discount
rates when determining the recoverable amounts of CGUs. Discount rates are based on an estimate of the
Company’s weighted average cost of capital taking into account external industry information reflecting the risk
associated with the specific cash flows. As at reporting dates for these consolidated financial statements,
64
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
impairment reviews were performed by comparing the carrying value with the recoverable amount of the CGU to
which goodwill and brands have been allocated.
The Company has determined there had been no impairment as at the reporting dates of these consolidated
financial statements (note 11).
Business combinations
For each business combination, the Company measures the identifiable assets acquired and the assumed
liabilities at fair value at their acquisition date. The determination of fair value requires the Company to make
assumptions, estimates and judgments regarding future events. The allocation process is inherently subjective
and impacts the amounts assigned to individual identifiable assets and liabilities, including the recognition and
measurement of any identified intangible assets and the final determination of the amount of goodwill or gain on
acquisition. The inputs to the exercise of judgments include legal, contractual, business and economic factors.
As a result, the purchase price allocation impacts the Company’s reported assets and liabilities and future net
earnings and impairment tests.
5 Cash
As at December 31, 2023, the Company’s cash balance consists of no restricted amounts. As at December 31,
2022, cash consisted of $744 in restricted cash related to equity transactions under the Company’s normal
course issuer bid ("NCIB") that were awaiting settlement as at December 31, 2022.
6
Trade and other receivables
Trade and other receivables
Allowance for expected credit losses
2023
$
25,435
(495)
24,940
2022
$
14,628
(325)
14,303
The Company’s trade and other receivables consist of cash transactions awaiting settlement, rebates and
balances due from third-party financing companies.
The maximum exposure to credit risk at the reporting date is the carrying value of the trade and other
receivables.
65
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
7
Inventories
The Company's inventories on hand as at December 31, 2023 is $94,885 (2022 – $98,691). The Company
records a provision for obsolescence to value inventory to the estimated net realizable value and estimated
damages and shrinkage. The write-downs of inventories to net realizable value and due to damages and
shrinkage in 2023 was $5,079 (2022 – $2,417), which was recognized in cost of sales. There were no reversals
of previously recorded write-downs of inventories in 2023 (2022 – $2,325).
8 Other non-current assets
Convertible note receivable
Warrant
Other
2023
$
18,906
2,050
1,938
22,894
2022
$
—
—
1,611
1,611
On March 14, 2023, the Company issued a convertible note receivable and a warrant to the controlling
shareholder of Casper Sleep Inc. (the "Investee").
The convertible note receivable has a maturity date of March 14, 2028, with interest at a fixed rate of 7.0% per
annum, compounded quarterly in arrears. At any time prior to the maturity date, at the option of the Company,
the principal and any accrued interest may be converted into common shares, representing approximately 4.8%
of the shares of the Investee. After March 15, 2025, the Investee may prepay or redeem the convertible note at
a price in cash equal to the initial principal amount plus accrued interest, and an additional premium of 0.5x the
initial principal amount.
The warrant to purchase common shares of the Investee has an expiry date of March 14, 2026 and an exercise
price of $0.01. At any time prior to the expiry date, the Company may exercise its right to purchase common
shares.
Total consideration to the Investee on March 14, 2023 was $27,354, of which the fair values of the convertible
note receivable and the warrant were determined to be $17,985 and $2,120 respectively.
Details on the valuation methodology of the convertible note receivable and warrant are disclosed in note 22.
66
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
9 Property and equipment
Computer
hardware
$
Furniture,
fixtures
and equipment
$
Leasehold
improvements
$
Cost
At January 1, 2022
Additions
Disposals
At December 31, 2022
Accumulated depreciation
At January 1, 2022
Depreciation
Disposals
At December 31, 2022
Net book value
Cost
At January 1, 2023
Additions
Acquisition through business
combinations (note 21)
Disposals
7,128
1,273
(1,312)
7,089
5,251
1,221
(1,305)
5,167
1,922
7,089
3,827
28
(1,553)
15,198
1,899
(877)
16,220
9,363
2,392
(803)
10,952
5,268
16,220
3,683
1,050
(1,249)
Total
$
139,427
9,030
(2,570)
117,101
5,858
(381)
122,578
145,887
53,139
13,148
(195)
66,092
56,486
122,578
18,808
1,121
(48)
67,753
16,761
(2,303)
82,211
63,676
145,887
26,318
2,199
(2,850)
At December 31, 2023
9,391
19,704
142,459
171,554
Accumulated depreciation
At January 1, 2023
Depreciation
Disposals
At December 31, 2023
Net book value
5,167
1,712
(1,552)
5,327
4,064
10,952
2,478
(1,191)
12,239
7,465
66,092
13,554
(48)
79,598
62,861
82,211
17,744
(2,791)
97,164
74,390
67
Sleep Country Canada Holdings Inc. Annual Report 2023
Properties
$
Trucks
$
271,594
30,747
(1,486)
(38,920)
261,935
261,935
44,817
6,001
(457)
(41,112)
271,184
1,503
607
—
(896)
1,214
1,214
1,236
—
—
(829)
1,621
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
