Rowe 4Q earnings rise 23.4%
By Gary Evans -- Furniture Today, January 18, 2004
MCLEAN, Va. — With growing factory shipments and improved sales from its Storehouse retail chain, The Rowe Companies ended its fourth quarter and 2003 fiscal year in a better position than in 2002.
For the fourth quarter ended Nov. 30, the upholstery manufacturer and retailer said net earnings totaled $2.6 million, up 23.4% from earnings of $2.1 million in the prior year's final quarter. The 2002 quarter included $2.1 million in net earnings from discontinued operations. Shipments rose 14.5% to $77.5 million, and gross profit margins grew to 37.9% of net shipments from 37.7% for the same period last year.
The latest quarter included pretax income of $729,000 ($425,000 after tax) for the final settlement of legal issues stemming from the 2001 bankruptcy of a former customer, which wasn't named.
For the year, net earnings were $2.5 million, compared to $2 million in the previous year. Both years include net earnings from discontinued operations — its Mitchell Gold upholstery division, which was sold in April 2003.
Fiscal year 2003 shipments were $279.4 million, up 3.4% from the prior year. Gross profit margins increased to 36.2% of shipments from 35.8%, as retail margins improved and store operations accounted for a larger percentage of total shipments.
The 2002 year included a net charge of $1.4 million for the merger of Rowe's former Home Elements store division into the Storehouse chain.
"Storehouse continues to show strong sales growth, with an 11% same-store sales increase in the fourth quarter, the second consecutive quarter of double-digit same-store sales gains," said Gerald M. Birnbach, chairman and president.
He said the company added two Storehouse units during the latest quarter, one in Richmond, Va., the other in Atlanta, and plans seven new stores in 2004 and "at least that many" in 2005. Two stores in Baltimore will be consolidated this year into a larger store, and three other stores will be closed. The company currently has 61 Storehouse units.
Rowe's gallery program, StudioRowe, launched in October 2002, has grown to 50 in-store galleries totaling 150,000 square feet.
Rowe Furniture, the company's upholstery manufacturing division, saw shipments increase 3.5% in the fourth quarter, "continuing the improving trend we saw at the end of the third quarter," Birnbach said.
"We are optimistic the market demand the company experienced during the second half of 2003 will continue," he said. "Looking forward to fiscal 2004, we project mid-single-digit sales gains for Rowe Furniture, and comparable-store sales growth at Storehouse."
In a conference call with analysts, Birnbach said Storehouse units are not designed as traditional furniture stores but as "lifestyle" stores, "which we feel are the future of the industry. Many furniture stores which haven't updated are out of business."
Rowe's stock price has ranged from a 52-week low of $1.55 to a high of $6, and last week was trading around $5.60.
| The Rowe Companies | |||
|---|---|---|---|
| Owns Rowe Furniture and Storehouse | |||
| Earnings per share are fully diluted. | |||
| Quarter ended 11/30 | 2003 | 2002 | Change |
| (a) Includes pretax retail restructuring and other charges of $100,000 in the 2003 quarter and $262,000 in the 2002 quarter. The 2002 quarter also includes $2.1 million in net earnings from discontinued operations. (b) Includes pretax retail restructuring and other charges of $225,000 in the 2003 year and $2.4 million in the 2002 year and net earnings from discontinued operations of $1.1 million in the 2003 year and $4.4 million in the 2002 year. The 2003 year also includes a $462,000 net gain on the sale of Mitchell Gold and the 2002 year also includes an $895,000 income tax benefit. |
|||
| Sales | $77,455,000 | $67,664,000 | 14.5% |
| Operating income | 5,252,000 | 1,934,000 | 171.6% |
| Net income (a) | 2,632,000 | 2,133,000 | 23.4% |
| Earnings per share | 0.20 | 0.16 | 25.0% |
| Year ended 11/30 | 2003 | 2002 | Change |
| Sales | $279,385,000 | $270,084,000 | 3.4% |
| Operating income | 5,624,000 | 1,918,000 | 193.2% |
| Net income (b) | 2,546,000 | 2,020,000 | 26.0% |
| Earnings per share | 0.19 | 0.15 | 26.7% |
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