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Year's sales jump 24.4% at Hooker; profits slip

By Larry Thomas -- Furniture Today, January 4, 2004

MARTINSVILLE, Va. — Case goods and upholstery manufacturer Hooker Furniture said sales jumped 24.4% in the year ended Nov. 30, although net income declined 4.4% due to a one-time restructuring charge and lower margins on its domestic and imported wood furniture.

In the fourth quarter, sales rose 13.1% to $79.7 million, as net income dropped 39.1% to $3.6 million, compared with the prior year's final quarter.

The company, which owns upholstery producer Bradington-Young, said it was pleased with the top-line results — sales for the year hit a record $309 million — and believes the profitability squeeze is a short-term situation.

"Across all our operations — imported and domestic wood furniture and Bradington-Young upholstery — our incoming order rates for the fourth quarter were the strongest of any quarter during the year," said Paul Toms Jr., chairman and chief executive officer.

Some of Hooker's sales increase is linked to the acquisition of Bradington-Young in January 2003, but Toms said the company's wood furniture sales were up 6.6% to $264.8 million.

Net income for the year, which totaled $14.7 million, or $1.28 per share, was shaved by a $1.5 million pretax restructuring charge for closing its Kernersville, N.C., factory. In addition, Toms said low capacity utilization at the company's remaining wood furniture plants hurt margins, as did higher freight and transit-related costs for its imported products.

Toms noted that Hooker reduced its orders of imported goods at mid-year in hopes of trimming its inventory. However, the company was then unable to meet some demand for orders placed by dealers in the third and fourth quarters.

"We didn't have enough inventory to fully capitalize on our strong incoming orders for imports … so our backlog has grown," he said. "We expect our inventory availability to improve during the first and second quarters of next year."

Toms said the company's domestic plants, which operated at slightly less than 70% capacity in the just-concluded fiscal year, should be at more than 85% capacity in 2004.

That move, combined with efforts to reduce raw materials costs, shorten delivery times and control labor costs, should enhance profitability, he said.

"We expect the momentum in incoming orders to continue, and all of our operations are well positioned to capitalize on the uptick in retail activity," said Toms. "The economy is the strongest it has been in three years, and we are starting to see pent-up demand released as the consumer gains confidence."

At its December meeting, Hooker's board approved a two-for-one stock split, in the form of a 100% stock dividend. The date of record for the stock dividend is Jan. 9, 2004. The board also increased the cash dividend, after taking into account the stock split, to six cents per share, payable Feb. 27 to shareholders of record on Feb. 13.

Hooker Furniture(a)
Owns Bradington-Young
Earnings per share are fully diluted, and all figures in parentheses are loses or declines.
Quarter ended 11/30	2003	2002	Change
(a) Includes the results of Bradington-Young from its January 2003 acquisition. (b) Reflects a two-for-one stock split to be effective January 2004. (c) Includes a $1.5 million pretax restructuring charge.
Sales	$79,665,000	$70,438,000	13.1%
Operating income	6,198,000	9,902,000	(37.4%)
Net income	3,596,000	5,908,000	(39.1%)
Earnings per share (b)	0.31	0.52	(40.4%)
Year ended 11/30	2003	2002	Change
Sales	$309,005,000	$248,346,000	24.4%
Operating income	27,222,000	26,319,000	3.4%
Net income	(c)14,710,000	15,391,000	(4.4%)
Earnings per share (b)	1.28	1.36	(5.9%)

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