10 Right-of-use assets and lease liabilities
Right-of-use assets
At January 1, 2022
Additions and modifications - net of lease inducements
Terminations and other adjustments
Depreciation
At December 31, 2022
At January 1, 2023
Additions and modifications - net of lease inducements
Acquisition through business combinations (note 21)
Terminations and other adjustments
Depreciation
At December 31, 2023
Lease liabilities – Current and non-current
At January 1, 2022
Net additions and modifications
Interest expense on lease liabilities
Terminations and other adjustments
Gross lease payment
At December 31, 2022
At January 1, 2023
Net additions and modifications
Acquisition through business combinations (note 21)
Interest expense on lease liabilities
Terminations and other adjustments
Gross lease payment
At December 31, 2023
Lease liabilities are presented in the consolidated statements of financial position as follows:
Current
Non-current
2023
$
38,499
288,665
327,164
Total
$
273,097
31,354
(1,486)
(39,816)
263,149
263,149
46,053
6,001
(457)
(41,941)
272,805
Total
$
322,248
32,054
12,090
(1,803)
(50,807)
313,782
313,782
46,646
6,001
15,545
(444)
(54,366)
327,164
2022
$
38,612
275,170
313,782
68
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
11 Goodwill and intangible assets
Intangible assets
Brands –
indefinite
life
$
Brands –
definite
life
$
Non –
compete
contracts
$
Software
$
Total
$
Goodwill
$
Cost
At January 1, 2022
Additions
Disposals
Adjustment to non-controlling
interests
101,540
—
—
38,101
—
—
1,997
—
—
41,606
14,562
(1,402)
183,244
14,562
(1,402)
318,369
—
—
—
—
—
—
—
(1,584)
At December 31, 2022
101,540
38,101
1,997
54,766
196,404
316,785
Accumulated amortization
At January 1, 2022
Amortization
Disposals
At December 31, 2022
—
—
—
—
3,527
1,905
—
1,528
126
—
12,327
7,026
(1,402)
17,382
9,057
(1,402)
5,432
1,654
17,951
25,037
—
—
—
—
Net book value
101,540
32,669
343
36,815
171,367
316,785
Cost
At January 1, 2023
Additions
Acquisition through business
combinations (note 21)
Disposals
101,540
—
—
—
38,101
—
31,672
—
1,997
—
2,211
—
54,766
30,990
196,404
30,990
316,785
—
289
(3,067)
34,172
(3,067)
19,412
—
At December 31, 2023
101,540
69,773
4,208
82,978
258,499
336,197
Accumulated amortization
At January 1, 2023
Amortization
Disposals
At December 31, 2023
—
—
—
—
5,432
3,203
—
1,654
413
—
17,951
6,314
(3,067)
25,037
9,930
(3,067)
8,635
2,067
21,198
31,900
—
—
—
—
Net book value
101,540
61,138
2,141
61,780
226,599
336,197
69
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
The Sleep Country and Dormez-vous brands of $101,540 (2022 – $101,540) are included in to the Sleep
Country operating segment.
Goodwill of $336,197 (2022 – $316,785) has been allocated to the five CGUs (Sleep Country, Endy, Hush,
Casper Canada and Silk & Snow) as follows:
Sleep Country
Endy
Hush
Casper Canada (note 21)
Silk & Snow (note 21)
2023
$
242,146
58,739
15,900
9,801
9,611
336,197
2022
$
242,146
58,739
15,900
—
—
316,785
In assessing goodwill for impairment, the Company compared the aggregate recoverable amount of the assets
included in the CGUs to their respective carrying amounts. The recoverable amount is the higher of the fair
value less costs of disposal and the value in use.
The Company performs annual goodwill impairment tests for the CGUs using the recoverable amounts based
on the value in use (discounted cash flows) approach at the end of each fiscal year. Recoverable amounts were
determined for the CGUs using the 2024 budget approved by the Board and the four-year forecast that made
maximum use of observable markets for inputs and outputs. The assumptions used include revenue growth
rates, terminal growth rates beyond the forecast period and discount rates.
The Company has determined, using appropriate valuation methodologies, that there was no impairment of its
goodwill or brands as at the reporting dates of these consolidated financial statements. As at December 31,
2023, any reasonable changes to the impairment model assumptions would not result in an impairment.
12 Trade and other payables
Trade payables
Accrued expenses
Income taxes payable
2023
$
70,640
40,309
17
2022
$
56,111
39,140
11,632
110,966
106,883
70
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
13 Other liabilities
Current
Share repurchase commitment under automatic
share purchase plan (note 15)
Redemption liabilities
Non-current
Redemption liabilities
Contingent consideration liability (note 21)
Decommissioning provisions
Other
2023
$
20,009
2,962
22,971
2,702
1,493
2,029
309
6,533
2022
$
20,660
1,865
22,525
8,201
—
1,145
27
9,373
At the time of the Hush acquisition on October 22, 2021, the Company entered into an agreement to acquire the
remaining 48% of outstanding common shares in three equal increments of 16% over a three-year period
starting March 31, 2023. The consideration paid for each share increment purchase was calculated based on
specified earnings levels achieved during the three-year period. The Company completed its acquisition of the
first 16% increment in 2023 for a total consideration of $1,300.
As at December 31, 2023, the Company remeasured its redemption liabilities at $5,664 (2022 – $10,066) based
on the expected outcome during the remaining two increments and the change was recorded in finance related
expenses. The expected outcome (discounted) is determined based on an earnings formula and the expected
earnings levels over the measurement period. Details on the measurement of the redemption liabilities are
disclosed in note 22.
