Rowe posts 3Q net loss despite sales uptick
By Furniture Today Staff -- Furniture Today, September 29, 2003
McLean, Va. — The Rowe Companies said sales inched up in its third quarter, although the furniture manufacturer and retailer posted a net loss for the period.
Sales for the quarter ended Aug. 1 increased 1.5% to $70.2 million, compared with $69.1 million in the same period last year. The net loss came to $178,000, or 1 cent per share, compared to net profits of $554,000, or 4 cents per share, for the comparable 2002 quarter.
However, the 2002 quarter included $1.2 million in net earnings from upholstery producer Mitchell Gold, which subsequently was sold and is now classified as a discontinued operation. Excluding the Mitchell Gold profits, the net loss for the third quarter of 2002 was $622,000, or 5 cents per share.
Gross profit margins in the latest quarter increased to 36.3% from 34.1% in the prior year's quarter. Rowe attributed the increase to improving performance in its 59-unit Storehouse retail operation.
"Storehouse continues to reflect improved sales volume, with a same-store sales growth rate of 11% for the quarter compared to the same quarter in the prior year," said Gerald M. Birnbach, chairman and president.
"Further, while at the beginning of the third quarter, the incoming order rate for our Rowe Furniture upholstery manufacturing unit was soft, the order rate improved during the period, resulting in a higher backlog at the end of the third quarter than at the same time last year," he said. "As a result, we enter the important fourth quarter with both a strong backlog and an improved rate of incoming orders."
Selling, general and administrative costs for the quarter were $24.4 million, an increase of 3.9% from the same period last year. Included in SG&A in the quarter was a pretax charge of about $500,000 for impairment charges for certain Storehouse locations.
For the nine-month period, sales were $201.9 million, down fractionally from year-earlier sales of $202.4 million. Gross profit margins improved to 35.5% from 35.1% as retail margins improved and retail operations accounted for a larger percentage of total shipments.
The net loss for the first three quarters of 2003 was $86,000, down from $113,000 for the first nine months of 2002. Both periods include earnings from Mitchell Gold.
Included in earnings in the prior year was a charge of $1.4 million, net of taxes, or 11 cents per share, for the combination of the former Home Elements retail division into Storehouse. All prior periods have been restated to reflect Mitchell Gold's status as a discontinued operation.
| The Rowe Companies | |||
|---|---|---|---|
| Owns Rowe Furniture and Storehouse | |||
| Earnings per share are fully diluted, and all figures in parentheses are loses or declines. | |||
| Quarter ended 8/31 | 2003 | 2002 | Change |
| (a) Includes a $362,000 income tax benefit and $1.2 million in net earnings from discontinued operations. (b) Includes pretax retail restructuring and other charges of $125,000 in the 2003 nine months and $2.1 million in the 2002 nine months, income tax benefits of $721,000 in the 2003 nine months and $1.1 million in the 2002 nine months and net earnings from discontinued operations of $1.1 million in the 2003 nine months and $2.3 million in the 2003 nine months. The 2003 nine months also includes a $462,000 after-tax gain on the sale of Mitchell Gold. | |||
| Sales | $70,152,000 | $69,094,000 | 1.5% |
| Operating income | 1,020,000 | 41,000 | 2,387.8% |
| Net income | (178,000) | (a)554,000 | — |
| Earnings per share | (0.01) | 0.04 | — |
| 9 months ended 8/31 | 2003 | 2002 | Change |
| Sales | $201,930,000 | $202,420,000 | (0.2%) |
| Operating income | 372,000 | (16,000) | — |
| Net income (b) | (86,000) | (113,000) | — |
| Earnings per share | (0.01) | (0.01) | — |
