07 Jun, 2011
Hooker Furniture sales rise 13.6% in quarter, but profits decline
Posted by: admin In: furniture
Case goods sales lead way with 26% growth
Larry Thomas — Furniture Today, June 7, 2011
MARTINSVILLE, Va. — Case goods and upholstery major Hooker Furniture said sales rose 13.7% in its first fiscal quarter, but profits suffered because of higher costs and product discounting from its efforts to reduce slow-moving, excess inventory.
Sales for the 13 weeks ended May 1 totaled $58.4 million, up from $51.4 million in the same period last year.
The company said case goods led the sales growth with an increase of nearly 26%. Fabric upholstery sales were up 7% and leather upholstery rose 4%.
“Although we’ve had positive sales comps during the previous three quarters, over the past six months we’ve started to see significant growth in case goods,” said Paul Toms Jr., chairman and CEO. “This kind of growth is vital for achieving the high profitability performance objectives we’ve set for ourselves.”
Net income for the quarter totaled $523,000 or 5 cents per share. That’s down about 51% from $1.07 million or 10 cents per share in the same quarter last year. Last year’s first quarter included a $312,000 after-tax charge representing the company’s insurance deductible for a warehouse fire.
In addition to the product discounting, Toms said profits in the most recent quarter were hurt by higher freight costs on imported case goods, operating losses in domestically produced upholstery, higher expenses for returns and allowances, and higher employee health care costs.
“Given the sales growth we had this quarter, we’re disappointed in our inability to generate higher profits,” Toms said. “We’ve moved a lot of slow-selling, excess inventory but still have additional work to do and expect discounting to impact profitability over the next two quarters. It’s difficult to say how much of a factor the discounting will be due to other unknown variables, such as retail demand and the amount of full-price furniture we’re able to ship to offset the discounting of slower selling items.”
Since April, Toms said business has slowed for most of the company’s retail customers, but said Hooker is continuing to gain market share by remaining aligned with some of the industry’s healthiest retailers.
“While business isn’t robust, we are holding our own and faring better than retail in general,” he said.
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