14 Long-term debt
The Company has a senior secured credit facility of $260,000 with an additional $100,000 available on its
accordion, which is scheduled to mature on October 22, 2026. Under the terms of the senior secured credit
facility, certain financial and non-financial covenants must be complied with per the agreement. The Company is
in compliance with all covenants as at December 31, 2023. The senior secured credit facility is secured by the
present and after-acquired personal property of the Company. As at December 31, 2023, the balance
outstanding on the senior secured credit facility was $161,300 (2022 – $100,000). The long-term debt balance in
the consolidated statement of financial position is net of transaction costs of $673 (2022 – $918).
The senior secured credit facility allows for the debt to be held in Canadian or U.S. dollars. As at December 31,
2023, the Company held its debt in Canadian dollars.
Interest on the senior secured credit facility is based on the prime or bankers’ acceptance rates plus applicable
margins based on the achievement of certain targets, as defined by the amended and restated senior secured
credit agreement. The Company entered into a fixed interest rate swap, effective April 1, 2021 ending on April 1,
2024, for the notional amount of $60,000 whereby the Company pays a fixed rate of 1.072% and receives
interest at a variable rate equal to the Canadian Dollar Offered Rate for 3-month bankers' acceptances (“3-
71
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
month CDOR”) on the notional amount. The swap is being used to manage the volatility of interest rates on the
outstanding balance on its senior secured credit facility.
15 Share capital and other
The following table outlines the issued and outstanding shares:
33,529,713 common shares (2022 – 34,837,943)
Share repurchase commitment under automatic
share purchase plan
Reorganization adjustment and other
Contributed surplus
Common shares and Class A common shares
2023
$
2022
$
600,282
610,369
(20,009)
(276,159)
17,004
(20,660)
(276,159)
14,889
321,118
328,439
The holders of common shares are entitled to receive notice of any meetings of shareholders, to attend and to
cast one vote per common share at all such meetings. Holders of common shares do not have cumulative
voting rights with respect to the election of directors and, accordingly, holders of a majority of the common
shares entitled to vote in any election of directors may elect all directors standing for election. Holders of
common shares are entitled to receive on a pro rata basis such dividends, if any, as and when declared by the
Board at its discretion from funds legally available therefore and on liquidation, dissolution or winding up of the
Company are entitled to receive on a pro rata basis the net assets of the Company after payment of debts and
other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other
series or class of shares ranking senior in priority to or on a pro rata basis with the common shares with respect
to dividends or liquidation. The common shares do not carry any pre-emptive, subscription, redemption or
conversion rights, nor do they contain any sinking or purchase fund provisions.
Holders of Class A common shares will be entitled to the same rights and privileges as holders of common
shares described above and will rank equally with the holders of common shares on liquidation, dissolution, or
winding up of the Company. The Class A common shares will not carry any pre-emptive or subscription rights,
nor will they contain any sinking or purchase fund provisions. Class A common shares are redeemable at the
option of the Company on written notice to the holders of the Class A common shares, with the redemption price
being equal to the price per common share in the IPO. As at December 31, 2023, there were no outstanding
Class A common shares (2022 – nil).
On March 7, 2022, the Company received approval from the Toronto Stock Exchange ("TSX") to commence an
NCIB. Pursuant to an amendment to the NCIB on November 29, 2022, the Company was permitted to purchase
through the facilities of the TSX or alternative trading systems, from time to time until the completion of the
NCIB, if considered advisable, up to a maximum of 3,155,250 of the Company’s common shares, representing
approximately 10.0% of the public float as of February 28, 2022. Purchases under this NCIB concluded on
March 8, 2023.
On March 9, 2023, the Company received approval from the TSX on a new NCIB. Pursuant to the NCIB, the
Company is permitted to purchase through the facilities of the TSX, other designated exchanges and/or
72
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
alternative trading systems, from time to time over a twelve-month period until the completion of the NCIB, if
considered advisable, up to a maximum of 2,675,550 of the Company’s common shares, representing
approximately 10.0% of its public float of 26,755,502 as of February 28, 2023. Purchases will conclude on the
earlier of the date on which purchases under the bid have been completed and March 8, 2024. In accordance
with the rules and by-laws of the TSX, the Company has been permitted to purchase up to a daily maximum of
21,782 shares (representing 25% of the average daily trading volume of the shares on the TSX for the six
months prior to commencement of the NCIB), except where such purchases are made in accordance with the
"block purchase" exception under the applicable TSX rules and policies.
The Company established an automatic share purchase program ("ASPP") in connection with its NCIB to
facilitate the purchase of shares during times when the Company would ordinarily not be permitted to purchase
shares due to regulatory restrictions or a self-imposed blackout period. Before entering a blackout period, the
Company may, but is not required to, instruct its designated broker to make purchases at the broker’s sole
discretion and based on parameters set by the Company in accordance with the ASPP, TSX rules and
applicable securities laws. The Company records a liability for share repurchase commitment during blackout
period based on the parameters of the NCIB and ASPP. As at December 31, 2023, an estimated maximum
obligation of $20,009 (2022 – $20,660) was outstanding under the ASPP in other current liabilities.
For the year ended December 31, 2023, the Company purchased 1,596,910 common shares (2022 –
2,339,409) for cancellation at an average price of $23.38 (2022 – $24.67) for total consideration of $37,335
(2022 – $57,717). The total cash consideration paid exceeded the carrying value of the shares repurchased by
$22,139 (2022 – $35,601), of which $22,826 (2022 – $36,389) was recorded under retained earnings, and a
realized gain of $687 (2022 – $788) was recorded under finance related expenses.
