Rowe 3Q sales rise
By Janice Chamberlain -- Furniture Today, October 10, 2005
McLean, Va. — The Rowe Companies, parent of retailer Storehouse and upholstery maker Rowe Furniture, recorded sales increases in its quarter and nine months ended Aug. 28, but rapidly rising raw material prices and manufacturing productivity below historical levels resulted in net losses from continuing operations.
Quarterly sales increased 4.4% to $79.5 million from $76.1 million in the comparable 2004 period, with nine-month sales inching up 1.2% to $224.9 million. The net loss from continuing operations in the quarter was $1.6 million, compared with net income of $431,000 in the year-earlier period.
Nine-month net losses from continuing operations came to $7.1 million, measured against net profits of $1.3 million in the comparable 2004 nine months.
Including the results of discontinued real estate operations and the disposal of those operations, Rowe's net income in the 2005 quarter was $123,000, $490,000 in the 2004 quarter and $1.3 million in the 2004 nine months. The company posted a net loss of $2.6 million in the 2005 nine months.
During the 2005 quarter, the company completed the sale of its investment real estate properties in Christiansburg, Va., and Jessup, Md., for an after-tax gain of $1.7 million.
Based on his 49 years in the furniture industry, Rowe Chairman and President Gerald Birnbach said recent price increases for lumber, plywood, Dacron and other raw materials were "unprecedented."
In the most recent quarter, he said, accessories and bedroom were the top growth categories in dollars, with textiles showing the largest percentage growth.
In the 2005 quarter, gross profits slipped to 32.6% of sales from 34.9% in the comparable 2004 period. Nine-month gross profits in 2005 came to 31.3% of sales, measured against 35.3% in the year-earlier period.
"We continue to focus intensely on delivering a higher level of productivity and improving our gross profit," Birnbach said.
During a conference call with analysts, he reported the company's Storehouse location in New Orleans was seriously damaged by Hurricane Katrina and remains closed. He said all employees were safe and about half were working at other Storehouse sites.
Last year, sales at the New Orleans store were about $1.9 million, and estimated sales year-to-date were $2.2 million.
In the 2005 quarter, Storehouse same-store sales were up 3.6%, with overall sales surging 14.4%. The company said the average ticket size in the quarter was around $800, and Storehouse is on target to make money in the current quarter.
Rowe plans to add five stores by the end of the year, bringing the total to 71.
| The Rowe Companies | |||
|---|---|---|---|
| Owns Rowe Furniture and Storehouse | |||
| Earnings per share are fully diluted, and all figures in parentheses are losses or declines. | |||
| Quarter ended 8/28 | 2005 | 2004 | Change |
| (a) Includes income tax benefits of $972,000 in the 2005 quarter and $4.2 million in the 2005 nine months and net gains on the disposal of real estate investment property of $1.7 million in the 2005 quarter and $4.4 million in the 2005 nine months. The 2005 quarter also includes a $13,000 net loss from discontinued real estate operations and the 2005 nine months also includes $69,000 in net earnings from discontinued real estate operations. (b) Includes net earnings from discontinued real estate operations of $59,000 in the 2004 quarter and $58,000 in the 2004 nine months. The 2004 nine months also includes a $105,000 net loss on contingencies associated with operations discontinued in prior years. (c) Based on average shares outstanding of 13.3 million in the 2005 periods, 13.6 million in the 2004 quarter and 13.5 million in the 2004 nine months. | |||
| Sales | $79,466,000 | $76,149,000 | 4.4% |
| Operating income | (1,968,000) | 1,176,000 | — |
| Net income | (a)123,000 | (b)490,000 | (74.9%) |
| Earnings per share (c) | 0.01 | 0.04 | (75.0%) |
| 9 months ended 8/28 | 2005 | 2004 | Change |
| Sales | $224,892,000 | $222,132,000 | 1.2% |
| Operating income | (10,242,000) | 3,703,000 | — |
| Net income | (a)(2,566,000) | (b)1,290,000 | — |
| Earnings per share (c) | (0.19) | 0.10 | — |
