FBI sales rise, earnings fall
By Furniture Today Staff -- Furniture Today, February 1, 2004
ST. LOUIS — ST. LOUIS — Furniture Brands International's sales rose 3.6% in the fourth quarter and stronger order rates have continued into this year, but the expenses of factory closings sent earnings tumbling.
Fourth-quarter earnings were down 22.9% from the same period last year to $22.6 million on sales of $616.9 million, the company reported last week. For the full year, earnings declined 20.4% to $94.6 million as sales slipped 1.2% to $2.4 billion.
Restructuring and asset impairment charges of $8.2 million after taxes hurt fourth-quarter earnings.
On the bright side, the company is finished with most of its U.S. downsizing and no further factory closings are planned for this year, said Mickey Holliman, FBI chairman, president and CEO. The company uses offshore sourcing to give it a blended production strategy across its major brands — Broyhill, Lane, Thomasville, Drexel Heritage and Henredon.
"2003 was the third consecutive difficult year for the residential furniture industry, but we were pleased to see a positive change in order trends during the latter part of the year," Holliman said. While he said the industry has "had some false starts," Furniture Brands is projecting a sales gain in the first quarter and is hopeful about the rest of the year.
Drexel Heritage had the biggest sales jump among FBI brands in the fourth quarter, although he wasn't specific. Drexel posted a quarterly operating profit for the first time since FBI acquired it in early 2002, he said.
"Drexel Heritage has come back from the dead," Holliman said. "Stand by for some real progress at that company."
Furniture Brands, the No. 1 U.S. furniture maker, said it had some price deflation as it added more imports to its mix, although it amounted to just 1.54% company-wide. Deflation was greatest in higher-end case goods — 18% at Henredon and 14% at Drexel.
"I think most of that (deflation) we've digested," Holliman said. "I think that you're going to see a good bit of stability in pricing in '04."
He also said the company has contingency plans in case the U.S. government imposes duties on Chinese wood bedroom furniture, lining up "duplicate sourcing" for some Chinese product in other Asian countries.
| Furniture Brands International | |||
|---|---|---|---|
| Owns Broyhill, Drexel Heritage, Henredon, Lane, Maitland-Smith and Thomasville | |||
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 12/31 | 2003 | 2002 | Change |
| Sales | $616,862,000 | $595,491,000 | 3.6% |
| Operating income | 52,158,000 | 62,495,000 | (16.5%) |
| Net income | 22,612,000 | 29,317,000 | (22.9%) |
| Earnings per share | 0.40 | 0.52 | (23.1%) |
| Year ended 12/31 | 2003 | 2002 | Change |
| Sales | $2,367,738,000 | $2,397,709,000 | (1.2%) |
| Operating income | 216,049,000 | 251,666,000 | (14.2%) |
| Net income | 94,573,000 | 118,831,000 | (20.4%) |
| Earnings per share | 1.68 | 2.11 | (20.4%) |
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