16 Expense by nature
Inventory and directly related product costs
Salaries, wages and benefits
Occupancy costs – stores
Depreciation
Other
Cost of sales
2023
$
381,579
125,427
28,977
46,622
4,965
587,570
2022
$
387,370
122,192
26,949
45,430
5,688
587,629
The depreciation included in cost of sales relates to depreciation on property and equipment for stores and
operations.
73
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Media and advertising expenses
Salaries, wages and benefits
Credit card and finance charges
Occupancy costs – warehouses and other
Professional fees
Telecommunication and information technology
Mattress recycling costs and donations
Depreciation and amortization
Other
General and administrative
2023
$
87,061
48,497
22,423
10,854
10,772
14,593
3,727
22,993
6,963
2022
$
74,883
42,797
19,914
9,614
10,030
11,483
2,873
20,204
4,369
227,883
196,167
The depreciation and amortization included in general and administrative expenses relates to intangibles and
property and equipment associated to warehouses, office and other.
17 Finance related expenses (income)
Interest on lease obligations
Interest expense on long-term debt
Change in fair value on interest rate swap
Revolver commitment fees
Change in contingent consideration liability
Realized gain on share repurchases under ASPP
Change in redemption liabilities
2023
$
15,545
9,236
1,882
375
222
(687)
(3,102)
23,471
2022
$
12,090
3,623
(2,594)
630
—
(788)
(13,850)
(889)
74
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
18 Income taxes
Components of income tax provision
Components of the income tax provision are as follows:
Current income tax expense relating to:
Temporary differences
Adjustments with respect to prior years
Deferred income tax expense relating to:
Temporary differences
Provision for income taxes
Reconciliation to effective tax rate
2023
$
30,278
(2,379)
27,899
(2,764)
25,135
2022
$
34,381
—
34,381
965
35,346
The overall income tax provision differs from the amount that would be obtained by applying the combined
statutory income tax rate to income due to the following:
Net income before income taxes
Weighted average Canadian income tax rate
Income tax expense based on statutory income tax rate
Difference between rates applicable to Company and rates
applicable to subsidiaries
Effect of non-deductible expenses and other items
2023
$
96,670
26.5%
25,618
(199)
(284)
25,135
2022
$
146,042
26.5%
38,701
(273)
(3,082)
35,346
Effective income tax rate
26.0%
24.2%
75
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Deferred tax liability
Significant components of the net deferred tax liability are as follows:
Excess of carrying value of intangible assets over tax values
Benefit of share issuance costs and financing fees deductible in
future years
Loss carry-forwards
Other temporary differences
2023
$
2022
$
(30,699)
(29,508)
(68)
6,322
5,571
(73)
3,309
4,536
(18,874)
(21,736)
The Company has recognized a deferred tax asset of $6,390 (2022 – $3,498), which is dependent on future
taxable income. The Company expects that it will be able to utilize the deferred tax asset in the future.
As at December 31, 2023, the Company has unused capital losses of $19,739 (2022 – $19,739) with no expiry
date.
Capital losses may only be used to offset capital gains. No deferred income tax benefit has been set up for
these losses as the Company does not expect to realize capital gains in the foreseeable future.
On February 1, 2018, the Canada Revenue Agency (“CRA”) issued a Notice of Proposed Adjustments for the
2014 taxation year, which also results in consequential income adjustments for the 2015 and 2016 taxation
years. The proposed adjustments relate to restructuring transactions in the Company’s pre-initial public offering
(“IPO”) structure and certain related transactions.
In June 2018, CRA issued Notices of Reassessments related to certain of these items with an exposure of
$3,480 which includes interest. On September 5, 2018, the Company filed Notices of Objection with CRA.
Subsequently, the Company received an acknowledgement of receipt from CRA to the Notices of Objection. In
March 2024, the Company received a response letter from the CRA which included responses to these Notices.
The Company is currently reviewing the CRA's responses to these Notices.
The Company was required to pay a minimum of 50% of the amount issued in the Notices of Reassessment
within 30 days of the date of these Notices. Accordingly, payments of $2,988 were made and included in
prepaid expenses and deposits on the consolidated statements of financial position.
The Company expects to receive a Notice of Reassessment under Part III Tax, pursuant to subsection 184(2) of
the Income Tax Act (Canada) on the basis that it paid an excess capital dividend on July 15, 2015. The
maximum exposure, including tax, penalty and interest, in this matter is approximately $5,818. In the event the
Notice of Reassessment under Part III Tax is received, the Company, with the concurrence of Birch Hill Equity
Partners Management Inc. (“Birch Hill”) and its co-investors, has the ability to file an election under subsection
184(3) to treat the excess amount as a taxable dividend, which is expected to resolve this exposure.
Pursuant to the indemnification provisions of the pre-IPO share purchase agreement dated July 10, 2015, the
Company has a contractual arrangement for all of the above matters with Birch Hill and its co-investors, which
76
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
include some current members of the Company’s Board and the Company’s management. The Company
believes it will be able to sustain its tax positions, and consequently no reserve has been made.
19 Earnings per share
Basic earnings per share ("EPS") amounts are calculated by dividing the net income attributable to common
shareholders of Sleep Country Canada Holdings Inc. by the weighted average number of shares outstanding
during the year.
Diluted EPS amounts are calculated by dividing the net income attributable to common shareholders of Sleep
Country Canada Holdings Inc. by the weighted average number of shares outstanding during the year adjusted
for the effects of potentially dilutive stock options in addition to performance share units (“PSUs”), restrictive
share units (“RSUs”) and deferred share units (“DSUs”) which are dilutive in nature.
The below table summarizes the dilution impact of stock options:
Dilutive
Anti-dilutive
Total
2023
$
612,106
498,527
2022
$
526,791
511,999
1,110,633
1,038,790
The following table illustrates the calculation of basic and diluted EPS:
Attributable to common shareholders of Sleep Country Canada Holdings Inc.
Basic
Diluted
Basic
Diluted
Net income attributable to
Sleep Country Canada
Holdings Inc.
$
Weighted average
number of shares
(in thousands
of shares)
71,192
71,192
34,622
34,922
2023
EPS
$
2.06
2.04
Attributable to common shareholders of Sleep Country Canada Holdings Inc.
Net income attributable to
Sleep Country Canada
Holdings Inc.
$
Weighted average
number of shares
(in thousands
of shares)
110,471
110,471
36,316
36,648
2022
EPS
$
3.04
3.01
77
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
20 Share-based compensation
The Company has a long-term equity incentive plan (“LTIP”) for executive officers and certain associates in the
Company. The LTIP includes stock options, PSUs and RSUs. Additionally, the Company has a DSU plan for its
Board.
The LTIP and DSU plan can be settled in shares or cash at the discretion of the Board. The Company accounts
for these plans as equity-settled and it has no intention to settle in cash. The expense associated with these
instruments are recorded as share-based compensation expense through the consolidated statements of
income and comprehensive income with a corresponding entry made to contributed surplus in share capital and
other on the consolidated statements of financial position and the consolidated statements of shareholders’
equity. The contributed surplus balance is reduced as the options or units under these plans are exercised and
the amount initially recorded in contributed surplus is reclassified to common shares.
Share-based compensation expense is summarized as follows:
1,110,633 stock options (2022 – 1,038,790) (a)
213,700 PSUs (2022 – 232,667) (b)
235,902 RSUs (2022 – 170,164) (c)
94,598 DSUs (2022 – 84,761) (d)
2023
$
947
3,000
1,831
464
6,242
2022
$
1,102
2,387
1,080
366
4,935
The Company recorded $55 (2022 – $44) in payroll taxes related to share-based compensation which is not
included in the above table.
The maximum number of common shares that may be issued, under all share-based compensation
arrangements implemented by the Company including stock options, PSUs, RSUs and DSUs, may not exceed
6.5% of the total number of common shares issued and outstanding. The maximum number of common shares
that may be issued within any one-year period under all share-based compensation arrangements implemented
by the Company may not exceed 1.5% of the then issued and outstanding number of common shares. The
maximum number of common shares that may be issued under the PSU plan, the RSU plan and the DSU plan
cumulatively is 2.6% of the total number of common shares issued and outstanding.
a) Stock options
The stock option exercise price is determined by the Board at the grant date and may not be less than the
market price on the grant date. The market price is generally the volume weighted average trading price of the
common shares on the TSX or such other exchange on which the common shares are trading during the five
trading days immediately preceding the grant date.
Stock options granted prior to 2020 typically vest on the grant date’s fourth anniversary, and may have a term of
up to 10 years. Stock options granted in 2020 onwards will vest in equal installments over a period of three
years from the grant date and may have a term of up to 10 years.
78
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
The stock option plan allows for the cashless exercise of options at the Board’s discretion, if the common shares
issuable upon the exercise of the options are to be immediately sold. This amount may, at the discretion of the
Board, be settled in cash, by the issuance of common shares from treasury or in common shares acquired on
the market. Historically, the Board has settled granted stock options by issuance of common shares from
treasury. The Company has no intention to settle in cash.
The Company’s stock option transactions during the year were as follows:
2023
2022
Weighted
average
exercise
price per
share option
$
Weighted
average
exercise
price per
share option
$
Number of
options
Number of
options
Outstanding, at beginning of the year
Granted during the year
Exercised during the year
Forfeited during the year
25.46
24.51
18.01
24.08
1,038,790
131,961
(24,006)
(36,112)
24.23
27.73
17.87
25.39
1,157,713
102,518
(156,675)
(64,766)
Outstanding, at the end of the year
25.55
1,110,633
25.46
1,038,790
Options, exercisable at the end of the year
25.33
895,498
27.08
570,094
The weighted average share price, on the date the stock options were exercised, during the year was $23.89
(2022 – $28.04).
The Company’s weighted average remaining contractual life and exercise price of its outstanding and
exercisable stock options were as follows:
Exercise price
range
$15.94 to $17.00
$19.31 to $27.73
$30.70 to $38.83
Stock options outstanding
Weighted
average
remaining
contractual
life
(in years)
Weighted
average
exercise
price
$
Number of
stock
options
Stock options exercisable
Number of
stock
options
Weighted
average
remaining
contractual
life
(in years)
Weighted
average
exercise
price
$
178,400
521,958
410,275
1,110,633
5.3
6.0
4.6
5.4
16.14
22.65
33.33
178,400
343,284
373,814
25.55
895,498
5.3
4.5
4.4
4.6
16.14
21.13
33.57
25.33
The weighted average fair value of stock options estimated at the grant date for the year is $8.55 (2022 –
$9.32).
79
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
The Black-Scholes model was used to estimate the fair value of stock options. In determining the fair value of
these stock options, the following assumptions were used:
Risk-free interest rate
Expected volatility
Estimated dividend yield
Expected life of the options (in years)
b) PSU plan
Grant Dates
March 14, 2023 and September 5, 2023
3.4% - 3.7%
35.1% - 43.4%
3.0% - 3.9%
6.5
A PSU represents the right to receive a common share settled by the issuance of treasury shares or purchased
on the open market or the cash equivalent at the market value of a share at the vesting date at the discretion of
the Board. The Company has no intention to settle in cash. PSUs generally vest 100% on the third anniversary
of the grant date.
The number of units that will vest is calculated based on a performance adjustment factor of between 0.0 and
2.0 which is determined based on the Company’s revenues (weighted at 25%) and basic EPS (weighted at
75%) performance relative to the Board established targets that have been set for the three-year performance
period between the grant date and the vesting date of the PSUs.
Therefore, the number of units that vest and are paid out may be higher or lower than the number of units
originally granted to a participant.
The Company’s PSU plan transactions during the year were as follows:
Outstanding, at beginning of the year
Granted during the year
Settled during the year
Forfeited during the year
2023
Number of units
(vested and unvested)
232,667
199,194
(197,591)
(20,570)
2022
Number of units
(vested and unvested)
255,385
108,345
(106,690)
(24,373)
Outstanding, at the end of the year
213,700
232,667
The weighted average fair value of the grant price for the year was $20.73 (2022 – $25.44).
80
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
c) RSU plan
A RSU represents the right to receive a common share settled by the issuance of treasury shares or purchased
on the open market or the cash equivalent of the market value of a share at the vesting date at the discretion of
the Board. The Company has no intention to settle in cash. RSUs generally vest 100% on the third anniversary
of the grant date. The number of units which will vest and are paid is equal to the number of units originally
granted to a participant.
The Company’s RSU plan transactions during the year were as follows:
Outstanding, at beginning of the year
Granted during the year
Settled during the year
Forfeited during the year
2023
Number of units
(vested and unvested)
170,164
133,077
(54,721)
(12,618)
2022
Number of units
(vested and unvested)
93,596
88,051
—
(11,483)
Outstanding, at the end of the year
235,902
170,164
The weighted average fair value of the grant price for the year was $24.59 (2022 – $25.77).
d) DSU plan
A DSU represents the right to receive a common share settled by the issuance of treasury shares or purchased
on the open market. DSUs granted vest in equal installments on the last day of each month of the year
immediately following the grant date, and relate to the applicable portion of the Directors’ annual retainer.
The Company’s DSU plan transactions during the year were as follows:
Outstanding, at beginning of the year
Granted during the year
Settled during the year
Forfeited during the year
2023
Number of units
(vested and unvested)
84,761
23,710
(12,362)
(1,511)
2022
Number of units
(vested and unvested)
67,857
16,904
—
—
Outstanding, at the end of the year
94,598
84,761
The weighted average fair value of the grant price for the year was $25.02 (2022 – $25.73).
81
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
21 Business combinations
Silk & Snow
On January 4, 2023, the Company completed an asset purchase agreement for substantially all of the net
assets of Silk & Snow Inc., a direct-to-consumer sleep retailer.
This acquisition has been accounted for using the acquisition method.
The following table summarizes the purchase consideration that is paid or payable and the allocation of the
purchase consideration to the identifiable assets acquired and liabilities assumed based on the Company’s
estimate of the fair values:
Purchase consideration
Cash consideration
Working capital adjustment
Contingent consideration
Total purchase consideration
Allocation of purchase consideration to net assets acquired
Trade and other receivables
Inventories
Prepaid expenses and deposits
Property and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Trade and other payables
Deferred revenues
Lease liabilities
Total net assets acquired
Goodwill
Total net assets acquired and goodwill
$
24,089
571
1,271
25,931
624
6,811
532
377
255
12,137
100
(3,180)
(1,081)
(255)
16,320
9,611
25,931
To estimate the fair value of the brand (included in intangible assets), the Company used the royalty relief
method using a discounted cash flow model. The Company developed assumptions related to forecasts on
revenues and earnings before interest, taxes, depreciation and amortization (“EBITDA”) forecasts, royalty rates
and discount rate.
Recognized goodwill reflects the value assigned to expected future synergies, a portion of which is tax
deductible.
Pursuant to the purchase agreement, the seller is entitled to receive a contingent consideration payment if the
acquired business achieves specified earnings level during the period commencing on January 1, 2023 and
82
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
ending on December 31, 2025. At the date of acquisition, the Company recorded a contingent consideration
liability of $1,271 based on expected outcome (discounted) at the end of the contingency period.
The results of operations since January 1, 2023, the date of acquisition, have been included in these
consolidated financial statements.
Casper Canada
On April 14, 2023, the Company completed an asset purchase agreement for substantially all of the net assets
of Casper Sleep Inc.'s Canadian operations.
This acquisition has been accounted for using the acquisition method.
The following table summarizes the purchase consideration that is paid or payable and the allocation of the
purchase consideration to the identifiable assets acquired and liabilities assumed based on the Company’s
estimate of the fair values:
Purchase consideration
Cash consideration
Total purchase consideration
Allocation of purchase consideration to net assets acquired
Inventory
Property and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Lease liabilities
Total net assets acquired
Goodwill
Total net assets acquired and goodwill
$
34,775
34,775
1,695
1,822
5,746
22,035
(578)
(5,746)
24,974
9,801
34,775
To estimate the fair value of the brand (included in intangible assets), the Company used the royalty relief
method using a discounted cash flow model. The Company developed assumptions related to revenue and
earnings before interest, taxes, depreciation, and amortization (“EBITDA”) forecasts, royalty rates and discount
rate.
Recognized goodwill reflects the value assigned to expected future synergies, a portion of which is tax
deductible.
83
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
22 Financial instruments and risk management
The Company’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk
and cash flow and fair value interest risks), credit risk and liquidity risk. The Company’s overall risk management
program and business practices seek to minimize any potential adverse effects on the Company’s consolidated
financial performance.
Risk management is carried out by the senior management team and is overseen by the Board.
Market risk
Market risk is the loss that may arise from changes in factors such as interest rates, foreign exchange and the
impact these factors may have on other counterparties.
•
Foreign exchange risk
A portion of the Company’s sales and purchases are denominated in U.S. dollars which results in foreign
currency exposure related to fluctuations between the Canadian and U.S. dollars. Foreign currency forward
contracts can be used from time to time to mitigate risks associated with forecasted U.S. dollar merchandise
purchases sold in Canada.
•
Cash flow and fair value interest risk
The Company’s income and operating cash flows are substantially independent of changes in market interest
rates. The Company’s primary interest rate risk arises from long-term debt. The Company manages its exposure
to changes in interest rates by using a combination of variable and fixed rate debt by utilizing interest rate swaps
to achieve the desired proportion of variable and fixed rate debt. As at December 31, 2023, an increase or
decrease in interest rates by 1% would result in an increase or a decrease of $1,013 (2022 – $400) on interest
expense on the credit facilities.
Credit risk
Credit risk refers to the risk of losses due to failure of the Company’s customers or other counterparties to meet
their payment obligations. Credit risk arises from deposits with banks, as well as credit exposures from vendors
for the payment of rebate amounts and balances owed from third party financing companies under the various
financing plans the Company offers its customers. In order to manage its credit risk, the Company closely
monitors its financial assets and holds its deposits at highly-rated financial institutions. Sales to retail customers
are settled in cash, financed by third party financing companies or by using major credit cards. The Company
transfers the credit risk for financing plans to third party financing companies. The third party financing
companies that the Company deals with carry a minimum rating of BBB or better.
Trade and other receivables are written off when there is no reasonable expectation of recovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a
84
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
repayment plan with the group, and a failure to make contractual payments for a period of greater than 90 days
past due.
The trade and other receivables presented on the consolidated statements of financial position are net of
expected credit losses.
Liquidity risk
Liquidity risk is the risk the Company will not be able to meet a demand for cash or to fund its obligations as they
come due. Liquidity risk also includes the risk of not being able to liquidate assets in a timely manner at a
reasonable price. Prudent liquidity management implies maintaining sufficient cash and the availability of
funding through an adequate amount of committed credit facilities.
As at December 31, 2023, the Company’s cash balance was $37,371 with an additional $98,700 (not including
the $100,000 accordion) of liquidity available under the Company’s credit facility.
The table below analyzes the Company’s financial liabilities into relevant maturity groupings based on the
remaining period from the consolidated statements of financial position dates to the contractual maturity date.
The amounts in the table reflect the contractual undiscounted cash flows (including interest where applicable)
which may differ to the carrying values of the liabilities at the reporting date.
At December 31, 2023
Trade and other payables
Lease liabilities
Long-term debt
Other liabilities
At December 31, 2022
Trade and other payables
Lease liabilities
Long-term debt
Other liabilities
Within
1 year
$
110,966
56,281
12,506
23,136
202,889
106,883
51,187
6,936
22,705
187,711
Between 1
and 5 years
$
—
198,692
183,913
5,492
388,097
—
173,621
119,476
12,723
305,820
Over
5 years
$
—
233,834
—
—
233,834
—
157,889
—
—
157,889
Fair value of financial instruments
The different levels used to determine fair values have been defined as follows:
•
•
Level 1 – inputs use quoted prices (unadjusted) in active markets for identical financial assets or financial
liabilities that the Company has the ability to access.
Level 2 – inputs other than quoted prices included in Level 1 that are observable for the financial asset or
financial liability, either directly or indirectly. Level 2 inputs include quoted prices for similar financial assets
85
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
and financial liabilities in active markets, and inputs other than quoted prices that are observable for the
financial liabilities.
•
Level 3 – inputs are unobservable inputs for the financial asset or financial liability and include situations
where there is little, if any, market activity for the financial asset or financial liabilities.
The following describes the fair value determinations of financial instruments:
•
•
•
•
•
•
The carrying values of cash, trade and other receivables, trade and other payables, deferred revenues and
the share repurchase commitment under the ASPP approximate their fair values due to the relatively short
periods to maturity of these financial instruments.
The carrying value of the long-term debt under the senior secured credit facility approximates its fair value
as the terms and conditions of the borrowing arrangements are comparable to market terms and conditions
as at December 31, 2023 and December 31, 2022.
The interest rate swap obtained effective April 1, 2021 is recognized at fair value based on observable
quoted market prices for identical financial instruments in active markets as at December 31, 2023 and
December 31, 2022. The interest rate swap is included in trade and other receivables in the consolidated
statements of financial position.
The convertible note receivable is recognized at fair value. The inputs to the measurement of fair value are
level 3 inputs. The Company valued the convertible note receivable using the Black-Scholes pricing model
and the Crank-Nicolson finite difference method; significant model inputs include share price, risk-free
interest rate and expected volatility. An increase or decrease in the model inputs would result in an increase
or decrease in the fair value the convertible note receivable. Changes in the value of the convertible note
receivable for the year ended December 31, 2023 consisted of interest income of $1,546 and unrealized
foreign exchange losses of $625 recognized within other income in the consolidated statement of income
and other comprehensive income.
The warrant is recognized at fair value. The inputs to the measurement of fair value are level 3 inputs. The
Company valued the warrant using the Binomial option pricing model; significant model inputs include share
price, risk-free interest rate and expected volatility. An increase or decrease in the model inputs would result
in an increase or decrease in the fair value the warrant. Changes in the value of the warrant for the year
ended December 31, 2023 consisted of unrealized foreign exchange losses of $70 recognized within other
income in the consolidated statement of income and other comprehensive income.
The redemption liabilities related to the acquisition of Hush were initially recognized at fair value on
acquisition date and subsequently measured at amortized cost. The inputs to the measurement of the fair
value are level 3 inputs. The fair value measurements were made using a discounted cash flow model;
significant model inputs were expected future pre-tax earnings over the measurement period (determined
with reference to the specific acquired business) and a pre-tax discount rate of 14%. The discount rate is
attributable to the level of risk related to economic growth factors combined with the length of the contingent
payment periods; and the dispersion was driven by unique characteristics of the businesses acquired and
the respective terms for these future payments.
86
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
Changes in the value of the redemption liabilities comprises the following:
Redemption liabilities – Current and non-current
At January 1, 2022
Changed in estimated outcome
Accretion
At December 31, 2022
At January 1, 2023
Change in estimated outcome
Purchase of non-controlling interests
Accretion
At December 31, 2023
Total
$
23,916
(20,458)
6,608
10,066
10,066
(5,387)
(1,300)
2,285
5,664
•
The contingent consideration liability related to the acquisition of Silk & Snow was initially recognized at fair
value on acquisition date and subsequently measured at amortized cost. The inputs to the measurement of
fair value are level 3 inputs. The amount of payment is determined based on a formula, the key inputs to
which are (i) a contractually agreed maximum payment of up to $19,500, (ii) a contractually specified
earnings level and (iii) the actual pre-tax earnings for the contingency period. The inputs to the
measurement of the fair value of the contingent liability are Level 3 inputs. The fair value measurement was
made using a discounted cash flow model; significant model inputs were expected future pre-tax earnings
over the contingency period (determined with reference to the specific acquired business) and a pre-tax
discount rate of 17.5%. The discount rate is attributable to the level of risk related to economic growth
factors combined with the length of the contingent payment periods; and the dispersion was driven by
unique characteristics of the businesses acquired and the respective terms for these future payments.
Changes in the value of the contingent consideration liability for the year ended December 31, 2023
consisted of accretion expense of $222 recognized within finance related expenses in the consolidated
statement of income and other comprehensive income.
Capital risk management
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in
order to provide returns for its shareholders in the form of cash dividends, benefits to other stakeholders and to
maintain an optimal capital structure to minimize the cost of capital. In order to maintain or adjust the capital
structure, the Company may issue new shares or sell assets to reduce long-term debt.
23 Contingent liabilities and unrecognized contractual commitments
In the normal course of business, the Company has entered into agreements that include indemnities in favour
of third parties, such as purchase and sale agreements, confidentiality agreements, engagement letters with
advisers and consultants, leasing contracts, licence agreements, information technology agreements, and
various product and service agreements. These indemnification arrangements may require the Company to
compensate counterparties for losses incurred by the counterparties as a result of breaches in representations,
covenants and warranties provided by the Company or as a result of litigation or other third party claims or
statutory sanctions that may be suffered by the counterparties as a consequence of the relevant transaction. In
87
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Country Canada Holdings Inc.
Notes to Consolidated Financial Statements
As at December 31, 2023 and December 31, 2022
(in thousands of Canadian dollars, unless otherwise noted)
some instances, the terms of these indemnities are not explicitly defined. The Company, whenever possible,
tries to limit this potential liability within the particular agreement or contract; however, due to the unpredictability
of future events, the maximum amount of any potential reimbursement required to be made by the Company
cannot be reasonably estimated, but could have a material adverse effect on the Company.
24 Related party transactions and balances
Key management personnel are those individuals who have the authority and responsibility for planning,
directing and controlling the activities of the Company, including members of the Company’s Board of Directors.
The Company incurred the following compensation expenses in relation to key management personnel:
Salaries and short-term benefits
Share-based compensation
Directors’ fees
25 Subsequent events
2023
$
2,368
3,129
532
6,029
2022
$
4,219
2,746
549
7,514
On February 5, 2024, the Company declared a dividend of $0.237 per common share that was paid on February
29, 2024 to holders of the common shares of record as at the close of business on February 21, 2024.
88
Sleep Country Canada Holdings Inc. Annual Report 2023
Sleep Well. Stay Well.™
Sleep Country Canada Holdings Inc.
7920 Airport Road, Brampton, ON, L6T 4N8
Telephone 289-748-0206
sleepcountry .ca | dormezvous .com | endy .com | hush .ca | hushblankets .com | silkandsnow .com | therest .ca | casper .ca